Foreclosure is a legal process in which the usurer or lender is allowed to retrieve the total sum owed on a defaulted loan from the borrower or defaulter. This could be done by two means, either by selling off the property and claiming the proceeds , or by repossession (indemnification) of the property.
For people looking for bargains on properties, the foreclosure process provides them three main opportunities, and they are:
- Pre-Forclosure: During the grace or pre-foreclosure period, people who are interested in a property could approach the current owner of the house to purchase from them directly. Usually it is possible to get a bargain up to 30% to 40% below market price.
- Auction: If the loan is not recommenced, or the property had not been sold to a third party by the end of the grace period, it would be up for public auction. Interested parties would get the best bargains from public auctions, however the timing is bad. This is because the they would not be able to properly check the condition of the property, and they need to pay the deposit on the spot.
- Banked Owned or REO: After the grace period, and the property is not purchased at the public auction, it becomes banked owned. If the usurer or lender repossessed the property, it is considered to be as an REO (Real Estate Owned). Prices are usually below market price, especially if the property is not cleared and refurbished.
Be sure that you have enough data and knowledge regarding the foreclosed property if you are planning to buy – This video will show you what you need to know.
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