What is Foreclosure?
Foreclosure is a process that allows a lender to recover the amount owed on a defaulted loan by selling or taking ownership (repossession) of the property securing the loan. The foreclosure process begins when a borrower/owner defaults on loan payments (usually mortgage payments) and the lender files a public default notice, called a Notice of Default or Lis Pendens. The foreclosure process can end one of four ways:

   1. The borrower/owner reinstates the loan by paying off the default amount during a grace period determined by state law. This grace period is also known as pre-foreclosure.

   2. The borrower/owner sells the property to a third party during the pre-foreclosure period. The sale allows the borrower/owner to pay off the loan and avoid having a foreclosure on his or her credit history.

This is where your Best Opportunities are! Pre-Foreclosure and/or Short Sales represent a buyers best opportunity for a Great Price and Value.

   3. A third party buys the property at a public auction at the end of the pre-foreclosure period.

   4. The lender takes ownership of the property, usually with the intent to re-sell it on the open market. The lender can take ownership either through an agreement with the borrower/owner during pre-foreclosure, via a short sale foreclosure or by buying back the property at the public auction. Properties repossessed by the lender are also known as bank-owned or REO properties (Real Estate Owned by the lender).

This foreclosure process allows for three opportunities for finding bargains on foreclosure homes.
 
Pre-Foreclosure (NOD, LIS):
Buying a property in pre-foreclosure involves approaching the borrower/owner and offering to buy the property outright. The borrower/owner can walk away with something to show for any equity in the property and avoid a derogatory on his or her credit history. The buyer has time to research the title and condition of the property and can realize discounts of 20-40 percent below market value.

Finding a Pre-Foreclosure Property
Pre-foreclosure is the most crucial time in the foreclosure process. It is during this period that you as an investor stand to make the largest profits and negotiate a favorable deal for both the owner and the bank. But first we must confirm pre-foreclosure status.

When a property enters pre-foreclosure, the owner usually has at least 2-3 months to reinstate the property. 

We find out as much as we can about the estimated market value of the property. Contact the Owner in Default.

We as your Pre-Foreclosure real estate Specialists, are Licensed Agents in The State of California, contact with the owner to express interest in the property.     

We also develop a system to keep track of properties that interest you. And Negotiate a purchase agreement that you are satisfied with.

If you and the owner both agree to proceed, we need to negotiate the terms of a purchase. 

Make closing the deal contingent on a full title search conducted by a title company or attorney.

Wondering what happens after foreclosure? Then please read on. Remember that understanding foreclosures is the first step for homeowners to stop foreclosure. It is also the first step for investors to buy foreclosure properties.
 
Auction (NTS, NFS):
If the loan is not reinstated by the end of the pre-foreclosure period, potential buyers can bid on the property at a public auction. Buyers often are required to pay in cash at the auction and may not have much time to research the title and condition of the property beforehand; however, a public auction often offers some of the best bargains and avoids the unpredictability of dealing directly with the borrower/owner.
More about Foreclosure auctions

 
Bank-owned (REO):
If the lender takes ownership of the property, either through an agreement with the owner during pre-foreclosure or at the public auction, the lender will usually want to re-sell the property to recover the unpaid loan amount. The lender will then typically clear the title and perform needed maintenance and repair; however, the potential bargain for these REO homes is typically less than a pre-foreclosure or auction property. Bank foreclosures can become government foreclosures if the loan is backed by a government agency such as the Department of Housing and Urban Development (HUD) or the Department of Veterans Affairs (VA). In that case the government agency would be responsible for selling the property.
More about HUD foreclosures and VA foreclosures

 
Before you Buy
You'll need to make sure you're armed with the foreclosure data you'll need to find and buy foreclosed homes. You can start by having us search our free foreclosure listings database, which includes pre-foreclosure and auction properties across the country and a nationwide bank foreclosures list.
 
Timeline for Typical Foreclosure in Typical RE Environment:
1) 30 Days Late
2) 60 Days Late Notice - Lien
3) 90 Days Late Notice - Notice of Default
4) 110-115 Days - Notice of Sale, Trustees Sale
5) Not Sold- Banked Owned or REO Property