Buy carefully at a foreclosure sale

When a lender fails to work out a loan in default, the property ends up on the courthouse auction block. Typically, experienced foreclosure specialists who accurately calculate risks win at this game. Yet, it's true—you must start somewhere. If you get to know the condition and value of a property by talking with its owners in preforeclosure workout discussions that eventually failed to secure a deal, consider bidding at the public auction.

Bidders who thoroughly prepare can walk away with great bargains, but not great financing. Most foreclosure sales require cash. To buy, you'll need wealth, a ready line of credit, or a money partner. As it turns out, the foreclosing lender often wins the auction because no investor stepped forward with a bid high enough to pay off the lender's lien.

The property then ends up as an REO in the (unwanted) real estate owned portfolio of HUD, VA, Fannie Mae, Freddie Mac, or the lender itself. In these cases, the owners of the REOs face no choice. The properties have to get sold. This fact gives you another chance to negotiate a good deal on price, terms, or sometimes both.

Win The Foreclosure Battle

Win The Foreclosure Battle

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