What are the different stages of foreclosures and how to find foreclosures for sale at each stage?

Basically, a foreclosure is a situation where a homeowner defaults on the mortgage payments on their home. These properties that are foreclosed for sale are called distressed because, typically, the homeowner is in financial difficulty and has defaulted on their payments. The owner may be in financial difficulty due to the following reasons:

o Fired/fired or quit job

o Unable to continue work due to medical conditions

o Mounting debt and excessive bills

o Tiff with co-owner or divorce

o Relocation to another state due to job transfer

Getting foreclosures for sale doesn’t happen in a day. A typical foreclosure process can take a few months. Each stage of foreclosure offers different types of opportunities for the potential buyer.

There are three stages of foreclosure namely
1) Before foreclosure
2) Foreclosure Auction
3) REO Stage or Real Estate Owned by Banks

1. Pre-foreclosure is the first stage of the foreclosure for sale process. At this stage, the homeowner has not paid the mortgage on the loan for the first time and is considered delinquent. A pre-foreclosure is also called a NOD (Notice of Default) or Lis Pendens, as a formal warning is sent to the homeowner of the default. Investors can find properties at the lowest price at this stage. Further damage to the homeowner’s credit rating can be avoided and the property can be transferred to the buyer at a mutually agreed upon rate. The best contacts for properties at this stage are lawyers, friends and acquaintances, as well as real estate agents.

2. The foreclosure stage is the second step in foreclosures for sale. The auction is the next stage after the pre-foreclosure stage. You can attend an auction and bid on the property. The auction is usually held at the county clerk’s office.

During an auction, the lender does everything possible to get the best possible price for the foreclosed property. In an auction sale, buyers are required to buy for cash and without having the facility for prior inspection of the property in question. However, an auction sale allows for good deals up to 40 to 50 percent below market value.

The best way to identify foreclosures for sale at this stage is through the county clerk’s office. Learn about notices of default that have been filed to locate pending foreclosure sales.

The foreclosure process will vary from state to state depending on whether it is a title or lien state that determines a judicial or non-judicial form of foreclosure. Judicial foreclosures refer to mortgages and take a long time to finish. Nonjudicial foreclosures involve deeds of trust, where a third party, a trustee, manages the property after the default period.

3. The third stage is the Real Estate Owned (REO) stage, in which the property reverts to the bank. REO properties are also a good opportunity to buy foreclosures for sale as the bank is in a hurry to get rid of your “non-earning asset”. Therefore, at each stage of foreclosure, there are numerous opportunities to obtain foreclosures for sale. Banks can be contacted directly or online listings can be found through genuine foreclosure listings at this stage.