Pearls of Knowledge

“Foreclosures on a steady rise”

“3.1 percent Americans label themselves as real estate investors”

“Investors earning attractive profits by investing in foreclosures”

“Foreclosed properties available at great bargains”

At one time or another I am positive  you  would  also have come across these headlines. Lots  of success stories are being told about investors making money in Texas real estate investing.Does that include foreclosures?

More about Foreclosures

The foreclosure process begins when the homeowner fails to pay his mortgage payments or fulfill his tax obligations. Non-payment could be due to various reasons like divorce, unemployment, failing business and more.

The bank issues a NOD (Notice of Default) to the owner, on his non-payment of dues for three consecutive months. The owner is left with a choice to clear his dues or evict the property. Sometimes, home owners sell their property to avoid the social stigma of the foreclosure process. This is better known as selling the property pre-foreclosure. For investors, this is a good time to buy as the owner is in an uncomfortable position  financially and needs to sell quickly. You can often get a great bargain.

Once the property is foreclosed, it is sold at the courthouse steps through an auction. Usually, the minimum bid is equivalent to the loan amount due on the property. If there are no takers at the minimum bid, then the property is repossessed by the lender.

Lenders are often banks, who are in the business of money and cannot take out time to sell these properties to recover the dues. Mostly, they sell these properties through expert real estate agents, better known as Real Estate Wholesalers.