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Well always do your homework first. Here is an excerpt from the Dec
2 shownotes from the clarkhoward
website.
Buying foreclosed property
Did you know that the rate of foreclosures is the highest it’s ever been
in the country? About one in every nine FHA borrowers are in trouble
paying off their loans. And, when people hear about these problems they
think there could be opportunity with foreclosures. Clark owns a few
foreclosures himself. But you’ve got to understand that there are
high-risk foreclosures and low-risk foreclosures. For inexperienced buyers,
some foreclosures come problems. People who go out and buy these
properties know about the pitfalls before they buy. Some even approach
homeowners and offer to buy the house before it goes into foreclosure.
This is called “pre-foreclosure.” Clark has only bought a foreclosed
home after the process was completed. At that point, you have the ability
to get what’s referred to as “clear and marketable title” or REO –
real estate owned. It’s not as profitable to do this way, but it’s
usually safer. When someone forecloses on a property and no one buys it on
the courthouse steps, the lender becomes the owner. Lenders and banks
don’t want to own these homes because every month it costs them money.
So, you get the home free and clear of charges and add-on fees and it’s
clean. In addition, the lender will often loan you the money to buy the
home. In an economy that is presenting tough times for some and good times
for others, there is always opportunity out there. Talk to your lender
about “REO” properties if you’re interested, and try to buy at
property at 70 percent of fair market value like Clark does.
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