| Foreclosure investors often make the decision to do | | | | the process and knows what he is buying. |
| their own bidding at foreclosure sale auctions.The | | | | At the auction, the foreclosure investor has the |
| general misunderstanding about the nature of | | | | opportunity of purchasing a controlling interest in a |
| foreclosure sale auctions is that the foreclosure | | | | property without having to deal directly with the |
| investor actually bids on the property when in fact | | | | distressed homeowners who understandably are |
| what he bids on is the mortgage itself. The mortgage | | | | often in an unpleasant emotional state at this time. |
| is also called a liens. What this means is that even | | | | It is important that the investor does as much research |
| though an investor wins the bid on a mortgage at a | | | | on a property as possible because buying at an |
| foreclosure sale auction, he may never really acquire | | | | auction presents the investor with a number of other |
| the property. | | | | challenges. |
| Many parts of the USA give the homeowners their | | | | * The investor must be aware that depending on the |
| last chance to save their home. It is called a | | | | number of real investors at the auction he may face |
| redemption period and can last anything up to a year. If | | | | some stiff competition. The investor should therefore |
| they can raise the money to cover what is owing, they | | | | set a maximum price he can afford to pay for the lien |
| get the property back and the highest bidder is no | | | | and still make a 20% profit . The investor must then be |
| more. | | | | disciplined enough to stick to it. It is all too easy to get |
| What are the different types of mortgages or liens | | | | caught up in the frenzy and excitement of an auction. |
| that the foreclosure investor should be aware of? | | | | * The investor may not have the opportunity to |
| * The Senior lien is the first mortgage. This is the loan | | | | thoroughly inspect the property and therefore should |
| that the homeowners signed for to purchase the | | | | be prepared for properties that are sold as is in less |
| property. Owning the first mortgage or senior liens will | | | | than peak condition requiring some maintenance or |
| give the foreclosure investor the best chance of | | | | costly repairs. |
| eventually acquiring the property. | | | | * If the investor plans to bid at an auction it would be |
| * The junior lien is usually a second mortgage or a | | | | wise to take a cashiers check as a cash payment is |
| home equity loan. It is any other loan the homeowners | | | | usually required at the time of purchase. |
| had approved using the property as collateral. There | | | | * When purchasing a mortgage in a state where there |
| can a number of junior liens and they take low priority | | | | exists a mandatory redemption period, The investor |
| on the totem pole and are often erased from the | | | | should be aware of the financial consequences of |
| books during the foreclosure process. | | | | waiting out this period before seeing a profit. |
| * A tax lien is a claim against the property for unpaid | | | | * The opening bid at an auction is normally the |
| state property taxes. The state property taxes has | | | | minimum bid calculated to cover the money owed on |
| priority over everything else. A tax lien remains in place | | | | the property plus attorneys fees and whatever else. If |
| after foreclosure. If the tax lien is for unpaid state | | | | no one offers a high enough bid, the bank takes |
| property taxes,the buyer is liable for this lien. If the lien | | | | possession of the deed and transfers the property to |
| is for income taxes, then that is another kettle of fish | | | | it Real Estate Owned (REO) department and |
| and the foreclosing attorney needs to deal with this. | | | | prepares the property for sale. |
| Novice foreclosure investors should probably consider | | | | There are risks an investor must take bidding at |
| attending half a dozen foreclosure sale auctions | | | | auctions. Only by being thoroughly prepared going into |
| before actually bidding at one. The investor then not | | | | an auction can an investor confidently purchase the |
| only learns the process but also is able to identify the | | | | deeds to properties that are almost certain to make a |
| competition. It is wise for the investor hold off bidding | | | | profit. |
| at foreclosure sale auctions until he fully understands | | | | |