There are a number of different ways in which foreclosed properties can be purchased, each with varying levels of risk and potential return. Before identifying opportunities, though, purchasers must first figure out the phase in the foreclosure process that is best suited for them. After that, they will need to determine an appropriate offering price, make an offer, and then bring the transaction to a successful close. See the following article from ForeclosureRadar to learn more.

Buying foreclosures
There are many ways to buy foreclosures: from the no cash, no credit methods taught on late night TV, to billion dollar bulk purchases. There are significant discounts available on foreclosures, but buying a foreclosure is not a get rich quick proposition. For those willing to work, and in some cases take some risk, foreclosures represent a unique opportunity for acquiring real estate at discount prices.

1. Choose a Stage of Foreclosure

The first step towards buying a foreclosure, is to determine which stage of foreclosure to focus on. Each of the 3 stages has it's own advantages and disadvantages, and each requires a slightly different approach. Here is a brief overview of each:

Preforeclosure

Prior to the completion of the foreclosure process and the owner losing the home, you can purchase the property from the owner. Today, many owners in foreclosure owe more on the property than it is now worth. In these cases, known as short sales, you will also need the approval of the bank. In some cases, preforeclosures will be listed with a Realtor® and be available for sale through the MLS. If the property is not listed, you can approach the owner directly, or preferably using a Realtor®. Preforeclosures are much like any purchase of real property and you typically have the opportunity to get inspections, title insurance, and financing prior to completing the purchase. It is also possible to purchase the property Subject To the existing loans; which is similar to assuming those loans, but does not necessarily require cash or good credit—this is the method often taught by late night promoters, and has risks that should be carefully considered.

Auction

If the owner is unable to sell the property, refinance, or otherwise resolve the problem, the property is taken to auction. These auctions are referred to as Trustee Sales, or Sheriff Sales, depending on the state. The process for the auction varies by state, but typically properties are sold as-is, where-is, subject to existing loan and liens, and require payment in full and in cash, at the time of sale. Properties are also typically sold while the owner or renter is still living there, which means there is no opportunity to inspect the property, and you may have to do an eviction after purchase. By far the riskiest method of purchasing foreclosures, buying at auction can also offer the deepest discounts due to these risks and the limited number of buyers willing to take them...

Click here to read the rest of this article from NuWire Investor