How To Get Access To Foreclosures and REOs
One of the places you can find motivated sellers is during foreclosure.
Foreclosure
Foreclosures are usually initiated by the lender which is usually the bank.
What banks do is they initiate legal action against people that haven’t paid their mortgages because they are looking to recover their payments through something called foreclosure. Basically, that means they are going to come in and they are going to take the house from the owners.
There are different levels of foreclosure. I’m not that familiar with them but there is pre-foreclosure and there is foreclosure. If you can get in there at the right time, you might be able to get a good deal.
Pre-Foreclosure
Pre-Foreclosure is when the owners have been given notice and they have to make up payments prior to them going into foreclosure.
Pre-foreclosure is usually when owners get three months behind before the banks can foreclose on them.
And it’s not necessarily the bank that’s going to foreclose. It could be a second mortgage holder that’s going to try to foreclose. If there is a second mortgage on the property, maybe the lender in the second mortgage position is going to try to foreclose.
The other thing is if the bank is trying to foreclose, maybe the second mortgage holder will step in and actually make up the payments for the arrears that are due and then add it to the second mortgage. I’ve seen that happen a few times.
Those second mortgage lenders can be MICs or mortgage investment corporations where they hold the second mortgage. Also, mortgage brokers would probably have insight into foreclosure if owners have a second mortgage through a private lender.
Where can you get access to foreclosures?
Banks
Banks are a good place to get access to foreclosures. Usually, they will list these foreclosures. I think by law, they have to list foreclosures prior to selling them. What happens is after they go into foreclosure, the bank will try to sell them and they try to sell them on the open market, usually through a real estate agent.
After a property goes into foreclosure and after the bank takes possession, the property is now referred to as real estate owned (REO).
Realtors
There are realtors that actually specialize in foreclosures. There are Realtors that specialize in bank-owned real estate or real estate owned as it’s called. These realtors are a good place to get access to foreclosures.
You can actually go online and find specific realtors that specialize in foreclosures or you can just ask around and start talking to realtors even those that don’t specialize in bank-owned real estate. They probably come across foreclosures and real estate-owned properties once in a while.
Mortgage Brokers
The other place you can go to to get access to foreclosures is mortgage brokers.
A lot of times prior to going into foreclosure people are looking at refinancing and looking to see if mortgage brokers can help them.
Summary
So, to find foreclosures check with realtors, check online and check with your mortgage brokers.
Those are some ways to find motivated sellers that are in difficult situations that are going through pre-foreclosure prior to going into real foreclosure and prior to going into real estate owned properties.
