Foreclosure properties come up for sale when the property owner who has a taken a loan or mortgage on the property is unable to repay the loan and the lending company takes possession of the house and puts it up for sale. Foreclosures are usually distress sales made because of the inability of the owners to repay the mortgage taken by them.

It is essential for you to understand the process, and what steps you need to take at different times of the process to make a successful investment in a foreclosed property which usually sells up to 50 to 20 percent cheaper than its list price.

The foreclosure process may end up in any of the following 4 scenarios:

1.The borrower/owner pays off the default loan repayments to reinstate the loan during the grace period also known as pre-foreclosure.

2.The borrower/owner manages to sell the property to a third party during pre-foreclosure period, allowing the borrower/owner to pay off the loan and avoid having a foreclosure on his or her credit history.

3. A third party buys the property at a public auction at the end of the pre-foreclosure period.

4.The lender takes ownership of the property, usually with the intent to re-sell. The lender can take ownership through an agreement with the borrower/owner during pre-foreclosure or by buying back the property at the public auction.

Real estate foreclosure investors have the opportunity of buying the distressed property under the following 3 conditions

1. Buying during pre-foreclosure period
2. Buying at public auction
3. Buying bank-owned properties

According to expert investors in foreclosure properties the best foreclosure deals usually go to those who have friends in the foreclosure department of a local bank. When someone defaults on loan payments the real estate investors in foreclosures and researchers on the look-out for such information may get to know about it and start making preparations for researching and buying up the properties.

Banks, which are in the business of real estate view foreclosed properties as liabilities and are eager to sell them, sometimes, even at a discount. Those that are not snapped up from the bank directly are usually sold out with in days of being listed with real estate agents.

But even if foreclosed properties are being sold at bargain prices don’t forget to do the basic research that you would do before buying any property.

 - Check out if the prices being offered are in line with market prices.
 - What’s going prices for properties in the neighborhood?
 - And most important get the property inspected as many foreclosed properties are poorly maintained.

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