The technique to apply when buying a foreclosure property will vary depending on the stage in which the property is in at the time when you indicate your interest to purchase.  The first stage is the pre-foreclosure process after the Notice of Default has been issued and the lender is still preparing for the auction.  At this step in the foreclosure process, the homeowner may have already realized that he is bound to loss his home and that it would be best to look for a buyer.  However, it is important to be careful because of the strong emotions that the homeowner may be undergoing.  In this stage, you will need to search for loans that are in default, create a short list of potential targets, inspect the homes, contact the homeowner, estimate the various expenses and the potential profit, negotiate with lender and owner, make the needed repairs, and resell the property to get the profit.

The second stage in which you can buy a foreclosure property is the auction where you need to pay a small deposit and then pay the down payment after several days.  To show that you really intend to buy a particular property that you have won in the bidding, you will have to pay a small deposit on the spot.  You may then be required to pay the down payment within a matter of days.  Therefore, it is vital to have your deposit in hand and the source of your funds in readiness before you go to the auction.  Make sure that you have thoroughly examined the home before going to the auction and that you have already calculated the potential expenses required because the properties are being sold as is and without warranty.

The last stage at which you can purchase a foreclosed home is after the auction where it is listed as Real Estate Owned (REO).  Substantial discounts could be had when buying REO properties because the lender is in a hurry to convert the home into money that he can lend.  This provides you with several ways to negotiate for a lower price and easier terms.  Buying at this stage has the added benefit of being assured that you are getting a clear title because the lender would already have paid off any outstanding taxes, liens, or any other unpaid expenses.

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