Georgia Real Estate Investors
The 4 Phases of Foreclosure in Geogia
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Foreclosure purchases can be very lucrative but only if you understand the phases. There are 4 distinct phases that you need to understand.
1)Pre–foreclosure begins when the homeowner gets in trouble and can’t or won’t make their house payment. Many of these homeowners will be in denial that they are in trouble and may not seek help unless they are spurred by an ad or something of that nature to act. This goes on until the second stage of foreclosure happens. If the homeowner will act now he may be able to sell his or her home and retain the equity they have in the home. Unfortunately most will not act quickly enough in this stage.
2)The second stage is still pre-foreclosure but the danger is real at this time. Remember in Georgia the home can be sold without going thru the court system. The homeowner has gotten notice that his home will be sold the first Tuesday of the following month. At this time their home will be advertised in the local newspaper and you can use these or some of the online publications that compile impending foreclosures to search out these sales. During this stage the homeowner feels more urgency to sell and is usually more willing to take some cash and allow you to purchase or take over the home subject-to. Be aware that many of these homeowners will still be in denial. Many times the homeowner will allow you to negotiate directly with the lender. It is in the lenders best interest not to let the home go thru the foreclosure process - if possible - and they may be willing to take a short sale if there is not enough equity in the home.
An investor with cash or a way out for the homeowner is in the cat birds' seat during this final stage of pre-foreclosure. This is going to be an emotional stage for the homeowner and the investor should be aware that it may be a tough rollercoaster ride but if you can work this out you save the homeowner from a devastating foreclosure that will destroy his or her credit for a long time to come. If they sell – then they only have a few late payments on their credit and 6 months of good bill paying will put that chapter of life behind them and leave them with a good opportunity to be homeowners again sometime in the future.
3)The third phase of foreclosure happens in Georgia on the courthouse steps the first Tuesday of the month when the homeowner has not brought their loan current or sold the distressed home. This stage can also be very lucrative for the investor but you should be aware that it is filled with potholes. First you need access to the property to analyze the repairs needed. Second, you need to do a good job of searching liens and other encumbrances that may affect the quality of your purchase. It is easy to make mistakes because you have to act quickly.
4)The forth stage of foreclosure happens when the property does not sell on the courthouse steps and it reverts back to the bank or lien holder. Homes are financed at such a high percentage now that many times the home goes back to the bank because investors are not willing to pay off these mortgages. Whole departments called REO property managers are devoted to this side of the business. Finding and approaching these asset managers can be challenging. There are books and seminars devoted to this stage of the game. Some of these asset managers will be willing to work directly with investors but others will only sell by listing the properties with Realtors.
Banks do not want to own real estate so these can usually be bought at a discount. How much discount depends on how much inventory the financial institution has on the books. Like everyone else if the inventory is high they will want to move these properties quickly and will offer deep discounts.
Foreclosure investment can be very lucrative and many times offer an alternative to distressed homeowners that is a relief. All the 4 phases offer opportunity for you the investor.
About the Author
This article was written by Wayne Long. He and his wife Donna are Realtors in the Columbus Ga Real Estate Market. You can view propeties in his area using the most advanced search and mapping system in the area serving the Columbus Ga MLS.
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