When people think about real estate foreclosure investing, they most often think about the foreclosure auctions. They imagine a group of investors bidding on properties in a meat market-like atmosphere. In actuality, there are several places in the foreclosure process that investors can home in on for property leads, and a couple of them don’t involve the auction block atmosphere.



The first stage of foreclosure investing involves pre-foreclosures. When a property owner falls behind in their payments, a notice of default is issued. This notice is filed (in most cases) at the county courthouse, where it becomes a public record, and that means anyone can access this information.

Once the notice is filed, the property owner has a specified time frame known as the "redemption period," in which he must cure the debt or else the property becomes foreclosed on and goes to auction. In general, pre-foreclosures involve dealing with the homeowner face-to-face, which means a lot of time is spent going back and forth. One thing most amateur investors find when dealing with property owners in pre-foreclosure is that a lot of them are in denial and despite the arising foreclosure problem, they refuse to cooperate! For that reason, pre-foreclosures can be extremely time consuming.

Auctions are the second stage of the foreclosure process. At these auctions, investors will either have to be physically present at the county courthouse steps or hire someone to be their representative (power of attorney) to bid on these foreclosed homes. Again, time and money are issues here because financial resources can get eaten up rather quickly with all the traveling or hiring of representatives.

What’s more is that once you become the winning bidder for an auction, you’ll typically have 24 to 48 hours to overnight or wire funds to the attorney. That’s not a lot of time to put a deal and funding together, and sometimes doing this can be difficult. Oftentimes you have to do this without ever having seen the inside of the house since the former owners are probably still living there.

These are both good options, but I specialize in REO foreclosures, which is the third stage of the foreclosure process. With REO properties, I don’t have to travel all over the country to close killer deals. In fact, I can pretty much do most of my research online and with a solid power team; a smooth process to profit can be created!

REO foreclosures are properties that were not sold at auction. When no one bids on a property, it goes back to the bank and is then seen as a liability by the bank because it's not making them any money. These homes can most easily be found on the MLS (multiple listing service) of the area you’re investing in. This makes the investing process much easier because all I deal with is a Realtor® who submits the offers and helps with the negotiation process until a deal is solidified.

With all that being said, you’ll still need to do your due diligence on each property and form a solid power team who will help you with your investing.