Let’s go “Bargain Hunting” for foreclosure real estate, pre-foreclosed, auction, bank repossessions… these all sound irresistibly attractive and potentially profitable. Who wouldn’t want to make a quick profit of 20 to 50%? But whether a foreclosure real estate deal is going to be profitable or not depends on a list of factors.

Foreclosure is a legal procedure that the financial institution who made the loan to the property owner reclaims the property because of ongoing payment defaults. Legal action is started by the lender after 3 or more months of non payment. In the U.S. some states allow ’strict’ foreclosure so the borrower has a certain amount of time to catch up on his payments, after which if he fails to do so the title reverts back to the lender.

Also keep in mind that, in some foreclosure proceedings, borrowers have the right of redemption. This allows them a certain amount of time in which to “make good” on the loan’ and make back payments, shore up credit, etc and reclaim title of the property. This is not a good time to get involved in a foreclosure real estate proceeding.

But once the foreclosure process has completed, or at least become inevitable, and a Notice of Default has been issued you can start an action plan to acquire the property. Foreclosure auctions are the common place to bid on these properties and are sold ‘as is’. Unlike other property sales, no warranties are provided and no title insurance granted. You would have to have done the proper research on the property and know about all possible liens, mortgages etc.

If you hear about a ’short sale’ regarding a foreclosure real estate deal this means that the lender is willing to accept less money for a property than is outstanding on the loan. This is good

You can buy foreclosed properties at three different stages:
Before it goes to auction, at the auction, after the auction. The best option would be to buy direct from the owner before the auction but only if there is at least 20% equity after all debts and costs. This is because the owner’s debts become yours if you buy before the auction. The owners willingness to negotiate is not always there either.

If there’s not enough equity or the debt is just too large, or you can’t find or negotiate with the owner buy at the auction because some of the liens will be eliminated and once they are the remaining equity may be sufficient to turn this into a very profitable purchase.

Buy after the auction If the purchase price at the auction was greater than 80% of the quick resale value. (the bank would have been the high bidder at the auction). Banks will have private mortgage insurance that they can collect on to cash in on 20% in cash from the actual value of the property. So if the bank bought the property at the auction for $70,000 and it is actually worth 85,000 in the market, it can sell it to you for well under $60,000 without losing a dime.

Before you get to the auction stage you should at least have done a bit of investigative work on the property and have a professional inspection performed. The property doesn’t have to be free of every tiny defect, but you’ll want to know that the roof doesn’t need to be replaced, that the plumbing is sound, there are no serious foundation cracks, or potential for flooding, etc. Some of these can still be acceptable if you’re looking for a ‘fixer-upper’ and have the time and funds. Construct your offer accordingly.

Get free tips and information on foreclosure real estate and how to build your wealth the way most millionaires have through investment techniques such as flipping and foreclosures at http://www.Real-Estate-Wealth-Builder.info