Buying Foreclosed Homes

Getting good at buying foreclosed homes is becoming more important every day. Just when it seemed that the housing crisis was easing up, things started to get worse. It would appear that this will continue for at least another twelve to eighteen months.

The reason behind this is very simple. The peak of the market was late 2005 and early 2006. Banks were issuing mortgages to anyone that could fog a mirror. Most of these subprime loans were 3 year adjustable rate mortgages. This means that these loans will be readjusting throughout 2008 and into 2009.

As these loans readjust, homeowners often realize that they can no longer afford to pay for the home and that the home is upside down and has not equity. It makes for an easy decision to choose foreclosure.

Depending on what part of the country you live it can take 12 months or longer for the bank to reclaim their property through foreclosure. This provides a long window of opportunity for buying foreclosed homes.

In addition, as the foreclosures are completed and the lenders take back the homes, the number of REO (bank owned) properties on the market will increase radically.

A good example of this was the announcement that foreclosures for June 2008 were up 55% over the same month in 2007. This means that more REO's will hit the market and prices for homes will remain depressed for the forceable future.

All of this is more or less a "Perfect Storm" for the investor that concentrates on buying foreclosed homes. You need to learn how to buy foreclosures and get good at this business model.

Finding a really good course on buying foreclosed homes will save you a lot of time and energy. It often pays not to reinvent the wheel and in my long and varied real estate investment career I have discovered that you always pay for your education, one way or the other.