IMO, now is a better time to buy foreclosures than there has been. I realize that you aren’t getting the appreciation that was happening a few years back, but that was a double edged sword. At that time, depending on your area, you could buy houses off the MLS and resell them a month later and make bank. Foreclosures were selling at or above market price, so deals there were far between. Now that people are scared of the market, competition has been halved and deals are easier to find.
Now, pre-foreclosures are where you can really bank. With a foreclosure auction, you are bidding against people that may or may not know what they are doing, and basically take a chance and buy it sight unseen. Talking to a homeowner before the house is auctioned, you get to negotiate price and see the house.
I’m not sure how familiar you are with the foreclosure process, but it goes something like this: Once a person fails to make a payment, a lender can begin the foreclosing process. I’ve seen lenders wait 6-12 months or more to begin proceedings, and I’ve seen some begin within 30 days. Most often it happens after someone gets about 90 days behind.
Once the lender decides to file foreclosure, they typically file a “lis pendens” which is basically a legal document stating intent to file foreclosure. Then they file a notice of sale, or notice of trustee’s sale, which are terms for a foreclosure. That is the official notice.
Depending on where you live, the homeowner has 90-120 days to do something about it. After that, the home is auctioned. The time between the filing of the NOS and the actual auction is pre-foreclosure, and the best time to contact the homeowner. That way, you can get in to the house, look around, get repair estimates, and really know what you are getting before you buy.
I actually use pre-foreclosures so that I have more money to feed Google. Haha. Real estate is easy, you can make all decisions based on numbers. There are few unknowns once you know what to look for. Home sales are on the rise, even though prices are not so much. Make sure you get a hell of a deal and buy way below market price so that you can fix it up nicer and sell it cheaper than the houses around it.
BTW – Robert Kiyosaki’s books are shitty. Rich Dad Poor Dad was a good read, and I really liked the book, but if you are looking for actionable material, his manuals are overpriced and they under deliver.
