What is a Foreclosure in the USA?
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A foreclosure is simply a property seized by the court.
Indeed, when the owner can no longer repay his debt and the "Short Sale" and "Pre Foreclosure" procedures have been unsuccessful, the property is directly bought by the bank which becomes the purchaser following the failure to respect the agreements previously signed with the owner to settle his loan within the deadlines.
In the case of a foreclosure, it is not the owner who puts the property up for sale, but the bank. This simplifies things considerably because there are only two parties involved instead of the three parties involved in short sales.
The major difference is that banks respond quickly to offers on their foreclosures. Banks are willing to sell off these properties because it costs them money to maintain them, especially since certain tax laws prohibit them from exceeding a certain limit of properties in their name. As a result, the best deals are often bank foreclosures with a relatively short buying cycle of 30 to 45 days.
What are the main steps in buying a foreclosure?
You must make a written offer, along with an initial payment into an escrow account, to demonstrate to the bank your motivation to purchase.
You will need to show proof that you have the necessary funds for this acquisition.
Within the framework of a financing has credit, you will have to make you "approved" by an organization lender, because you will not be able to profit from suspensive clause of credit.
It is important to know that if you have the opportunity to acquire a real estate bankruptcy called "foreclosure" at a price much lower than its intrinsic value, this one will be very little negotiable and you will often be led to make an offer at a price higher than the price asked by the bank because a system of natural biddings is set up between the various buyers.
It will be necessary to be very reactive to the numerous buyers who wish, like you, to take advantage of an exceptional business.
Although the U.S. economy is recovering, the volume of foreclosures remains high and investors can still find great deals.
We strongly advise you to contact a real estate professional in the area where you wish to invest.
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I hope this article has helped you understand what a foreclosure is and its acquisition process. You can also check out our video on the "Short Sale" for more information.
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Eric Amsallem, author
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