Buying Foreclosure PropertiesStep 1. Pre-Notice of Default
During this step, its very difficult to purchase a home at this stage because an owner usually feels something will come along to save the property. Unless the property owner contacts you, you have no way of knowing that the property is in the pre-notice of default stage.
Step 2. Pre-Foreclosure
At this point, the Notice of Default is now public and all the foreclosure sharks go in for the kill to try to get the property at a discounted price below the fair market value.
Step 3. Foreclosure Auction Sale
This stage is where most foreclosed homes are purchased. However, you should at least check out the property before bidding on them at the auction. I have had a friend who bought a property from an auction only to learn that it was the second mortgage that was foreclosed and ended up owning a huge unpaid first mortgage.
Step 4. REO / Real Estate Owned Properties
At this step, lenders usually help get a broker to sell the properties. The property is no longer a bargain, especially with the hot real estate during the past few years.