Foreclosures

The practice of buying foreclosed properties and flipping them for profit has been widely lampooned as an easy way to get rich quick. Infomercials promote countless programs that promise to reveal the secrets of becoming successful in this area of real estate investment. While there is certainly potential for a high profit margin, it's important to carefully research all that is involved in foreclosure before getting started. There are several windows of opportunity for those interested in purchasing distressed property, including pre-foreclosure.

Dealing directly with a homeowner in default on a loan can make for a complicated and volatile situation. The process of foreclosure is not the most desirable outcome for current homeowners or their lenders. People now have many resources for avoiding foreclosure and salvaging as much of their investment as possible. All these variables can seriously affect how the house is sold and for how much.

For those unwilling to get involved in an unpredictable pre-foreclosure negotiation process, there are other options for buying distressed property. Certainly a foreclosure auction provides the possibility of buying a home at a discounted price, but it can be tricky. Buyers may be required to pay the entire cost of the home in cash the same day, and many times there will not even be time for an inspection of the property.

Buying Repossessed Properties

Potential buyers may also choose to secure the property post-foreclosure, once the bank or lending company has repossessed the home. In this type of procedure, the original lender may offer the home for sale for a lower down payment, or for a lower purchase price. These are generally the safest transactions because they involve no current residents in the home or other liens on the property.