"I want to buy a foreclosure property." This is a statement that is made daily by people contacting real estate brokers. An offshoot is, "How can I buy a property in foreclosure?"

The real answer to this question or statement involves a discussion of the technical aspect of foreclosure, however most people are really saying, "I want to buy a property below market," and they believe that the word "foreclosure" is magic. Sometimes it is and sometimes it is a synonym for the word DYNAMITE.

If you work closely with a good broker, they can find you a below market property which can fall into many categories. This can be a divorce situation with a need for a quick sale, a business failure with need for a quick sale, a probate sale, or in fact a property in foreclosure. Why limit yourself to just foreclosure if my assumption is correct and you were just looking for a below market property?

Let’s take a moment and look at the actual foreclosure process. This process consists of two steps that last approximately four months. During that four month period that property is sometimes listed with a broker and, in my experience, is usually not listed low enough for the "quick sale" that is really needed. After a three month "default period," the property is advertised for "Trustee’s Sale," which culminates in a public auction. That auction is all cash, as is, with few if any warranties. Though there are people who make a very good living in attending these daily sales, this is NOT for the uninitiated.

There actually is a foreclosure area that is "somewhat" user friendly. FHA (Federal Housing Authority) disposes of their properties by auction. These properties are also sold as is, but the buyer only puts up a deposit and completes the sale through a normal escrow. Many people buy these properties, fix them up and immediately resell them.

Saturday morning television usually offers a "get rich quick" series of courses, often involving foreclosure properties. In earlier years, it was common to see the seller of these courses pictured in a Rolls Royce in front of a palatial mansion. In some cases the Rolls Royce was borrowed, the mansion belonged to a friend and many of the testimonials were shams.

My favorite expression in this area is "the grass is always greener on the other side of the fence--until you pay for the fertilizer."

If you haven’t figured it out yet, nothing is easy in this world, including real estate riches. What is wonderful about the society we live in is that you can accomplish virtually anything if you have clear goals and work hard at it. If you are really motivated to own real estate, either under market or with no money down or with bad credit or whatever, a good real estate broker can help you realize your dreams. This is not a marketing pitch for your local real estate broker, it is just an article trying to help you focus on what a customer really wants and means when they walk into an office and say, "I want to buy a foreclosure."

In the paragraph above I have mentioned buyers with no money down, buyers with bad credit and buyers who desire to buy real estate "under market." These three categories make up a fairly decent size percentage of the real estate buying public. The real estate courses you see being offered hit on many of these areas. There really is no magic. You just have to be somewhat flexible in your desires. It’s a cinch to buy a property with no credit. It’s a cinch to buy a property with no money down. It’s a cinch to buy a property under market. Having said this, don’t believe for a moment that you can buy the exact house you want below market with no money down and poor credit. It is just a question of flexibility, which goes back to another one of my favorite expressions, i.e. "everything is relative." If you want to buy a property with no money down you will probably pay a little higher than normal. If you want to buy a property with bad credit you will probably be faced with a higher interest rate. If you want to buy a property under market, you may be faced with tough terms, i.e. all cash, close in ten days. A good real estate broker can guide you in any one of these pursuits.

Perhaps in a future article we can spend a little more time on the actual foreclosure process, which can be quite fascinating.

Peter Rosenthal
VIP Trust Deed Company