The term Foreclosure Investing Process can be a bit of a misnomer. Contrary to popular belief, there is no standard way to invest in foreclosures. As a matter of fact, there is no standard way that a foreclosure occurs. There are general processes that are typically followed, but the laws of each State and the policies of each bank can vary greatly, creating a different process for many foreclosure situations.

When pursuing a foreclosure, the first question to ask is why invest in foreclosures. There should only be two reasons. The first is that you want to find the best deal possible. The second is that you have found the home of your dreams, and it happens to be a foreclosure. In this article, we will address the first reason. Throughout the foreclosure investing process you will find homes that are in all stages of foreclosure. The stages of foreclosure include:

1. The borrower is late on payments but have not been served
   
2. The borrower is late on payments and has been served
   
3. The borrower has been served and an auction date is set
   
4. The property has an auction date that has passed and has failed to sell
   

These stages may vary slightly from State to State, but these are the general steps in the foreclosure investing process. When an opportunity has been located, it is imperative to determine where the borrower is in the process. If the foreclosure is in step 4, then borrower is no longer in the process at all. However, if the foreclosure is in steps 1-3 you will still need to be negotiating with the bank and the borrower(s) to get all parties to agree.

Generally speaking, the most opportunity to buy a property at a discount exists during step 1. At this point, the bank is alarmed about their loan going bad, but no additional expenses have been accrued due to lawyer fees and the foreclosure lawsuit process. As the process continues the bank begins to accrue extra fees that they want to "re-coup". In addition to lawyer fees, property maintenance, possible winterizing of the home (if it's been abandoned), etc...

To summarize, the foreclosure investing process can be a confusing maze. It is essential that you quickly determine where the borrower is in the process. If the borrower is early in the process, then you have more opportunity to work out an agreement with the borrower and the bank.

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