Investing in real estate that has been foreclosed on involves a certain amount of risk especially when you consider the current market conditions and trends. If the real estate market exhibits characteristics that favor the seller, then it is a sellers market, if the real state trends like increased inventory due to foreclosures it is a buyers market.

The laws of supply and demand collide with economic conditions like unemployment and inflation to create a reduction in sales, reduced real estate value and foreclosed real estate. When real estate inventory exceeds the demand from qualified or credit worthy buyers real estate values drop. When economic conditions produce unemployment and underemployment, the real estate foreclosure rate goes up.

Rapid escalations in mortgage interest rates can and will also contribute to the number of real estate foreclosures. As homeowners mortgage payments are increased due to an adjustable rate mortgage the foreclosure rate goes up, real estate property values go down. Homeowners find themselves in the unenviable position of owing more on real estate than it's current value.

When the real estate foreclosure rate goes up and the prices of the real estate goes down, real estate investors have an opportunity to buy low and wait to sell at a profit. Foreclosed real estate is properties that whose ownership has reverted back to the lender or mortgage holder due to failure to pay the mortgage payment.

Notice of default is the first step in the foreclosure process after the property owner has not paid two or more mortgage payments. The foreclosed real estate is then offered for sale at auction to the highest bidder. Not every property that falls into foreclosure is presented for public sale due to property owners having an opportunity to make up the back mortgage payments and regain ownership. The time in which a homeowner has to make up late payments is different in every state.

Investing in foreclosed real estate is especially appealing to investors because they can see a profit by purchasing the property for the amount owned on the property not what the property is worth. The homeowner equity is gratis or free.

Short Sales - Short sales happen when property owners are in foreclosure but before the real estate has gone to public auction. With a short sale the mortgage lender has to agree to receive less that the money owed on the real estate.

Dissimilar to foreclosures, real estate investors generally purchase the property for much less due to the buyer not having to pay off the existing mortgage or without making up any delinquent back payments. Real estate investors seeking to profit from foreclosures are closing deals with existing mortgage lenders to sell the real estate for less than the amount owed in order to avoid foreclosure procedures.

Mortgage lenders do not usually close real estate transactions with investors unless the property owner or seller has become delinquent in the mortgage payments. Investing and participating in a short sale before the property becomes available in a public sale saves the mortgage lender and the delinquent property owner from foreclosure procedures. The buyer or the real estate investor buy the property for much less in a short sale than they may in a public sale.

Real Estate Owned By The Lender (REO) - Real Estate Owned:

? Purchasing property that is REO is like purchasing real estate in a short sale but the real estate is already owned by the mortgage

lender

? Real estate that has been acquired by the mortgage lender through the foreclosure procedure.

? Mortgage lenders sometimes frequently sell real estate for less than is owed

? When a bank owns real estate the properties are called REO's which means that the real estate is owned by the mortgage lender

The banks or mortgage lenders often end up owning real estate when there are not enough bids at public auction to satisfy the amount owned against the real estate. REO real estate homes are frequently considered one of the most profitable ways to purchase distressed property because the seller is no longer in the picture. REO sales often involve just the real estate investor, the real estate investor's agent, the mortgage lender and their agent who close the transaction.

More info on your stop foreclosure information search:

Get Free Foreclosure Advice and Free Refinance Quotes
Get your free on-line foreclosure refinance quote and free advice from foreclosure mitigation specialist in minutes. Compare real offers from top national subprime and hard money lenders... more...

What You Can Do to Stop Foreclosure of Your Real Estate
You have received a notice of foreclosure on your real estate. It may seem hopeless, but the last thing you should do is give up. Many people encounter life-altering events that interfere with their ability to pay their debts. Usually the last payment to be late is the mortgage, but it happens. Too ... more...

California Law for Real Estate Investors - Including Forclosure Issues
Probate Issues One mistake that California real-estate investors make is signing a purchase contract too soon when a probate is required. Some real-estate investors try to buy properties when the deceased left real estate to family members or friends who cannot make the monthly loan payments. If ... more...

What to Examine Before Buying Real Estate Foreclosure Properties
Are you interested in buying real estate foreclosure properties with the hopes of turning them into investment properties and making money with them? If you are, you need to be familiar with real estate foreclosure properties. Not only do you need to know what they are, but you also need to know ... more...

Foreclosure Real Estate - Untapped Resources
With changes in the homeowners' financial situation like divorce, medical emergencies or losing a job, being able to pay their monthly mortgage payments have become difficult. If their financial situations do not change for the better, a foreclosure is usually imminent. When creditors such as banks ... more...