A foreclosure is a legal proceeding in which a bank or
lender repossesses a parcel of real estate due to the owner's failure to comply
with an agreement between the lender and borrower, called a mortgage or deed of
trust. Lenders usually consider a mortgage to be in default when payments
have not been made for several months. Now despite being a dreaded
word in the real estate world, a foreclosure can actually be extremely
beneficial for investors. Now that you have an idea of what a foreclosure
actually is, lets me explain the different types: the pre-foreclosure,
foreclosure auction, and REO or real estate owned foreclosure.

A pre-foreclosure is the period between the mortgage lender's notice to the
borrower of their default on the mortgage payments and the auction sale event
that finalizes the transfer of title to the property to the lender. This
period of time allows the current homeowner in default to sell his/her home and
use the net sale proceeds to satisfy the mortgage debt even though these
proceeds could be less than the amount owed. Although the homeowner will
probably end up losing money on this type of sale, it is a much better
alternative than having the property go into foreclosure. Now the great
thing about buying a house during the pre-foreclosure process is that
it allows you to simply take over the existing financing. You don't need to
have perfect credit or qualify for a loan, unlike most of the other
opportunities in the industry that often preclude most people from getting
involved in real estate investing.

If the homeowner is unable to sell the property it will go into the next
stage known as the foreclosure auction. This is when the bank/lender
pays any other outstanding debts such as property taxes or amounts owed to the
IRS in order to sell the house with a clear title. Buying property from
a foreclosure auction is an experience unlike any other in purchasing real
estate. When a property goes to auction, the competition can sometimes be
intimidating. In addition, you have to be ready to make a substantial payment
immediately, and therefore have to have your short-term financing squared away.
Don't let this discourage you however, because purchasing real estate this way
can ultimately be very lucrative.

The third and final type of foreclosure is the real estate owned (REO)
foreclosure. An REO is different from a foreclosure property in the sense
that the bank has already tried to sell the property at a foreclosure
auction and has not been successful in getting bids. As a result, the
bank has become the owner of the property because the property did not
fetch a high enough price at the foreclosure auction. As expected, the bank
is not too interested in keeping the REO for much longer, so this becomes
the perfect opportunity to invest in real estate and potentially get an amazing
deal.

There are many websites out there that specialize in
providing information on these types of foreclosures. One such website
that really caught our eye was Government
Auctions.org. We were blown away by just how many listings they within
their online
foreclosure database (over 100,000+!) The great thing about the
site is that you can browse properties from all 50 states and narrow
your search by zip code radius and county. If you think that's cool, they
even have Canadian and U.S. territory foreclosure listings as well! For
the most comprehensive foreclosure website on the net GovernmentAuctions.org
is definitely a site worth checking out.

More info on your stop foreclosure information search:

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