If you would like to buy foreclosure properties you must be aware of local foreclosure laws. These laws have a significant impact on the foreclosure process in any given area.

Foreclosures may be vacant for a substantial time period before they can be sold as the legal process runs its course. Until a legal decision has been rendered, the property may not be sold. Investors eager to buy foreclosure properties actively seek properties in hopes of obtaining a bargain, particularly at an auction.

But if an investor would like to buy foreclosure properties, he or she must understand that the foreclosure process is different depending on the legal requirements in each state. Accordingly, there is variation in the length of time it takes to complete the foreclosure process as well as variations in the value of the property.

But while foreclosure properties are responsive to local area house prices, they do
not capture all of the area wide appreciation. In addition, when local area house prices are
dropping, the discount tends to increase. Borrowers who are identified at application as higher risks also tend to own homes that sell at an even higher discount than typical foreclosed property. These issues can enable investors to buy foreclosure properties at substantial discounts.

State level foreclosure laws can also have impacts on the appreciation of foreclosed
property. For instance, if a loan is foreclosed in a state that allows the borrower the right
to redeem the property after paying the foreclosure expenses for up to a year after the
foreclosure date the discount increases. But the impact of foreclosure laws is different
for each type of law. For instance, if a state requires that the foreclosure proceed through
the judicial system the discount also increases, but the discount is smaller in states that
allow the lender to recoup any losses from other assets beyond just housing. State foreclosure laws have a significant impact on how and when investors can buy foreclosure properties.

There are of course many factors that impact the value of foreclosed property. The
simple fact that the borrower has defaulted indicates that an educated investor can buy foreclosure properties at a substantial discount relative to similar properties. This discount is mitigated somewhat if the state allows deficiency judgments by lenders against borrowers. In contrast, the discount tends to increase if the property is being sold in a state that allows statuary right of redemption. The result is that foreclosed properties tend to follow the movement of house prices in the area but in a muted fashion.

There is no doubt that investors who buy foreclosure properties need to be educated on the market and do their due diligence. They must learn to navigate the foreclosure process in their respective state and stay on top of the market.

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