Now that you decided you want to invest in real estate you should decide on a niche. Foreclosures is a popular category of buying distressed properties. There are 3 phases of Foreclosures. Preforeclosures, Foreclosures-Auction at the courthouse steps, and Post Foreclosures-Bank REO’s.


Preforeclosures is one of the most lucrative areas for you to focus on.  This phase of the foreclosure process allows you to deal directly with the homeowner. Every state has their own set of foreclosure laws on how a lender may foreclose on borrowers who are in default. Once you understand the process in your state, you will know what your timeline is and how much time you have to be able to buy that house before the foreclosure takes place and the homeowner loses their house. That is one of the most important aspects of being successful in working with Preforeclosures—knowing the timeline and laws in your state. If you want to capitalize on working with Preforeclosures, you have to have a sincere interest in helping families in need. You are not only buying real estate, you may have to help a family get through one of the most financially stressful times in their life. Zig Ziglar, a world-renowned speaker and motivational leader said, “You can have anything in life that you want, if you will just help enough other people get what they want.” Nothing could be truer in dealing with Preforeclosures. In order to be successful working with Preforeclosures, you have to be willing to help others.

Finding homeowners who are facing foreclosure is an easy process because the law requires that the lender advertise publicly prior to the auction. Do an internet search in your state to find out where foreclosures are advertised in your state. In my state, Georgia, each county has one newspaper that is referred to as the legal organ and that is where foreclosures are publicly advertised in every county in the state of Georgia. In the county’s legal section, you can find the property address, the amount of the mortgage that is being foreclosed and the name(s) of the defaulting borrowers. Once you’ve identified the property and homeowner you want to target for purchase, you can send a marketing letter in the mail to let them know you are interested in buying their house. Another common method is to knock on the door &/or leave a flyer to let them know you are an investor interested in buying their house.


Now you’ve made contact with the homeowner and asked them the million dollar question: “Are you willing to walk away from your home for what you owe on it?“ When the homeowner answers yes to that million-dollar question: Simply tell the homeowner that you are going to do some research on your computer, run some numbers to see if the numbers work. Also, tell them that you’re going to talk to your partner then call him/her back. Either way, if the numbers work or not, say that you’ll call them back and let them know if the deal works. Then say, Is that fair enough? OR, go to my website at and click on FREE CONSULTATION and book an appointment on my calendar within the next 18 hours and we will review your deal together then get on the phone with the homeowner and make that deal happen.


The second phase of the foreclosure process can be referred to as legal closure giving the lender ownership of the asset. During the preforeclosure stage, if the defaulted borrower is unable to bring their loan current, then the process escalates to the second phase. In the second phase of the foreclosure process, depending on whether you are in a judicial or a non-judicial state, the property will be auctioned off. In some cases, the auction is set for a specific day of the month and the property will be sold to the highest bidder on the courthouse steps. In some states, full payment is required on the day of the foreclosure. In other states, you can win the bid and only give a small deposit with the remainder of the balance due anywhere from the close of business on the day of foreclosure to as long as 30 days.


This phase of the foreclosure process deals with properties that go through foreclosure and don’t sell to a 3rd party buyer. In this case, the property goes back to the bank and becomes what is called an REO. REO means Real Estate Owned and specifically refers to bank owned properties. Once a property becomes an REO, it will eventually get assigned to a real estate agent to “List” the property. The bank is obligated to list the property in an attempt to get the highest and best price that the market will allow. Because of this requirement for the bank, it becomes difficult to contact the bank directly to try to buy the property directly from them. However, there are small and medium size banks that may allow you to buy directly from them. These are what I would consider part of a hidden market and can give you an upper hand in learning about possible deals before they hit the marketplace.

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