New Jersey Foreclosures For Sale

Posted in Foreclosures For Sale, October 30th, 2008 |

The process of mortgage foreclosures creates three different real estate investment opportunities. These consist of the three phases that take place prior to the property actually being purchase by the lender foreclosing on the mortgage. These phases are:

* Default or Pre-Foreclosure

* Auction or Sale

* REO or Real Estate owned

Each investment opportunity in these phases of New Jersey foreclosures for sale has both its risks and rewards.

Pre-foreclosure investment is thought to entail the most work, contain the most risks, but also reap the best rewards in terms of profit for the investor. The investor is required to work together with the home owner and sometimes even the lender. The investor has to research loans in default, narrow down his selections, try to inspect the property in question, determine market value, negotiate with the owner, close on the property, repair and re-sell it. This is quite a list of things to do for the investor, but if he knows what he is doing, it will reap the best rewards.

Buying on auction can also be a very rewarding way of investing in New Jersey foreclosures for sale. This is when the property is auctioned in public to the highest bidder. This is a very fast process and is also extremely competitive, bidding lenders against other investors. To take part in an auction properties have to be researched before the date of sale, realistic opportunities must be pursued, values and profits need to be calculated, a bid price should be determined and obviously participation in the auction on the date of sale needs to take place. Buying on auction provides the investor with the ideal opportunity to make good profits, and although it has its inherent risks, many investors buying at auction have hit pay dirt.

Buying real estate owned or REO New Jersey foreclosures for sale, is the easiest way to purchase this kind of property. The bank or lender has already purchased the property at auction, the mortgage is foreclosed and they are the new owner of the property. The lender does not really want to keep these properties as they need to turn them into money for the institution. The bank or lender is after all in the money lending business, not the real estate business. The generally want to cut their losses and resell the property fairly quickly.

The bank holds the senior lien over the property in terms of the default on the mortgage repayments. In this instance, when the lender purchases the property at auction, all other liens are wiped out. The lender will also pay back taxes and any other outstanding amounts owed by the property and the property is then good to go. The only real problem with investing in New Jersey foreclosures for sale in this method, is the profit margins. There is less risk, but there is also definitely less profit to be made.