How to buy foreclosure?

[Lorena Ramirez]

Hello I live in Illinois and I would like to know how to find properties that are in foreclosure?

[James Ihssen]

@Lorena Ramirez

Foreclosure properties can be purchased at many stages of the foreclosure. By the time the foreclosure process has more or less been completed for a particular property, it is then REO or bank owned. Those will usually hit the mls and there is a specific 'flag' that all mls listed foreclosures are tagged with in order for easy searching for agents.

Find a good realtor in your market and they can set you up with an automated search that runs at any interval you specify (daily, weekly, even 3x a day, etc.) to pull foreclosures for you. 

If you are looking for foreclosure properties at an earlier stage in the process you have a few options.  One is at the 'courthouse steps', which is basically right before the bank takes it back.  There are many good deals to be had at these auctions (especially in certain counties, Cook is super competitive) but you need cash, and a lot of confidence as you never get inside the property in advance.  Cash is due in full within 24 hours of purchase typically and you have to be VERY CAREFUL regarding liens and other items recorded against the property.  With Confidence and LOTS OF DILIGENCE, great deals can be had here, I have had great success at these types of auctions.  BE VERY CAREFUL though without going into a lot of detail I have seen people bid on liens that were not first position liens which means that they were in a secondary lien position and could/will still be most likely completely wiped out if/when the first lien holder eventually forecloses.  This strategy is not for the beginner. 

Another option is to reach out as soon as the lis pendens is filed at the courthouse.  This is the very beginning of the foreclosure process, often called preforeclosure.  Basically, you can search lis pendens filings at your local jurisdiction and then send a letter and/or call the homeowner and try to negotiate a deal with them directly.  This is a safer bet as you will get to view the property and negotiate (if there is equity).  Even if there is no equity, you can approach the homeowner and walk them through the Short Sale Process with you in place as the buyer.  Keep in mind there is competition to this approach, as the homeowner who has a recently filed foreclosure will receive many mailings from people attempting to do the same thing.  The key here is 'touches' meaning you want to 'touch' the homeowner 6 or 7 times.  You cannot just send out one piece of mail and forget about it.  You have to be confident and also empathic regarding their situation though, as many times they are angry or possibly embarrassed about the situation.  

These are the main strategies to acquiring foreclosure properties.  Hope this helps!

James Ihssen