Have you ever imagined owning a piece of land and building your dream house on it? Choosing where and how? Deciding if you want near neighbors or not? If so, investing in land foreclosure property may be the right choice for you.
Land foreclosure is property that was once financed, and due to default payment of the loan, repossessed by the lender. However, the lender does not want to sit on the property. The land foreclosure property will be marked below appraisal value in order to get the property sold quickly. The longer the lender has possession of the property the more money that will be lost. The lender will be responsible for any new taxes or old taxes on the property. Due to these facts the lender wants to get the land sold as quickly as possible. This is a great opportunity for new home buyers and investors.
There are three types of land foreclosure sales: pre foreclosure, foreclosure auction, and lender owned sale. But how do you know what are the differences between the three?
Pre foreclosure means that the process of the land foreclosure has begun but is not finalized. This gives the original owner a chance to redeem his or her name with the bank. He or she can do this by either paying the defaulted amount of the loan or selling the property to pay off the loan. It is during this time frame that investors and property buyers have the best opportunity to get a significant deal on the property. The owner is facing an ultimate crisis and is on the verge of losing the property, ruining his credit, and other financial burdens. For this reason he or she will be prepared to accept any help that is reasonable.
By purchasing the property during the pre foreclosure period, an investor can save up to thirty percent off the appraised value. Also, the investor gets the ability to inspect the land before making an offer, and this should not be overlooked. It is always in the investor’s best interest to have financing pre approved before discussing purchase with the property owner. The property owner may not want to discuss any offers if financing is not already pre approved.
A foreclosure auction is final process of land foreclosure, and the ownership of the land has reverted to the lending agency. You need to keep in mind that purchasing land from an auction requires an investor to be educated on the process, and can make the difference between making a profit and losing money. There are two major downsides to purchasing land at a foreclosure auction: one, the property now cannot be inspected, and two, payment for the land is expected at the time of auction.
A lender owned sale is different type of land foreclosure sale. The lender has ownership of the land and will sell the property in a more formal sale at a lower price in order to minimize their risk. However, an investor can expect to save at least twenty percent of appraised value on property.
Regardless which method the investor uses, investing in land that has been foreclosed on is a great way to save a lot of money. Keep in mind, anyone can invest in a land foreclosure sale, but a smart investor is an educated investor. Do the research and homework before investing and it can pay great dividends.