Land in foreclosure is a way for smart investors to buy a piece of land to build their own home, commercial property, or other buildings for diverse purposes. If you have funds available, with land foreclosures you can get prime property at a discounted price.
Land in foreclosure is the result of properties that were purchased with a mortgage and the owners failed to make the due payments. Therefore, the lenders repossessed them, but this does not mean that they want to keep those foreclosed properties.
What lenders want is to sell them as soon as possible and thus in many instances they offer them for a bargain price. As long as they own them, they must continue paying taxes on a property that is not producing any profit, which means a net loss.
The best time to buy a land foreclosure
There are three stages where you can purchase land in foreclosure.
1. The first is during the pre foreclosure stage. At this stage, the original owner still owns the land, but has defaulted on payments on the mortgage. They are often very interested in finding an investor willing to purchase their property in order not to damage their credit any further.
In addition, lenders are generally interested in listening to investors who want to buy a pre foreclosure property, because even if they repossess the land in pre foreclosure, they almost always lose a lot of money with a full foreclosure process.
As long as you approach the deal ethically, you will even do them a favor when you buy a piece of pre foreclosure land. At least, the owner will not have to carry the burden of a mountain of debt, and the lender will not have to take responsibility for the repossessed land. And you get a bargain.
2. The second is during the foreclosure process. When the land in foreclosure is not sold at the pre foreclosure stage, the lending organization will then take the foreclosure process to the end. Finally, they will put it up for sale at a foreclosed property auction, where you can often buy such properties for very low
3. The third is at the foreclosure listing stage. When nobody buys the piece of property at the auction, the bank keeps it. Next, they publish a listing of land in foreclosure for sale at a discount. Usually, you can purchase land foreclosure properties from such listings for about 20%, 30% or more off the appraised value.
Closing the land in foreclosure deal
If you want to buy pieces of land in foreclosure as an investment, it is essential that you familiarize yourself with the buying process or you will not be able to complete it. As an example, most short sales are never closed; about 85% of them never go through. Mostly, the reasons are lack of financing, or the buyer itself does not understand the purchasing process well enough.
Bottom line of land foreclosures
Acquiring land foreclosures ethically is a good and legitimate way to increase your wealth. However, while there are many bargains, the foreclosure buying process is not as simple as some would like you to believe. Surround yourself with specialized professionals, learn to negotiate deals and you will on your way to become an expert in investing in land in foreclosure properties.