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Today, I thought I would write an article that would dispel any misunderstandings that you may have about San Diego foreclosures and REO's. There are some really great deals out there, and if you allow us to help, the process can be as smooth as buying any other type of property. One of the most important things that you should know about San Diego foreclosures and REO's is that there are several reasons why the previous owner may have defaulted and, that not all San Diego foreclosures and REO's are in need of major repair.

Foreclosure means the process of legal action being taken by a lien holder. They repossess property held by a borrower who is in default.

This is normally instituted by lending institutions such as banks or mortgage companies. The word distressed is used to describe the lender when a borrower fails to meet a legal obligation. They are distressed because their business is loaning money not accumulating property.

The word default is used when repayment terms are not fulfilled by a borrower. When that happens the property stops earning interest and is considered a nonperforming asset. It gets worse for the lender as the property not only stops earning money but starts costing money with expenses such as legal costs.

Recent reports have stated that foreclosures increased 30% from 2006-2007. A homeowner can be affected by any number of situations.

Nine Reasons for Foreclosure:

1. Job transfer or relocation
2. Separation or divorce
3. Loss of job
4. Bankruptcy
5. Retirement
6. Illness or disability
7. Family member deceased
8. Investor tired of investing
9. Property tax problems

Advantages of Investing in Foreclosures:

Being able to purchase property at wholesale prices.

During the redemption period great buys are possible as many investors don't know that these rights can be purchased.

Minimize risk by using a Subject-To Agreement to control property. This is handled by having the homeowner quitclaim the deed to an investor. The investor then makes up missing payments and keeps them current. All this without the liability of owning the property.

Buy houses on the courthouse steps at good prices without much competition.

Often you will be the only bidder or bidding against the mortgage holder who really wants you to outbid them.

Disadvantages of Investing In Foreclosures:

Financial discussions with homeowners who are already over stressed.

Homeowners are under a tremendous amount of pressure. Along with that there might be many people contacting them about various ideas for the property.

Purchase made at auction may have late liens attached.

This is a very real possibility. Check for new liens the day of the auction.

Most properties will be in poor financial condition.

If a homeowner can not make up to date payments they probably also won't fix the leaky roof or the plumbing problems. The longer the situation drags on the more potential for the condition of the property going down hill.

As has been stated in prior articles employ professionals to guide you along the way to riches.

You will sleep better!

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