Buying Pre-foreclosure - The Smart Way To Buy Foreclosures

[Ken M.]

As I covered in  

How To Break In To The Foreclosure Space 

https://www.biggerpockets.com/forums/311/topics/1268537-how-... there are different kinds of foreclosures. The kind of foreclosures you want to chase will determine your strategy. I chose to chase Deed of Trust foreclosures.

Foreclosures are public notice. There are requirements to notify the borrower publically, in case the borrow has not received the notices.
There are lots of other reasons to post publically, as in alerting potential bidders and in trying to get the most people to bid to get the  highest price. Some people have the misconception that the bank/lender gets all f the money from the Auction. That is generally not true. The opening bid is usually the amount needed to satisfy the Deed of Trust and the attorney's auction fees. The excess, if any, is generally held for the borrower to claim.

So, in most states, when a property goes through the auction, the subordinate liens are wiped out. (22nd mortgages, HELOCS, HOA liens)

However, when no auction is held, (you buy the property before the auction occurs) the liens survive and are still owed. So, it's important to know the status of the Title, any debts and liens and what will survive an auction, before deciding to buy before the auction or at auction.

One thing to keep in mind is that many homes in foreclosure get postponed. There are reasons for that. One trick is to track properties that have been postponed, and when they come up for auction again, they fall into a different category which most investors aren't tracking. You have the upper hand.