Thinking Outside The Box

Banks have been doing the same thing for many, many years – they have a rigid formula that loans must fit into, and because of the diversity of their operations and the need to make fairly standard procedures and rules, they tend to view the unknown with caution. Trust deed investment companies, on the other hand, are much more open-minded.

One of the reasons that investors go to investment companies (sounds obvious, huh?), instead of banks, for their loans, is that they know banks try to force loans to fit inside a tight box. In other words, every loan must fit a predetermined structure. If the loan strays outside those borders, it’s rejected. Say there is an investor who has an elephant phobia, and wants to build his house with special elephant protective features. He knows the bank won’t necessarily approve extra amounts on the loans for such an unconventional expense - but on the other hand, that investment companies are creative, innovative, and flexible. They would be more likely to approve the loan.

That’s the same reason why many real estate developers turn to trust deed investment companies rather than to banks. Loan policies at banks are set in stone. Trust deed investment companies, however, take a different approach. Remember when your kids and/or your grandkids grabbed a piece of play-Doh? Did you tell them what sort of creation they could sculpt with that rubbery piece of dough? No, you let them use their imaginations, shape it any way they pleased. Trust deed investment company loans are just as flexible. As long as we are dealing with a reputable borrower, one who has a good track record and who fits other criteria, we shape the loan to ensure that we-and most importantly, that you, the investor-don’t lose out on a good deal yet remain well secured just because the loan doesn’t fit “inside the box” of the traditional financial institution. Trust deed investment companies cheer the entrepreneurial spirit of borrowers.

Traditionally, real estate developers have had a difficult time prying money loose from banks. Often, the developers are seeking money for construction-in other words, they’re borrowing against something invisible. The borrower has a vision, complete with architectural plans and renderings, but all the bank officers can see is dirt. “Where’s our collateral?” they wanted to know.

Trust deed investment companies, on the other hand, see more than dirt. They see the developer’s vision and they know the chances are good that the successful developer will repay them. If not, they have ways of recouping the investment. Remember, the trust deed investment company can see the vision of something great on that patch of dirt – they know the same avenues that the borrower would have taken to complete the work, and they are quite willing to use those also. The work is finished, the money is made (possibly more than before, given that the investment company now takes all the profits, rather than just their margin of them) … and you have a fatter wallet or a fatter bank account statement. Or a big pile of notes to put under your mattress or up your chimney!

Short Sales - Are They The Best Option

When a home owner finds themselves in a position of failing to meet mortgage payments, there is an option that does not include foreclosing on the home. A short sale is a home sale where the lender is willing to accept less than the amount owed on the home. While some lenders do not offer short sales for the loans they have secured, and other lenders may choose a foreclosure as being more financially beneficial for the loaning party, others will allow a homeowner to enter into a short sale if all paperwork is filed properly and on time.

The paperwork involved in setting a short sale in motion is the not so short part of the sale. For obtaining permission to begin the short sale process from a lender the homeowner will need the following documents.

· Letter of Authorization. The letter of authorization will need to include the property address, the loan reference number provided by the lender, the name of the home owner or the person holding the loan, the date of the request, and the agents name and address. The agent may be a real estate agent or a lawyer dealing with the financial matters in the case. The letter of authorization will give the lender permission to speak to any outside parties listed in regards to the homes loan and the home loan status.

· Preliminary net sheet. The preliminary net sheet is a financial document proving the amount of money you expect to receive from the sale of the home. The amount of the total sale, any fees, late charges, and real estate charges. The real estate firm handling the short sale will be able to address the preliminary net sheet. To ensure the approval of the short sale, the bottom line of the net sheet should show zero profits going to the seller of the home.

· Letter of hardship. This is one of the most important documents the homeowner will provide to the lender. This letter should read as real and honest as possible. If there are extenuating circumstances surrounding the sale of the home or the loss of income leading up to the late mortgage payments, the lender will need to know these facts in detail.

· Financial documentation. The lender will also need copies of all financial statements and proof of all income and debt. These statements will include assets, income, bank statements, credit card statements and any monetary statements available at the time of the short sale request. Financial statements that prove the homeowner is not in debt will cause the lender to instantly deny the short sale.

· Purchase agreement. The lender will want the listing agreement and purchase agreement agreed upon by the seller of the home and the buyer of the home. The lender has the right to refuse any and all payments in association with the sale of the home that are not required by law. These may include inspections of the home and home protection plans, depending upon the laws of the state.

A short sale will be highly followed by the lending institution. While this sale will certainly remove the burden of an over expensive mortgage from the homeowner, it will leave that homeowner in the hands of the lender. At any time during the short sale proceedings, the lender can choose to remove the authorization and simply foreclose on the home.

Mortgage Note Buying Versus Rehabbing Homes

Sometimes rehabbing a home takes longer than anticipated. The cost of materials and labor can rise unexpectedly, local ordinances can change, or other scenarios can come into play to make a project run longer than scheduled or over budget – or both. And many of the circumstances dictating how things unfold may be impossible to foresee. Weather can play a critical role, for instance, especially if you are doing roof repairs, concrete work, or exterior painting and need the help of sunny skies. When hurricanes and other natural disasters strike, even on the other side of the country, construction materials can suddenly become more expensive – the price of plywood can jump 20 percent overnight.

“ By buying the debt that finances real estate, they can participate without having to roll up their sleeves and deal with the nitty-gritty details of rehab work... ” Many projects are now on hold simply because of a rise in gasoline prices, which adds to the cost of all materials delivered by truck to the local lumberyard or home improvement store. “It can even add to labor costs, because if your contractors are commuting, they expect to be compensated for the cost of getting to and from the job site,” says Troy Fullwood. If you are working on a slender margin, a few cents per gallon at the gas pump can be enough to erase your potential profits while you work to rehab and “flip” a property.

Any delay in a real estate project leaves the investors open to vulnerability from shifting economic factors. If the housing market cools off and interest rates spike before you get your house on the market and sold, for instance, you can be left holding the bag through the downturn, with expenses like mortgage payments, insurance premiums, and property tax added to your balance sheet.

To find an alternative way to invest in real estate – without the day-to-day logistical headaches – many investors turn to paper investment, either as a way to supplement their portfolio or as a full-time business in lieu of actual physical ownership of properties. “By buying the debt that finances real estate, they can participate without having to roll up their sleeves and deal with the nitty-gritty details of rehab work,” said Fullwood. “And without financing, you aren’t a buyer; you’re just a browsing looker, so those who invest in the loans that fuel projects will always be in demand, as long as there is a market for buying and selling property.”

Especially in times like these – when the real estate market is challenged by steadily rising interest rates – mortgage note investors can earn substantial yields, taking advantage of the higher rates. And those who have prior experience as real estate investors can use their knowledge of property to help choose sound, secure, credit-worthy investments. “If the building that serves as collateral on the note is valuable, then the debt carries less risk, and those who are accustomed to rehabbing property usually have an eye for what constitutes solid and problem-free construction,” says Fullwood.

As with any debt instrument, when investing in real estate mortgages there are different rates of return, yields, timetables to maturity, and degrees of risk versus potential reward. To learn more about investing in mortgage notes, log on to http://pinnacle-investments.com.

The Inside Scoop on Bank Foreclosures

Many new investors want to buy properties directly from the bank. You never hear anyone say, "I want to buy a property from a mortgage company, credit union or savings and loan."The attraction to bank owned properties is understandable, as it is the bank you borrow money from to buy a home. It is natural to assume that the bank owns the property. Whether a Deed of Trust or Mortgage, the title to your property is either held by a third party or pledged as security for the loan, so in fact the bank does not own the property.You borrow money from and give a mortgage to the bank. The mortgage is the security instrument utilized to protect the bank from loss should you default on the loan. Unless you bought a bank foreclosure directly from the bank, the bank has never owned the property at all.

The Lenders Profits

The goal of the foreclosing lender is to gain possession of the property. The financial goal is the recovery of the principle loan balance, accrued interest, late fees, penalties, taxes paid on behalf of the property owner, court costs and attorneys' fees. In most states, the laws are written so that the lender can only attempt to recover these widely accepted standard losses.The lender will add in every legitimate expense when foreclosing. This is what is sued for: the total the lender claims is owed by the property owner. In most states, this is the maximum amount the lender can collect. The laws are written this way to protect home owners from unfair practices.The commonly held notion that a bank (or any other lender) must sell a repossessed property for the same amount it cost to gain possession and therefore cannot make a profit is false. If the foreclosing lender is the successful bidder at the auction, it will take possession of the property for the very first time. When this happens, all the rules change. The lender, now the legal property owner, can do anything it wants with the property, Rent it, keep it, whatever. It can also sell the property for any amount it so desires.

Condition of Title

Often when purchasing foreclosures buyers are concerned about the quality issued by the lender. A common belief is that there may be liens or judgments clouding the title. This is a myth. The lender will bid at auction only if it wants the property. The lender, typically the senior lien holder, wipes out all junior lien holders or judgments in the process.If the foreclosing lender does not bid at that sheriff's sale or auction, it probably doesn't want the property. This may be due to excessive superior liens, such as IRS or tax liens. (Tip: If the lender doesn't bid for the property at auction, you probably shouldn't either.) The lender, in an effort to recoup its losses, will bid on the property, wipe out other lienholders, then pay the balance of outstanding property taxes to secure the property's clear title. No lender will go through the time, effort and expense of foreclosing, only to lose the property for a few thousand in back taxes. Having absorbed these costs, the lender generally adds them to the asking price and will sell the property with clear title.If you have heard that the lender must sell the property for what they paid for it at auction, forget it.Another myth is that all banks are bending over backwards to give away foreclosed homes. It's true that the lenders want to sell their foreclosures. Lenders, banks in particular, are corporations. These corporations are driven to make money, not to lose it. A bank has to answer to its shareholders just like other corporations do.The business of repossessing properties is not new. Over the years, many lenders have developed effective methods of selling their REO's quickly, with minimal loss.

Property Disposition

Lender practices and procedures vary greatly. Some widely market their inventory of REO's, while others practically hide them.We know of some banks that advertise foreclosures in daily newspapers, while others demand that you maintain an account with them (or better yet, become a stockholder) just to get their list of properties.Lenders are in the money business, not the real estate business. This is why most properties are marketed through recognized real estate brokers or agencies. Some agencies specialize in foreclosures and may represent several lenders' properties. Brokers may have several investors lined up just waiting for a good property to turn up. Brokers can also assist the lender in determining market prices, suggest marketing strategies, recommend appraisers or contractors, etc. Some lenders establish a set price for the property and will not allow the sales agent to consider offers for less. Many lenders dispose of their own properties. Depending on the size and complexity of its REO inventory, the lender may have one part-time clerk or a staff of special asset managers handling property sales.Lenders with larger inventories often have a staff dedicated to analyzing and managing the properties, while at the same time coordinating and managing the brokers retained to market the properties. The lender determines the strategy and the broker markets the properties accordingly.

Investing Overview

Purchasing directly from the bank is the most popular way to buy foreclosures. It's fairly easy, and less of a headache than other investing methods because it involves less complications and risks.Locate bank or government owned properties in the newspapers or by researching them at the county courthouse. You can also contact a realtor, or use a good listing service. We believe we offer the best foreclosure service on the market. Decide for yourself. Visit us at dandrewstrategies.com. Find properties that meet your investing criteria, those that are in your area, price range, size and style. Determine whether you are buying to resell or to secure a residence for yourself. Determine if the property is a bargain by deducting the lender's asking price from the average market price of very similar properties in the immediate area. Your goal as an investor is to realize a tidy profit. You can buy property at a 15%-20% discount and earn a 35%-40% return. As a home buyer, you want to buy below market value with a low down payment, low interest rate and reduced closing costs.Contact the lender or the broker and meet him at the property so you can inspect it. Record any damages and deduct the repair estimates from your price. Use a good property inspection checklist.Investors must deduct all expenses associated with buying, repairing, borrowing, holding and closing again, from the price they think they can get.Homebuyers should negotiate around the four discount factors: price, down payment, interest rate and closing costs. The bank, being a lender, can negotiate all these items.If you still like the numbers and the property, proceed with a written offer containing the following:

A statement indicating your intent to purchase the real estate.
The physical address of the property.
The legal description of the property.
Your price.
Your down payment terms.
Your financing terms.
Your desired closing date.
Any contingencies.
Your deposit information.
Your name, address and phone number.

Depending on the property and several other variables, you may want to buy a property at 15%-25% below market value. Start your offers accordingly.Unrealistic offers will be rejected quickly. Learn to work with the banks. You can negotiate around interest rates, price, down payment, whatever, just stay within reasonable boundaries if you want to succeed.Some lenders sell thousands of REO's every year. Many sell their properties at or near market price. We know one lender who has sold almost 10,000 properties in the last 3 years, with average sales of 99% of market value. Not all lenders behave the same way. Try to locate those that are more flexible in their property disposition policies.When the bank accepts your offer, close as quickly as possible. Avoid delays and complications from competitive offers.

Advantages

The advantages to this buying method are many. There are no liens or judgments to contend with, no homeowners or tenants to evict, no back taxes due, and accessing he property for evaluation or inspections is easy. The fact that the property has officially changed hands means that all that work has been done by the lender. With all the legal work done, the complications of buying and the associated risks are removed.Lower down payments, better interest rates, reduced closing costs and a discount off the market value of the property, taken all together, make for a better than average home purchase.While you may not be able to steal a property from the bank, a properly structured deal will make you the envy of the neighborhood because you will have a low down payment, low monthly payments, and a low total price. For those looking to save money buying their first home, this is usually the way to go.

Disadvantages

In this industry the rewards follow the risks. Therefore, the payoff from this investing method is typically lower than that of buying pre-foreclosures or buying at the auction.An REO investor should have no problems achieving 10%-20% discount from the market value of comparable properties. Savings of 25%-35% are harder to find. Savings of 40%-60% are possible, but getting rarer.Other disadvantages include: the lender that moves at a snail's pace; a lender selling the property "as is," with no cooperation in making reparations or allowances; and the very rare, but always possible problem of evicting a tenant or homeowner.

Purchasing a Home in This Down Market

The real estate market bubble has burst and home seller and buyers are battling throughout the United States. Home sellers are left with properties they can not sell. Home buyers have more choices and more room to negotiate than ever before. The key to finding just the right home, for just the perfect price, is all in the comparable sales.

Many real estate agents live and breathe by comparable or comp sales. These sales represent the homes in a given area, their total square footage and amenities, and the sales price recently achieved by that home. Other factors taken into consideration when analyzing comp sales are the lot square footage, the age of the home and the extra thrown in during the sale.

For the real estate agent, comp homes will provide guidelines for listing homes from other sellers in the area. If a given area has comp sales of 4 BD homes with 2000 square feet in the $250,000 range, a comparable or similar home would have to be priced in that same price range in order to sell in the area.

Real estate agents are not the only ones who use comp sales to their advantage. Potential home buyers will often study and research comp sales in a given area before looking at the homes available on the market. Then, they will look at the time a home has spent on the marker and thus weed out the sellers who may be in a pinch to sell their home.

Using this information, the buyer can approach the seller with a “deal”. The buyer may choose to offer the seller a price just below the comp sales in the area. No matter how far off the price is from the sellers listing price, the buyer has the upper hand. The financial obligations of keeping a home on the market for extended periods of time are often enough to push the seller into a low balled sale.

Home buyers will need to use a bit of time and careful planning when utilizing the comp sales as a bargaining tool in their real estate purchases, but, when the real estate market is at its lowest, the deals can be life altering. A home that once sold for more than $500,000 may be acquired for as little as $350,000 during a down swing in the real estate market. When the down swing reverses and the real estate bubble expands, the new home owner will have immense amounts of equity in the new home without ever paying an extra dime.

A floundering real estate market is what is called a “buyer's market”. Buyer's have the upper hand and seller are left to either sit on the property, or sell the property for less of a profit than originally intended. Either way, the seller is the one who loses when a real estate bubble deflates. For patient sellers, the bubble will re-inflate and the sale of the home will become profitable again, but this can take years and some sellers just do not have that amount of free time and extra money.

Making Your Credit Score Jump

Fixing your credit score or your FICO score can seem like a daunting task when the score is much lower than the national average. The key to improving credit score can mean less about what credit decisions you have made in the past and more about the credit decisions you are currently making and you make in the future. Improving a FICO or credit score can improve your overall interest rate for purchases dramatically and should be worked on heavily before choosing to invest in a new home or a new vehicle.

The credit score or FICO score of a person is the numerical equivalent to the person's credit history. The FICO score judges the credit worthiness and the ability of the person to pay back debt. When a credit score or FICO score is low, lenders will believe the person is not able to repay debt and will thus not extend any further credit to the person.

A FICO score can range from 350 to 800 points with the higher the score meaning a better credit rating. When the aim is fixing credit, the most recent credit decisions are the ones that will most affect the overall credit score or FICO score.

· Pay bills on time. From the day that you decide to improve your credit score, you will need to pay all bills on time. This timely payment will establish a new credit relationship between you and your current lenders. They will report the bills as paid on time and this will raise your overall credit score.

· Don't take on too much debt. The overall debt to income ratio is another important factor when judging credit worthiness. If a person has too much debt in relation to the amount of money they earn, the lenders will shy away from offering new credit. This will also lower the credit score.

· Stay away from debt consolidation companies. Debt consolidation companies do not offer any additional help to the person aiming at fixing credit. They simply work with the debtors to create a win-win situation. The debtors get their money and the payers pay less. But, this will be reported on your credit report and can lower your credit score.

· Opt for bankruptcy when needed. If you find yourself overwhelmed with debt with no way to pay back the creditors, aim for bankruptcy. Even though it will stay on your credit report for 7 to 10 years, the slate is wiped clean and those years can be spent paying everything on time. This is a great option for people who have a very low credit score.

Changing your credit or FICO score for the better takes time. There are no quick fixes and the only true way to accomplish fixing credit is to work with the creditors to pay off the old debt while paying every new bill on time. Keeping current bills current will greatly improve your credit score for the positive and can even raise your score 20-50 points or more within the first year of current payments.

Buying Pre-Foreclosures - The Art of Buying Before the Sale

The advantages to buying properties from homeowners in default can only be measured by the individual investor. Some do not see enough reward, some think it's too risky, while others are plagued by moral issues. Are you helping the troubled homeowner or taking advantage of his misfortune?

Both the lender and the homeowner lose in a foreclosure action. Neither want it to happen. Both parties are motivated to resolve the situation. Motivated parties are key to the process.

The investing window of opportunity opens the day the Lis Pendens, the notice that a legal action is pending, is filed. The window closes the day the property is sold at auction. The time between these two events enables an investor to work with the homeowner and lender to create a workout strategy or a purchase of the property from the homeowner before the sale date.

The amount of time the window remains open depends solely on state and local laws, as well as the behavior of the property owner. Some states sell properties within 90-120 days from the first notice of default. In New York, the process can take a year or more.

As for the moral question, keep in mind that by dealing with a homeowner in default, you not only help him, you generally rescue the loan and maintain the value of the property (and surrounding properties) as well. If there is enough equity in the property, there is the potential to work out an arrangement that satisfies all parties and allows for a handsome profit. That's what pre-foreclosure investing is all about: buying the equity in the property, working out an arrangement with the lender and the homeowner, then selling the property for a profit.

Investors follow these basic guidelines to ensure a successful purchase and sale:

Locate loans in default Evaluate choices and narrow selections Contact homeowner Inspect property and loan documents Determine homeowner's needs Calculate your selling price and profits Negotiate with lender, owner and lien holders Close the deal, repair as necessary and sell.

Locating Loans in Default
The Lis Pendens is the first public notice (document) that announces a loan in default, so it makes sense to start there. Access these notices at the county courthouse, newspapers that routinely advertise these notices or through a reputable Foreclosure Service Provider.

Evaluate Selections & Determine Potential
You know the default amount from the legal notices or service provider's information. Now you must estimate the property's market value. Subtract the default amount from the estimated market value to determine the gross equity in the property. This figure also reflects your gross profit potential. If there is little or no difference in the amount of debt and the market value, move on to another property. If there is a big difference, there may be enough equity in the property to make a sizeable profit.

Contact the Homeowner
This is easier said then done. The homeowner is probably being bombarded with letters and calls from attorneys and bill collectors and has creditors showing up at his door. The only way to contact the homeowner is by phone, mail or in person, and chances are you will have a difficult time getting in touch with him.

Start with mailings. Indicate in your letter that you are a private investor looking for property in that part of town. Let the property owner know that you may be able to help him with his financial problems.

Demonstrating an understanding the homeowner's dilemma will help your efforts. Indicate in your letter that you may be able to stop the foreclosure, save his credit rating and provide cash for use in paying his bills and/or for relocating.

Be professional and gracious in your correspondence. Invite the homeowner to call you at his convenience. If you don't hear from him in a reasonable amount of time, say three or four weeks, follow up with another letter, perhaps worded a bit more urgently. As you get closer to the auction date you may want to send two or more letters per month.

Follow up with phone calls if you can. Be courteous, never pushy. Never interview the owner on the phone. Merely state that in order to determine whether or not you can help him, you will need to meet with him at the property. Make sure he understands that the meeting will be more productive and less time consuming if he will have the loan, mortgage and insurance documents available, as well as the foreclosure notices.

If you are going to make an offer on the property, you must have the loan, ownership, and debt or lien information. You must also assess the condition of the property and the property owner. Combined with the market value and the default amount, you have all the ingredients necessary to formulate your offer.

If you feel comfortable with it, you can visit the property in person. You may be confronted by an angry homeowner. Be polite and leave if you are asked to. Never, under any circumstance, snoop around, inspect or generally trespass unlawfully on somebody's property.

Meeting the Homeowner
Use common sense and dress appropriately, something casual but not sloppy. Be sympathetic. Does the homeowner need cash? Is he waiting for a bailout? Will he go bankrupt? Find out. Review the loan and mortgage documents. Verify the loan amount, monthly payments, interest rates, taxes, etc. Review the insurance policies as well. Get all the pertinent information you can. Ask the owner if there are any other liens or judgments he may be aware of.
Inspect the property with the homeowner. Never comment on the owners lifestyle, just the physical condition of the property. Point out the obvious defects or items in need of major repair. Use an inspection checklist and record your information and estimated costs of repair.
Make no promises at this point. Make no offer or give the homeowner any money. Make an appointment to meet with him again if you think you want the property.

Preparing Your Offer
Determine the net equity in the property. This is the difference between the market value and the default amount plus liens and repair amounts.Negotiate with the lien holder. You may offer to satisfy the lien for 20% of the amount. Chances are the lien holder will lose everything when the property sells at auction. Buying out the lien puts more equity in the property and more money in your pocket.

Remember to include closing costs in your calculations for the purchase and sale if you intend to flip the property. Also included the carrying costs, the mortgage payments and taxes and insurances, while you hold, repair, and then resell. Also include a seller's commission if you use a broker.Calculate every legitimate expense associated with buying, repairing, carrying and selling the property. If a large enough figure remains, you may have a very nice deal. This bottom line figure has to pay the homeowner for his property and produce a profit for you.

How much do you offer the homeowner? Some investors itemize every expense, show their calculations to the owner and offer to split the profits. Some itemize the expenses and pay the owner the remainder on the bottom line. The investor then earns his profits by the reduction in lien amounts as negotiated, savings in repairs by doing them himself, negotiating a lower seller's commission, or selling the property himself. Others still make offers based on the bottom line, and negotiate from there.

The Purchase Contract
When the owner decides to sell, you will both need to sign an Equity Purchase or Real Estate Purchase and Sale Agreement. All parties recognized in the mortgage contract must sign.
Check with your attorney before signing any contract and make ure he is knowledgeable in real estate equity purchases.

Investing experts agree that the terms of the agreement must be clearly stated in the contract. Leave nothing to verbal understandings. Your best defense against future problems is the manner in which you present your evidence. Have everything documented properly.

Make sure to include the following in your purchase agreement:

A "Subject to" clause that allows you to bow out of the deal if something is not as originally agreed upon. This could be for unknown damages, general condition of the property or loans, termite damage, etc. A statement that allows you to show the property. A statement indicating that the property has to appraise at a certain value. The property must be vacant, all tenants and possessions out by the specified date. An agreement between buyer and seller that the payments for the current loans equal "X." A statement indicating the sale is subject to the condition of the loan and/or encumbrances against the title. A statement indicating the buyer shall pay all closing costs. A statement indicating the seller shall: Deed the property to the buyer... Authorize the buyer to record said deed at the appropriate time... Be aware that the buyer may resell the property... Be aware that the purchase price may be below market value... Leave the premises in good condition and pay for damages incurred after the contract has been signed and before the seller has left... Agree to pay for any damages or repairs necessary as discovered by termite and roof inspections... Vacate the premises on the date specified. A statement indicating all net proceeds paid to seller will be paid at closing.

Closing
Inform your attorney that you have a signed contract and that you need representation at closing. Have him prepare a Release of Lien, to be recorded at or just prior to closing, if you have negotiated a settlement with a lien holder.

Arrange your financing. If you assume the loan and have been in contact with the lender, make sure the foreclosure process is stopped before the sale date.

Order your certified appraisals and inspections as required before closing. Order the termite and roof inspections as well. Verify from a title search that there are no other lien holders against the property.

If all goes well, you probably just bought real estate well below market value.