How to Purchase Foreclosed Land for Sale

You've probably seen the ads: investors in expensive suits boasting about the easy money they've made snapping up foreclosure bargains.  But truth be told, buying foreclosed land for sale is neither easy nor a guaranteed bargain.  Sure, with the number of foreclosures surging, it's possible to find foreclosed land selling at a discount to those around it.  But often, there are pitfalls surrounding these abandoned properties of which buyers should be aware.

To shop for a foreclosure property as the cheapest land for sale, you must understand the foreclosure process, the risks and the timing necessary to close the deal.  The foreclosure process is a means by which a bank can recover the amount owed on a defaulted loan, by repossessing the property that secured the loan.  The average foreclosure starts when a homeowner misses a mortgage payment and the lender files a notice of default. This is a public record and can be a first step for buyers in finding distressed properties.  If the property owner doesn’t pay the owed amount in 60 to 90 days (or whatever timeline is dictated by the state you live in), a public-auction notice is generally recorded that sets a sale date for the home.

If the property doesn’t sell at auction, the lender takes ownership of the property with the intent to sell it and recover its money.  These bank-owned homes are often referred to as REO properties, a term that stands for “real-estate owned.”  However, the foreclosure process differs from state to state.  States with so-called judicial foreclosure laws require banks to go to court or file a lawsuit to repossess a home. This initial filing is called a “lis pendens,” meaning “suit is pending.”  Non judicial states do not require this.  The deed of trust signed by buyers typically includes a power-of-sale clause, authorizing a trustee to sell the available land for sale to pay off the debt if it’s in default.  The notice of default kicks off this process.

It’s important to be familiar with what the laws are in your state before embarking on your search, as they can affect the amount of risk you must shoulder and the timing for buying a foreclosed property.   To learn more about foreclosure laws and purchasing foreclosed land for sale in Florida contact an expert member of the Sales Team at (239) 333-2221.

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