Foreclosure

What is a foreclosure? A foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan. In simple terms, when you borrow money to purchase a home or property to renovate and you don't pay. In 2008-2010 there was an epidemic of this in America. Consumers were over leveraged and taking on debts to purchase properties in the hope that the value would continue to rise. When it stopped they became under water as the loan was more than the value of the houses.

Luckily this didn't hit Pittsburgh too hard in that time frame. Foreclosures are still common to see around the area. It is generally the older looking house that no one has gone into for years. That is because the foreclosure process can take years. From the notice to the borrower, to the preforeclosure process which generally is a 30-90 day notice, to the actual legal proceedings to take the home back, it is a lot of time involved. Then the lender must go through the process of determining the value and what they would like to do with the house.

Banks are not in the business of buying real estate. They are in the business of lending on it so others can buy. This then puts them in a difficult situation with an asset that they don't have much value for. The opportunity here is to solve a problem while helping yourself. Many times lenders will sell at a discount just to get the property out of their hands. You can offer cash for the house and try to get it at a great price. Since the property has been vacant for years in some cases, you have to assume there are multiple issues besides the not so nice paint job and older bathroom. These do carry a bit more risk as there won't be inspections and the bank is not sure what the previous owner did to the house while it was in their possession.

You can work directly with REO agents who have access to long lists of these properties in Pittsburgh, or you can work with an agent and just target the active foreclosure listings on the MLS. Gaining access to these properties is pretty easy, just remember to bring your flashlight because most times the lights are off!