Foreclosure essentially means the legal proceedings initiated by a creditor to repossess the collateral for a loan that is in default.
If you search the web you will find many locations that will give that description and its various elaborations.
This unfortunate situation (a foreclosed property) does offer opportunity to others to purchase a property. You may believe or feel it unethical as you are taking the opportunity of someone else's misfortune.
I feel it rather unethical to not take up the opportunity. As any house you purchase is for occupation, whether yourself or for someone else. And this is also fulfilling a community need.
With respect to real estate, foreclosure can occur when a homeowner stops making mortgage payments. Foreclosure can also occur if the homeowner does not pay contractors bills, property taxes and the like.
The next step is the creditor (such as a bank) takes possession. As they do not actually want the property they will be wishing to off load it as quickly as possible and obtain a price that covers the debts.
This is good for the investor or purchaser as you can often find good deals on such properties.
When considering such opportunities the web is your friend. There are many websites that you can find information about foreclosure as applied to homes.
Also do not forget your local newspapers and the county deed recorder's office.
When it comes to buying properties foreclosed you effectively have four opportunities, they are, buying from the current owner prior to foreclosure, buying from the creditor after foreclosure, at a foreclosure auction and purchasing from the US Department of Housing and Urban Development (known as the HUD).
Each one has its various strengths and weaknesses and you need to consider which best suits your situation. Suffice to say that purchasing from your bank probably has the least risk, as the bank will have evicted the tenants/owners and paid all debts. They will have also had it valued and will be in a position to negotiate.
The only real disadvantage of a foreclosed purchase is that it may be in an 'as is' state and you need to factor in the costs to fix or repair any issues. So a thorough assessment is essential so that you know what you are purchasing.
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