If you are interested in purchasing a home through a foreclosure auction, you will need to track the pre-foreclosure properties in your area carefully. When a home gets scheduled for auction, you will need to confirm the status of the auction before its scheduled date.

Often auctions are cancelled or postponed to give the homeowner a chance to pay off the mortgage. To ensure that you are not showing up for an auction that is not going to happen, call the trustee a few days before it is scheduled to confirm the date and the place. Also inquire about the bidding procedures that are going to be used, as these vary from state to state.

Before heading to the foreclosure auction, be sure that you know about the resell value of the property. The key to making money in foreclosures is purchasing homes at a deep discount. If the home is just a few thousand dollars cheaper than it will be when you resell it, you will not make enough money off of it to make bidding worth your while. Also, take some time to research the condition of the property.

If there are any major repairs that are needed, you should know these before buying the home. Decide if the repairs are something you want to do yourself, or if you want to resell the home with the problems and take a cut in your profits.

The opening bid at the auction will be set based on how much is owed on the property. Also, any fees or liens against the property will be included in this amount. Be sure that you know the opening bid before heading to the foreclosure auction, because this will help you determine if the property is worth your investment. Also be sure that you have the capital for your investment in place, because you will have to pay for the home soon after bidding ends if you win the auction.

In some states you will need to have a check with you at the auction to buy the home if you win. Finally, be sure that you know what your maximum bid is going to be. Be sure that you are getting the home for at least 20% less than its full market value if you intend to resell it for profit.

If you win the auction, you need to have a way to sell the home quickly. The longer you sit on a home, the more you will pay for owning it. Unless you are going to move into the home yourself, have some interested buyers in mind before going to the auction. Once you have the deed to the property, you can then offer it to these interested buyers and sell it before you have to pay any taxes or fees for owning it.

The key to your success in buying property in foreclosure is going to be organization. For this you need to have foreclosure investing software with a database that provides you with all the information that can enable you to locate in your area properties in foreclosure that have large equities. The software should allow you to choose about a dozen candidates, of which you take photographs and enter them into the software.

Your first step is to contact the owners of the properties. Since 9 out of 10 foreclosures are single family residences, most of the owners can be found at the properties. You can reach owners in different ways. The most obvious is the telephone – if it is listed and if it is still connected. But generally, your most efficient methodology will be a letter writing campaign.

Using the data from your foreclosure investing software, you will find that seventy percent or more properties in foreclosure will have equity at some level. You should send letters to all of these people. Further, you will need to send letters repetitiously. Keep in mind that it may take numerous letters before you can attract the attention of an owner in foreclosure. A unique letter will be helpful. This is not as expensive as it sounds. A postage stamp costs less than fifty cents, so you can mail 100 letters for less than fifty dollars. You should have a campaign of sending 200-300 letters per month. Results are virtually guaranteed if you are consistently mailing.

You only need to send letters to the people on your daily list of foreclosures you will get from your foreclosure investing software and you will be successful. Every month, a number of people will contact you asking whether you can assist them. Spending a few hundred dollars per month is well worth it when you can make $25,000 or more for every foreclosure purchased, especially when you consider there is no other overhead.

Using your foreclosure investing software, you are able to find properties with equity. However, there is also a way to make money
with properties that have no equity. You do this through a “short” sale with the lender, that is, by paying them off at an amount lower than the existing balance. In a hot market in properties this is extremely difficult because the lender has no motivation to reduce the loan. But in a soft market, some lenders may be interested in receiving a lower sum and walking away from the foreclosure.

They would do so because foreclosures usually take about six months, causing lenders significant costs, as well as the fact that lenders have to pay large expenses to fix and sell properties. In a short sale you will also need the cooperation of the buyer and normally he will receive nothing, except relief from the foreclosure. For many this is enough, because of the extreme pressure they have been under.