Pre-Notice of Default
At this stage, the property owner is behind 2-3 payments, the Notice of Default, formerly kicking off the foreclosure is usually sent out by the bank or mortgage company after the 4th mortgage payment is missed, but they technically have the right to send it after only 1 missed payment.
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Pre-Foreclosure
This is the period after the bank has issued the Notice of Default, but before the actual sale. This is the period most commonly known as "in forclosure." Upon sending the Notice of Default, the foreclosure is now public notice.
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Foreclosure Auction Sale
This is the actual sale of the property on the courthouse steps. The bank usually tries to get the balance of the mortgage and any other costs it has incurred in obtaining the property from the sales proceeds.
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REO's or Real Estate Owned Properties
If the property does not sell at the auction, and most times it does not, the bank then owns it. The bank incurs more expenses, management, legal, administrative, fixup etc. Then they attempt to sell it, usually through a broker it has retained for this purpose.
Each one of the stages has its advantages and disadvantages and requires its own unique set of resources.
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Pre-Notice
For instance, at the Pre-Notice stage, there is almost no way of detecting the owner's difficulty, unless he contacts you for help (read money!) Yet, if you could find distressed owners at this stage you will have virtually no competition.
We have developed an Automated Prospecting System that will deliver distressed owners to your email inbox or fax machine begging for your help. They come to you, automatically, 24 hours per day, 7 days per week.
You will not have to make cold calls or send out letters or go to the court house. Your first contact with a prospect will be when you receive their 3 page, Confidential Property Evaluation Worksheet, containing all the financial information about them and their property which they have completed and forwarded to you with the hope that they qualify for your help. Rejection is a thing of the past!
You have the option of closing the deal yourself or we will close it and split the profits with you. Profits from buying at this stage are often the biggest and we can show you how to make money even if there is little or no equity in the property, deals others would pass up. For more information, click on Automated Prospecting System on the left.
Even if you cannot solve the owner's problem at this stage, you have the opportunity to bond with them and to be there with other creative offers as they become more realistic later. In other words, you have the inside track.
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Pre-foreclosure
During the Pre-foreclosure stage, after the Notice is given but before the property is sold, the sharks and wolves descend on the hapless owner, because now his situation is a matter of public record posted at the court house and published in the papers.
Unless you have a particullarly strong story to tell and the prowess of a magician to get your story through to the owner, you will not have success at this stage as you have probably found out. Owners tend to be confused, frightened and unrealistic at this stage due to all the competing offers.
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Foreclosure Auction Sale
At the auction, you have to be very careful. You have very little time to research the property or to determine exactly what else may be on its title.
Property going at a steal of a price? No one else bids and you are the lucky winner! Only to find out that it was the second mortgage foreclosing and that you now have a big first mortgage on the property to pay off! Also, you have to have the purchase price in cash at the auction in most cases, so unless you have the cash, this is not even an option for most investors.
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REO's or Real Estate Owned Properties
Once the property goes back to the bank after not selling at the auction, (it becomes an REO), more charges accrue. Administrative fees, legal fees, fixup fees, management fees, etc. so that by the time they offer the property for sale through their agents, the price is no longer a bargain. And believe me, in the hot real estate market of the last 5-10 years, banks have been getting top dollar for their REO's and they are not shy about it.
You will also have to make a down payment and qualify for a bank mortgage to buy the property.
When the real estate market collapses, and it will sooner than later, (be sure to read my Report, Foreclosure Alert on this site); banks will be chasing investors to GIVE them their REO's. In the mid 70's when the real estate market in Newport Rhode Island collapsed because the Naval Station there closed, the local bank GAVE me and my partner a house at 50% of the appraised value with 110% financing!
In summary, the different stages of foreclosure offer different investing opportunities, each requiring different resources and yielding different profit results. The choice is yours!
Bill Young 
