One of the main reasons why people can no longer keep their house is due to financial hardship. As a real estate investor you can help these people start over by purchasing their house and giving them money to start a new life. However, many real estate investors get afraid when they see judgments against a property.
If you are passing up properties that have judgments against them without doing any research, you may be letting some excellent deals pass your way. Properties with judgment liens can be some of the most profitable deals you can obtain if you know what you are doing. By utilizing some simple strategies you can take deals that most investors pass on and turn them into very profitable transactions simply because you have the knowledge that other investors lack.
What is a judgment?
A judgment is a court order levied against someone usually due to either the loss of a lawsuit or non payment of a legally obligated debt. The judgment gives the creditor the ability to take certain actions against the losing party through several means, such as wage garnishment, seizure of bank accounts and liens against assets.
Once a judgment is filed against a homeowner, the creditor will then use the judgment to file a judgment lien against property owned by the homeowner that lost the judgment. Once a judgment lien has been filed, the homeowner cannot sell the property without satisfying the terms of the lien.
On the surface, this doesn’t look good for you as the investor. If the homeowner can’t sell the home, you as the investor have to pay off the lien before purchasing the property. Depending on the terms of the deal, this may not be feasible.
However, before making a decision to walk away from the deal, there are certain things you need to know about judgment liens that could have a major impact on your decision.