Monthly Archives: August 2011

Aug 29

Foreclosure: Buying A Foreclosed Home

Posted on by

Foreclosure begins when a property owner defaults on the mortgage of a property, mainly due to financial difficulties or the inability to keep up with the mortgage payments for some reason or another. In the event that a property succumbs to a foreclosure, it’s most likely that the property has not been maintained as it should have been. This means that perhaps the roof is in dire need of repair, a damaged foundation or the landscaping has been severely neglected, or a number of other maintenance or repair issues that may be costly. Some foreclosure homes may only need a fair amount of TLC. The amount of repairs needed or required for the foreclosure property may greatly reflect on the asking price. A major fixer upper may be offered at a lower than normal price, whereas a property that is in fair condition may go for a price just the below the market value.

When a mortgage lending institution decides to foreclose on a property, they will file a notice of default that will become a public record for all buyers who are interested in locating foreclosed properties for purchase. There are many places buyers can look to find foreclosed properties such as: various web sites on the Internet, real estate agents or brokers and real estate magazines.

Once the buyer locates a foreclosed property they are interested in, the buyer can assess the public records and check for any liens on the property. Most liens that are placed on foreclosed properties are for unpaid taxes. Interested buyers should also check the values of the neighboring properties before entering into a contract, to make sure they would be getting a fair market value.

Novice buyers may be interested in checking out bank owned foreclosure properties. These bank owned foreclosure properties may prove to be at lower risks to the novice buyer. With bank owned foreclosure properties, there are usually no tenants to evict, no liens against the property and no past due taxes.

Some lending institutions may be eager to sell their foreclosed properties and may offer to finance the foreclosed property to the buyer at a low market rate or with a small down payment. If the lending institution has already done an appraisal, the interested buyer may not have to pay an additional appraisal fee. Most lending institutions that are eager to sell a foreclosed property may also include title insurance that generally removes most of the risks that come with buying properties early on in the foreclosure process.

The more experienced buyer may decide to find a pre-foreclosure property owner about to go into default and offer to buy the property for a portion of the difference between the property equity and the market value. This may be an acceptable offer to a property owner who doesn’t want to end up losing all of the equity that has been invested in the property. Some pre-foreclosure property owners may offer bargains to a persistent buyer. This is mostly because at this stage, credit collection agencies are constantly hounding the property owners, who would in turn want to resolve these issues to avoid any further harassment.

Buyers may sometimes find that contacting the owner of a pre-foreclosed property can be difficult. Usually by this time, the property owner may not have any electricity or a telephone. Sometimes these pre-foreclosed property owners may also be difficult to deal with directly, due to a drug or alcohol addiction that put them in their situation in the first place. Some owners may also be hostile to the buyer or unpleasant to deal with because they are bitter and frightened about losing their home and perhaps they have no other place to go. Some of these owners may even see the buyers of their foreclosed properties as their mortal enemy and may do some extra damage to the foreclosed property before evacuating the premises.

Many foreclosed properties are normally sold at prices close to the assessed value. Depending on what city or neighborhood the buyer is interested in, what the neighboring property values are, how long it has been on the market  and what amount of work needs to be done to the foreclosed property will greatly reflect on the asking price.

Aug 18

Pre-Foreclosures – Can You Make Money?

Posted on by

If you’ve been looking into the idea of making money in real estate by buying foreclosures, then you may have come across the idea of buying pre-foreclosure.  Basically, pre-foreclosure is the period when the buyer is behind on payments, but the lender has yet to auction off the property.  There’s a good and bad side to buying in pre-foreclosure, so let’s take a look at both.

When someone is facing foreclosure, they’re often very motivated to get out of the mortgage completely.  This gives you a good opportunity to buy the house for little more than the cost of taking over the mortgage payments.  There are thousands of foreclosures advertised every month, so if you do your research or subscribe to a listing service, you can simply do drive bys and then approach the owners of properties you’re interested in buying.

The downside is that properties are only in pre-foreclosure for about three weeks, so you need to be quick.  In that time you have to contact the owners, get contracts signed, organize finance and anything else that needs to be sorted out.  It’s important to realize, too, that you’re not going to be dealing with level headed, logical owners who realize that it’s to the benefit of their credit history to avoid having a foreclosure listed there.  It’s much more likely that they’ll be angry at the world in general, under a lot of stress and receiving numerous calls from debt collectors.  They’re not likely to greet you with enthusiasm and open arms.

It’s also possible that the homeowner will find a way out of their situation before the courthouse auction occurs, in which case you may spend a lot of time putting together a deal that doesn’t happen.

If you’re serious about buying pre-foreclosures, then you need to let people know you’re there as an option.  Design a bold, eye-catching flyer that you can send or give to the house owners, and make sure it’s motivational enough for them to call you.  At the time you’re trying to contact the owners they’re probably overloaded with debt collection notices, so you need to make it clear you’re something different.  Stand out, and contact them more than once if necessary.  Vary your approach, rouse their curiosity, and make sure you come across as someone who can help them, not just a pushy person wanting to make money out of their situation.

Buying pre-foreclosures isn’t for everyone – you need to take action quickly, be diligent in doing your research, and be able to handle rejection, a lot of which will be nasty and unpleasant.  It’s important to keep on top of new listings, because the sooner you can get to an owner in pre-foreclosure, the better your chances of success.  So spending money on a listing service will pay off in time saved.  If you can handle all the different elements, pre-foreclosures can be a great way to build your real estate investment portfolio very cheaply.

Aug 08

10 Reasons Why Foreclosures Can Be The Best Way To Real Estate $$$

Posted on by

1. You can buy foreclosures as your road to wealth, starting with little or no cash.

2. You can get big value for little, or no, dollars when you invest in desirable foreclosures.

3. You build up your wealth fast with foreclosures.

4. A wide choice of good properties is available with well-chosen foreclosures.

5. Foreclosures are readily available at a great bargain through auctions.

6. You have many sources of foreclosures – banks, local tax authorities, the federal government, bankruptcy courts, and so on.

7. Foreclosures are available auction procedures and you’ll win with foreclosures!

8.With foreclosures you can make big money in both active and sluggish real estate markets.

9. To make it big in foreclosures, invest as little as possible, look beyond your buying price, control your offers, and look for bargain properties everywhere.

10. Tax-favored income can be yours with foreclosures.