Category Archives: Pre-Foreclosure

Jan 02

Pre-Foreclosures – Profitable for Investors

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Homeowners faced with major changes in their financial situation are often faced with foreclosure as well. Foreclosure is the process where by the creditor or bank works to make the homeowner or person on the loan pay the amount owed. Pre foreclosure is the grace period the bank or creditor allows the homeowner to come up with the money owed. If the owner is not able to come up with the money during the pre foreclosure, the lender may take back the house and resell it to the open market or in a public option.

Pre foreclosure is a vital time for the homeowner and in such a difficult situation, they may be under stress. Various situations such as job loss, divorce, health problems could have precipitated the foreclosure process. No homeowner really wants to lose the equity they have put into their property. They may be worried, angry or overwhelmed with the circumstances facing them. The grace period of the pre-foreclosure can allow them a bit of time to come up with the money or consider other options.

Boon to Investors

Many real estate investors work on pre-foreclosures or property that is ready to be auctioned or sold during this period. It enables them to get some property at up to 20 to 40 per cent under market value. If the local market is good, they can easily turn the property around for resale and make a profit or hold it as a rental as the market improves. There are classes, books and tools to help people who invest or buy pre-foreclosure property. It is important that the person looking to buy pre-foreclosure homes look into any other liens the property may have on it.

By selling their home at this time, the property owner may end up with some extra money from the equity depending on the buyer. The homeowner also saves their credit history. If they sell their home during the pre-foreclosure period, they avoid having the foreclosure on their credit history. The investor may find the prospective clients on lists and approach the homeowner directly. It usually takes several tries to get in touch with the person, as they may be stressed and or going through hardship. Sometimes the investor approaches the person in pre-foreclosure through a real estate agent that deals with foreclosures.

Flipping property has become a trend in the U.S. as the buyers market heated up and interest rates were low. Those with the financial means will continue to utilize pre-foreclosures as a way to increase their investment assets.

Dec 03

7 Big Reasons To Invest In Pre-Foreclosures

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Looking for an in to real estate investing?

Working a nine to five job swapping time for money can be incredibly dispiriting. After the futility of it all hits home, its all you can do to limit the number of home business opportunities you investigate to twenty per week.

One of the more compelling home business opportunities is real estate investing. Real estate investing is the perennial wealth builder, and the transition from working a job to achieving wealth through real estate investing is becoming increasingly well documented.

You’ve probably thought about investing in real estate yourself but you’ve not gone for it because you thought you needed tens of thousands in savings for a down payment, and perfect credit along with strong banking relationships.

Well, you can get all that together if you want. It doesn’t hurt to have those resources. But it’s not necessary to have a huge pile of cash and perfect credit to buy a house cheap and resell it for a profit.

It’s especially not necessary in the preforeclosure market. Preforeclosures are houses in the default phase of foreclosure; where the bank has filed initial foreclosure papers but the Sheriff Sale or Trustee Sale where the bank auctions off the property, or repossesses it if no-one buys at the auction, hasn’t occurred yet.

Buying during the preforeclosure period is one of the best ways for anyone to get involved in real estate investing. With little more than a few hundred dollars and some specialized knowledge you can buy a house at a substantial discount and resell it retail picking up a five figure profit check in the process.

Don’t believe it?

Well, let me give you seven reasons why its true:

1) When people are in default on their mortgage they have stopped making payments to the bank. So when you are negotiating with the seller, and the bank, right up until the point where you buy, no-one is making the payments. For novice investors worried about holding costs this is a huge advantage.

2) Preforeclosures are a very well defined niche market. One of the most deadly mistakes rookie investors make is trying to be a jack-of-all-trades, going after any and everything they can lay their eyes on. The result of this lack of focus is they are soon back at their jobs. By being a very defined market, preforeclosures allow you to develop focused marketing campaigns and standardized processes to get deals completed and closed.

3) One of the fundamentals of real estate investing is contacting and talking only to motivated sellers, and avoiding all the rest. Sellers in preforeclosure are some of the most motivated sellers you will find. Their world has been turned upside-down, they are about to lose their house, and their motivation is such that they just want out of the house and the bank off their back. By buying houses from people in preforeclosure, creating 30%+ equity spreads on houses often in good condition is not a difficult thing to do.

4) Buying houses in preforeclosure enables you to create unusually large equity spreads. Recent economic uncertainty has caused a lot of foreclosures, and rising rates will cause more in coming years. If banks had to take back all of the properties that went into foreclosure the FDIC would shut them down. They know this, so they try not to take properties back they dont have to. By requesting the Lender discount what is owed on their payoff, large spreads of equity can be created on houses that are totally maxed out with loans. This cant be done on loans not in default.

5) Because Lenders are under pressure to liquidate bad loans rather than take the property back, large discounts can be negotiated. After becoming familiar with the issues that cause Lenders to discount, larger and larger discounts can be achieved as you hone your negotiating skills.

6) If your plan is to buy and hold the property, having good enough credit and financials to get bank financing excludes a great many people from getting into real estate. On top of that, if you do get a bank loan, your financial exposure is at its maximum when everything is in your own name and personally guaranteed. Buying houses in preforeclosure allows you to simply take over the existing financing already in place. No qualifying needed. You can take title to the property in a Land Trust, begin making payments on the existing mortgage(s), and still get all the tax advantages, appreciation, depreciation without any of the risk of being personally liable for the mortgage and the property.

7) If you have ever bid at auction for property at the courthouse steps, you are only too aware of the competition breathing down your neck. Lots of mind games. The 40 thieves are talking trash to you trying to get you not to bid. If you are Larry Bird, no problem. Make sure you have $500K on your credit line though. However if you are not the Bird and you dont pack half a mil of credit, you can sneak in and avoid this NBA showdown by buying the house during the preforeclosure period… before the auction.

Make no mistake about it, there are many ways to make healthy profits in real estate investing. But when you look at how easy preforeclosure makes it to buy houses cheap and resell for five figure profit checks, all the while helping people out of agonizing life circumstances, it makes little sense to pursue real estate investing any other way.

About The Author

Ben Innes-Ker is a full-time real estate entrepreneur, best-selling author, and real estate investing warrior. He has developed the “Motivated Seller Magnet – automatic lead generating system” to help real estate entrepreneurs and investors attract more motivated sellers with less effort and increase profits. To learn more about this powerful step-by-step program and receive your free special report, go to http://www.motivatedsellermagnet.net.

Oct 19

Getting Rich with Pre-Foreclosures

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I’m sure you know what pre-foreclosure is. But do you know buying a pre-foreclosure can actually save you up to 40% of the market value of the pre-foreclosure house? Or you are actually already thinking to buy a pre-foreclosure? Either way, you will need info to know more about pre-foreclosure and further decide your strategy to buy pre-foreclosure.

For your info, pre-foreclosure happens when home owner has missed at least one payment of the loan. The lender will then issue a Notice of Default which is a public record asking the home owner to respond to the un-paid payment/loan. This is the first legal stage of a home being foreclosed. Home owners have to respond fast to show their motivation to solve the problem. Foreclosure home owners will be very motivated to look for home buyers to buy their house during this very period.

There are always advantages and disadvantages of buying pre-foreclosure. One has to get the balance point within the advantages and disadvantages. Buying pre-foreclosure could be very prosperous in return but in another hand, it might be a nightmare.

Talking on its advantages, the sale agreements of buying pre-foreclosure could be flexible and adjustable. For the agreement only involves 2 parties – buyers (us) and the home owner. Thus, as long as the pre-foreclosure homeowner agrees, the agreement is always negotiable. Secondly, buying pre-foreclosure could save you up to 40% of market value of the foreclosure home. It means if a foreclosure home’s market value is 250,000USD, you could save up to 100,000USD. Sure your neighbors will envy you for you owning the same house with them but with the different price they are paying.

Thirdly, buying pre-foreclosure straight from homeowner as compared to buying foreclosure home through auction or REO (Real Estate Owned) allows you to have adequate time to research on the conditions of the foreclosure home. As stated above, the agreement involves only you and the homeowner, you can always have a look on the title and other details of the foreclosure home as long as the homeowner gives a green light, can’t you? For most of the cases, buying pre-foreclosure needs lesser down payment and this make the fourth advantage of buying pre-foreclosure. As long you got your lender, everything should be going smooth.

Of cause, buying pre-foreclosure have not only these 4 advantages, but they are the major one. Having so many advantages in buying pre-foreclosure, does it mean buying pre-foreclosure is easy? I doubt it. Great bargains always need efforts and good things don’t easily have you unless, you planned your strategy properly in buying pre-foreclosure.

About The Author

Shawn Daren makes it clear on how to pick up great bargains on buying foreclosure. Learn the key of earning 100k in buying foreclosure. To know more on foreclosure, visit his buying foreclosure website. buyingforeclosure.biz

Oct 09

Preforeclosures: How Fortunes Are Made

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What is preforeclosure? Preforeclosure is the time period from which the bank gives notice of default, once the homeowner is approximately 90 days late in payments, to the time the house sells at auction.  Preforeclosure is also the most crucial time in the foreclosure process. It is during this period that you as an investor stand to make the largest profits and can literally make thousands of dollars in months, weeks, days, or even hours!

The key to preforeclosure houses is equity. Simply put, equity is the difference between what a house will sell for (fair market value) and what is owed on the house. The whole concept to making money with preforeclosures is to buy a house for less than fair market valuing, thus immediately creating equity for yourself.

Here is an example of how this can work. Let’s say someone owns a house with a fair market value of $200,000. Now let’s assume that this homeowner has lived in the house for several years.  If you consider that the property has most likely increased in value over time, while at the same time the homeowner has been paying down the mortgage on a monthly basis, it is fair to assume they owe less than $200,000 on the property.

For this example let’s assume that the homeowner owes $160,000. This means there is $40,000 in equity in the house. As an investor, you would want to buy the house for $160,000 or slightly higher. If you can do this, you have a shot at making $40,000.

I know what you are thinking. Why would they sell the house for $40,000 under the market value? Right? Here is one reason why. If they sell the house to you, you can promise them a quick closing, thus stopping the foreclosure (losing the house at auction).

This will prevent a foreclosure from going on the homeowner’s credit record.  A foreclosure can stay on someone’s credit for seven to ten years making it next to impossible to get another mortgage in the future. This is just one of many reasons.

So let’s say they sell the house to you for $160,000. You can turn around and put the house back on the market for the $200,000 that it is worth. Once the home sells, you could put a whopping $40,000 in your pocket. Sounds pretty nice, huh? The best thing is there are ways to make similar deals with little or no money! An that is an example of how you can make money with preforeclosure houses.

In order to buy preforeclosure houses you first need preforeclosure leads. This is how you are going to get your leads.  You are going to implement a powerful direct marketing campaign soliciting those who are in preforeclosure.  How do you learn where to start looking?

One of the most valuable sources for preforeclosure leads is mortgage brokers.  Almost everyone knows a mortgage broker.  Maybe your brother is a mortgage broker. Maybe a good friend is a mortgage broker.

If you don’t know anyone in the mortgage business, network a little bit. I am confident you will be introduced to someone in the mortgage field that can help you.

If not, that is OK too!  You will just have to do a little more legwork.  Go through the yellow pages and look for mortgage companies.  Start calling around and introducing yourself.  See if you can talk to the manager.  If not ask to speak to a loan officer.

Ask them if they have someone in particular that handles foreclosure financing.  They may or may not.  Often times in mortgage companies, they will receive large volumes of calls from distressed homeowners.

These are homeowners who are trying everything to stop foreclosure.  Most of the time, it is too late for the mortgage company to help the homeowner because their credit is already shot.  At this point the mortgage company may refer them to what is sometimes call a hard money lender.  A hard money lender is a lender that specializes in high risk loans.  Often times, they are private investors.

This is where you come in.  These leads are invaluable. They are homeowners that are exhausting their last options to save their home.  What you do is have the mortgage company start to refer these deals to you.  If you can get the names and phone numbers of these homeowners, you can contact them directly.  More importantly, you can contact them when they are open to listening and expecting your call.  If the mortgage representative that can’t help them gives a high recommendation of you to the homeowner, they will be excited to hear from you.

–By Jeffrey Ringold
© All rights reserved.

About The Author:
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Jeffrey Ringold is the author of ‘How To Build A Massive Fortune Through Real Estate Foreclosures’.  He is a licensed real estate agent and investor who has bought or sold over $12 million in real estate over his 7 year career.  He is consulted by leading real estate developers and investors almost daily.

For more information on real estate investing and foreclosures, visit his web site at:http://www.MassiveForeclosureProfits.com
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Sep 26

What is Pre-Foreclosure?

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It’s a sad fact, but many Americans lose their homes to foreclosure every year.  Some lenders aren’t always diligent enough in checking a person’s ability to make repayments, and others don’t really care anyway.  And of course there are situations where a change in circumstances happens, leading to the homeowners being unable to meet their mortgage obligations.

Whatever the cause of a person getting behind on their mortgage payments, the process from that point onwards is fairly set.  Initially, the lender will file a public default notice.  This initiates the foreclosure process, and at this point the property officially enters the pre-foreclosure stage.

So basically, pre-foreclosure is like a grace period.  The homeowner is being warned that they’re in default and need to do something about it, but at this point, the lender is unable to claim back the property and sell it to recoup their costs.  The length of the grace period varies, as it’s determined by state laws.  Some states allow the grace period to last for as long as 6 months, but many states have shorter periods.

Once the property enters pre-foreclosure, there are a number of ways the homeowner can avoid having their property foreclosed on and sold by the lender.

Pay Off The Default

If the homeowner can find the money to pay off the default amount, then the property is removed from pre-foreclosure.  If the amount in default is small, and the default was caused by a temporary glitch in circumstances, then it may be worthwhile taking out a personal loan to repay the debt.  If the problem is ongoing, however, this may just cause more problems for the homeowner.

Sell The House

This is a little more drastic, but is probably the best solution if meeting the repayments is likely to be an ongoing problem.  By selling the house, the homeowner should be able to get a reasonable price for it.  If the homeowner waits and lets the lender sell it, the sale price is almost certainly going to be much lower, because the lender just wants to offload the property as fast as possible.

This is often a good time for an investor to approach the homeowner with a fair offer to purchase the property.  However, many people in pre-foreclosure go into denial, and instead of trying to make the best of a bad situation, will actually avoid taking action until it’s too late.  Many also don’t understand the long-term detrimental effect a foreclosure listing will have on their credit score.

Nobody wants to face foreclosure on their home, but at least the pre-foreclosure period gives the homeowner the opportunity to find a solution that’s a little more favorable for them.  Waiting for the property to pass into foreclosure and be seized by the lender is almost never the best option.

Aug 18

Pre-Foreclosures – Can You Make Money?

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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.