Whether buying or selling real estate, arm yourself with information - The Boston Globe

In the real estate world, there was one word — repeated three times — that used to be the cardinal rule: location, location, location. Just about anybody could buy a house in a good location and easily make money by flipping, selling, or refinancing the home.

The new cardinal rule of real estate is information, information, information.

“For decades, the real estate industry has operated under the principle that the less information buyers and sellers have, the better it is for agents, lenders, title companies, and all the other folks who eat from the trough,’’ writes Ilyce Glink in “Buy, Close, Move In: How to Navigate the New World of Real Estate — Safely and Profitably — and End Up with the Home of Your Dreams’’ (Harper Paperbacks, $14.99). “But the real estate tide seems to be turning, as the housing and credit crises of 2008 have heightened awareness in Washington, D.C., and on Wall Street about the catastrophic consequences of a closed information loop.’’

I have no doubt that many professionals in the real estate industry will take great exception to Glink’s observation. But the evidence is on her side. We ended up in one of the worst housing market collapses because far too many borrowers were uninformed, ill-prepared, and overly optimistic about potential gain because of bad information they received and gladly embraced.

Glink has spent years covering the real estate industry and that’s why for August, I’m recommending her book for the Color of Money Book Club.

Glink is also the best-selling author of “100 Questions Every First-Time Home Buyer Should Ask.’’ She coauthors a syndicated column, “Real Estate Matters.’’

In her new book, Glink looks back at what happened and then forward to what’s to come in the real estate market. As she reports, millions of people have seen their home values plummet. One group of economists has suggested that housing prices won’t recover until 2017.

But this book isn’t all pessimism. It’s also a guide to help buyers and sellers navigate the new world of real estate. Glink offers advice on what to do in a new era of declining home values, the changing role of Fannie Mae and Freddie Mac, fixing your credit, calculating what you can afford, and snagging a house through a short-sell or foreclosure. She even ventures to help those still interested in investment property.

I think you will find the section on the 10 things that have changed in real estate sobering. If you’ve been looking for a home, you know that number one is that you need a lot of cash. The industry has long known that the more money someone puts down on a property, the less likely the person will default. In this case, an old rule is the new rule.

This is the worst of times and the best of times for real estate. It’s up to you to determine if this will also be the age of wisdom or the age of continued foolishness.

Michelle Singletary is a columnist for The Washington Post. She can be reached at singletarym@washpost.com. 

Tax foreclosures - Higher Profits with Pre Foreclosure Listings

You may bid as often as you dare. Low-ball offers are easy, but seldom produce the highest profit over a year. You would miss too many great deals chasing a few once in a lifetime dreams.

Hector Milla Editor of the "Best Free Foreclosure Listings" website -- http://www.BestFreeForeclosureListings.com -- pointed out;

“…The easiest way to maximize profits buying homes at foreclosure auctions is to use top quality foreclosure listings. The best lists provide sufficient information to form a reasonable opinion about each prospect. They allow you to evaluate thousands of home using basic data, sort by extended supplement information, and even provide proprietary valuations and index ratings. When searching through a list of over a million properties, all help is welcome…”

If profits are your goal rather than a one-time purchase, you cannot afford to rely on simple lists. Look for a list that includes photographs, comparable sales, and all taxes owed. Some lists include court data, including bankruptcy stays, injunctions, disputed titles and many more litigation traps. You will save days spent chasing records, making unproductive calls, and perhaps worst of all, driving to a location only to find a home in battered condition.

Targeting pre-foreclosure auctions eliminates the greatest delay in all real estate deals. You do not need a willing seller. Once the auction is set, it will occur. Occasionally, you may be the only bidder. More often, a few bidders actually compete toward the end. If you are better prepared and properly investigate each property, you can precisely bid up to, but not over your minimum profit requirement. You are not required to be perfect, but you must know when to raise your bid, and when to stop bidding.

“…The best companies provide a full ra

nge of data, features and functionality for about $30 to $50 a month. You could pay more, but be sure to evaluate all extended features and products carefully to insure you are not overpaying. Be sure to take advantage of free trial offers. You will have an opportunity to compare multiple services, free of charge, before selecting your favorite…” added H. Milla.

Further information and resources to get free home foreclosure listings by visiting http://www.BestFreeForeclosureListings.com

Hector Milla runs his corporate website at http://www.OpsRegs.com where you can see all his articles and press releases.

How To Find Foreclosures | Real Estate and More

Short Sales, Foreclosures and Bank-Owned Properties

There are many properties in some stage of foreclosure or taken back by lenders at this time and a lot of buyers ask about these because they've heard that this is where you can get an incredible deal. After more experience with these types of properties I've found that there is a lot of false information and hype out there and want to provide you with some more information that can help you understand this whole subject a little better.

During the boom years there were tons of seminars and books on how to make a fortune in real estate by buying and flipping houses. Though some people were able to make good money quickly that way during the period of about 2003 to mid-2005, many others are now part of the foreclosure statistics.

Similarly, there are now lots of websites, seminars, books, etc. on how to make your fortune buying foreclosure properties. They present stories of exceptionally good situations that make it sound like this is how every foreclosure situation goes even though it is really more of a rare occurrence for the average person. Maybe these are the same people who promoted the seminars and books on "flipping" (and maybe they are also the ones who email you about winning the UK lottery or about the $50Million they want to send you from Nigeria:).

That's not to say that there aren't good deals available in properties that are in some stage of foreclosure, there are. BUT - there are some things you'll need to understand because the process can be quite different from the normal.

First of all there are some different types of 'foreclosure' properties and I want to start off by clearing this up for you.

There is a 'pre-foreclosure'. This is a property where the owner has fallen behind on their payments to a point where the bank has begun the foreclosure proceedings (usually by filing a notice of pending legal action).

There is a 'short sale'. This generally means a pre-foreclosure property where the property is being listed at a price that is less than what is owed on the outstanding loans. You can recognize these in listings as it will either say "short sale" or "3rd party approval needed" or "list price may not be sufficient to cover all encumbrances" (meaning that the bank will have to approve it in addition to the seller accepting the offer).

One word of caution though, some realtors will list a property as a short sale or "possible" short sale without even having their client complete a "short sale package" (the paperwork that will have to be submitted to the bank with any contract) - avoid these as in most cases they end up going nowhere or take months to hear anything back.

There are also "bank-owned" properties. Bank-owned means the bank has completed the foreclosure proceedings and now owns the property fully. These are usually the easiest and quickest of the different types of foreclosure properties to deal with although they are often (not always) in pretty bad condition.

That gives you a basic overview of the types of "foreclosure" properties you may run into.  Now let's look at what you need to know about them if you're thinking about venturing into this area.

The most difficult type of these to deal with at this point in time (in most cases) is a short sale. With a short sale, you will have to be prepared to wait weeks or even months to hear anything back on an offer. If your offer is at the asking price and 100% cash, then that may shorten the time period. But even in that situation there is no guarantee that it won't take weeks or months.

As an example, I spoke with another realtor a few months ago whose client not only put in a full list price offer but also offered to pay for the title insurance that would normally be paid by the seller. It still took 3 weeks to get an answer and what came back from the bank was that they wouldn't consider the offer until they had a special disclosure signed by the buyer that is required on houses built before 1978. Only problem is that the house was built in the last 5 years and this disclosure isn't required. But the bank doesn't care and wants the disclosure before considering the offer. And it took 3 weeks to get even this ridiculous reply back!

One other case is a realtor that listed a short sale and got a very low offer which she submitted to the bank in November (this was even after the house was listed for $200,000 less than the current owner paid for it 2 years ago). As of February she still hadn't gotten a reply back from the bank. So that was 3 months with no reply.

Recently I had a client put in an offer on a short sale that just came back on the market after the lender rejected the offer that had been submitted to them nearly 6 months ago.  The offer was lower than they wanted but they rejected even doing a short sale because the owner had been continuing to pay their monthly loan payment – and it took them 6 months to let the owner's realtor know this.

So with short sale properties, you first need to find out if it is actually a good deal. I had one client recently looking at a townhouse that is a short sale and based on recent sales in the complex and comparing the condition of the properties this townhouse was priced at least $15,000 too high for even its market value.

If you do determine it is a good deal (especially when it is below market value) then it is best to offer a price that the bank will consider. This is especially true when the lender has already dropped the list price once or more. If you go too low, you may never hear back. And keep in mind that in some cases during the waiting period for a reply, other buyers can submit an offer and if the bank feels the other offer is better than yours - they can then accept it and reject yours. You can also miss out on a really good deal by playing the negotiating game – trying to get the price down even more when it is already priced really well.

I saw an example of this with a client who put in an offer on a townhouse directly on Tampa Bay.  We found out they already had another offer in and I told my client to offer full list price (which was still a great deal).  We found out after the deal closed that the other offer was $15,000 less – suggested to the buyer by his realtor.  My client's offer was the one submitted to the bank with the other offer held as a backup.  As we got closer to the closing we ran into some problems with my client's lender and the other buyer offered $30,000 more than my client and then $70,000 more than my client, both full cash offers.  Fortunately we got the problems worked out quickly enough and closed the deal but the other buyer definitely regretted missing out on a great deal by trying to get the price down a little further.

It is also fairly well known that short sale deals are often more difficult. An April 18, 2008 article said "The success rate for short-sale offers is low...20 percent of short-sale offers in the area [Las Vegas] lead to completed sales, compared with 85 percent for more traditional sales. Redfin, an online real-estate brokerage based in Seattle, says it represented buyers on 65 short sale offers in the first quarter but expects only two or three to result in a completed sale."

And the final insult with short sales is that even if the bank accepts your offer and things are proceeding along well, they can decide in the 11th hour to cancel the deal. This info was given to me by an attorney who works for our state Realtor association.

I've found that the best short sales to work with are the ones that have already gone through the approval process and have just come back on the market.  Usually this happens when the buyer just doesn't want to wait any longer and cancel their offer right before the lender comes back with an answer.  The advantage here is that the lender has already done all of their work in processing the short sale and has approved it as a short sale and has normally stated what they will accept for a price.  In addition, they often give a time period of about 30 days that this approval is good for so if you jump in at that point you will usually get a fast reply and can have the whole process take a much shorter time.

Other than recently approved short sales, the easiest of all foreclosure properties to work with are bank-owned properties. This is where the bank has completed the foreclosure proceedings and now owns the property. In these cases the time frame for getting an answer back on an offer will be much quicker. However, in a high percentage of cases the property can be in very bad condition.

One of my clients put in an offer on a foreclosed property after checking it out pretty thoroughly and providing a list of the problems they found (including mold and termite damage).  The bank rejected the offer.  Months later they came down in price and we looked at it again.  The hole in the ceiling over the dining room where my client found some of the mold and termite damage was repaired and with no attic there would be no way for anyone to know what we had seen up there and I have found that some banks do not disclose these things (even when provided the information) and try to get away with that by stating they "never occupied the property".  By the way, even if they did not occupy the property, if they are made aware of any problems or their realtor is they do need to disclose it.

Another client put in an offer on a foreclosed house but after we had an inspection done and found the house needed a new roof, new A/C system, new ducting, new appliances and there were settlement issues (possible sinkhole) she cancelled the contract.  This was with Fannie Mae and it took 2 months to get them to send her deposit back.  We checked the listing after she cancelled and noticed that nothing about the settlement issues was noted.  So with foreclosed properties you must have a thorough inspection done because that is your only way to find out the true condition of the property.

Bank-owned properties can be a good deal for you if they are in decent condition or if you are willing to do the work necessary to bring it up to the standard you want. But keep in mind that you will get very little or no information about the property from the bank so the risk of hidden problems is higher.

A very important point with any of these type of properties - you must have your financial arrangements taken care of before even bothering to look at any. In all cases that I have seen so far, an offer won't even be accepted in a short sale or bank-owned situation unless you submit a preapproval letter for financing or proof that you have the cash to buy it.

I only recommend short sales at this time for investors who are cash buyers and will have no problem with waiting an average of 60-90 days for the whole process, or if they have been recently been approved by the lender.

In most cases, your best bet is finding a property that suits your needs and is a good value where the owner can sell for a good price without being in a short sale situation. Many of my clients have found this to be the best thing for them (and the least stressful and frustrating).

So there's a brief rundown of some information on foreclosure properties and how buying them differs from buying other properties. Please make sure you understand this if you plan to try to purchase any as if you aren't properly prepared or try to ignore the way these go, you'll just be wasting everyone's time and may end up getting unnecessarily frustrated.

How to make money Buying Selling Real Estate that is REO (Real Estate Owned) : auctions.org

Buying property in a foreclosure auction – made popular by the media and tons of TV ads – is very challenging for a first time buyer. Property bought in foreclosure auction has several disadvantages,

Buyer must provide a cashier’s check for the full amount. In some states you have 30 days to pay – not a lot of time to find a lender and secure a loan.

You buy the property AS IS.

May have to evict the owner – NO the lender is not required to evict prior to the auction!

Buyer can NOT negotiate on rehab costs, interest, closing points and loan amount.

Lenders often set the initial bid too high in order to recover costs and loans.

You may end of paying too much in an auction due to aggressive bidding.

So REOs are property that went into foreclosure auction, did not find a buyer and is now back in the hands of the lender. Why purchase REOs?

Lender’s want a quick sale (these properties have generated NO income for 9-12 months as a result of the foreclosure process)

Possible savings of 20%-30% over market value

Good for 1st time homeowners and new investors

All Liens and back taxes are removed

Property is available free and clear of liens, ready for immediate possession

You can negotiate rehab costs, interest, closing costs

Smaller down payment and almost 100% risk free.

In the current market condition lenders have large department specializing in REOs. How do you access them, which websites (free access) specializes on REO.

To find out more and pick up tons of information on Foreclosure investing, how, where, when, private financiers you can work with in all 50 states go to,

www.foreclosurehelpjaima.com

Evaluating your property investment | Reuters

By iTrust Financial Advisors (www.iTrust.in)

Investing requires discipline - one can’t blindly invest money without knowing what one is getting into. Investing into Real Estate is no different. Here is a checklist that you should use when evaluating your property investment.

1. Desirability of the location: This is the single most important criterion to value real estate.

2. Reputation of the builder and quality of construction: Properties by some developers are worth a lot more than others because of quality. Don’t always go for the lower price because there could be huge execution risk with less reputed builders

3. Payment terms: Time-linked or construction linked payment plan, and cash vs. cheque component. This will affect your cashflow in other aspects of your personal finances.

4. Project approvals and licenses: This might affect your ability to get a home loan if project approvals have not come through yet.

5. Contractual guarantees: For assured return schemes get a written guarantee from the builder and post-dated cheques in your name. Understand the delivery date of your project

6. Demand and supply: Over or under-supply will affect both the capital appreciation potential and the rental yield you might expect.

7. Floor space index and carpet area: Local rules on the built up area and the available square footage (carpet area) might reduce the usable area. Recognize that what you pay for might not be what you get

Tips on the process of Real Estate Investing

When it comes to the process of making a property investment and exiting from it, there are a few things that you must keep in mind.

1. Transaction costs: When you buy or sell property, there are many transaction costs associated with these activities. You might have to pay a brokerage fee to the intermediary. If you have made a gain on the sale, there will also likely be a resulting capital gains tax liability.

You will also face some expenses related to the stamp duty at the time of the transfer and registration costs of the property. All these costs can add a material amount to the purchase or sale price of your investment.

2. Liquidity: Unlike stocks that you can sell readily and convert into money in the hand within a couple of days, buying and selling property takes time. Your ability to convert your investment into cash in hand is quite restricted.

Its not uncommon for deals to take up to one year, and still fall through at the last minute. So if you feel that you can sell your property to pay for your child’s education abroad once he/she gets admission, you might be in for a shock. To have easy access to this money, you might be better off putting it into a financial asset that you can access at a short notice (e.g., fixed deposit, or liquid fund).

3. Cash: Property investments are not always the cleanest when it comes to cash versus cheque component of paying for deals. Unlike mutual funds where KYC norms require that the investment be made in cheque and the PAN card details be shared, real estate investments can have a huge cash component to them. This might not suit everyone.

Copyright 2010 iTrust Financial Advisors Private Limited. All rights reserved.

Flipping Houses - Courant.com

Is now a good time to buy investment properties for flipping?

Opinions vary widely. Real estate agents say buy-and-hold is a smarter strategy, but some flippers say there are great deals to be had with so many short sales and foreclosures on the market.

In the past three years, Phil Zimbardi has bought seven properties in New Haven County and successfully rehabbed and sold them at a profit.

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"The key is to be in and out in four or five months," said Zimbardi, who runs the rehabhousesinct.com website and is a real estate agent specializing in foreclosures. "It's a full-time job with a good income."

For example, Zimbardi might buy a wreck of a 1,200-square-foot home in East Haven for about $100,000. He'd spend about $40,000 to renovate, including a new roof, kitchen, bath, furnace, light landscaping, siding, paint, carpet, windows and doors. Zimbardi typically hires a contractor to do all repairs, then puts the house on the market at slightly less than the comparable houses on the street, for instance about $200,000. After other costs are subtracted, he would earn about $33,000 in profit. (See the formula below).

Zimbardi is not generally a cash buyer but instead relies on loans from so-called hard-money lenders. He borrows the money for a relatively short time at a higher interest rate: 12 percent, with 3 points. He still manages to make money because he gets the properties renovated quickly and sold in two to three weeks.

Zimbardi chooses the properties by adhering to a strict formula that is a good guideline for anyone considering flipping:

The "after-repair value" of the house multiplied by 70 percent, minus the repair costs and carrying costs, such as the interest on the loan, utilities while the house is being worked on, closings and fee to the real estate agents.

The trick is correctly predicting what the buyer will pay for the house; no fun for the faint of heart.

"You really gotta know your stuff," Zimbardi said. "If you can buy the house at the formula price, you'll do OK. If you don't estimate the repair costs properly, you could get in over your head."

Falling Through The Kitchen Floor

Serial flipper Alan Abrahamsson of Killingworth takes a different approach. He chooses higher-priced properties in prime locations and does most of the carpentry, painting and renovating himself. Any house he and his wife buy to live in, they renovate with an eye toward flipping.

In 2004, Abrahamsson bought a charming 2,000-square-foot, two-bedroom, 1 1/2-bath investment property on North Street in Guilford for $235,000 cash, a few blocks from the town green.

"It was an old house that nobody wanted," Abrahamsson recalled. "About 80 people in two weeks looked at the house and walked away from it. I actually fell through the kitchen floor into the basement when I was renovating. I could have killed myself."

He worked on the house for a year, a complete gut renovation that also included a new driveway, septic system and asbestos remediation.

When it was finished in 2005, the house sold for $425,000, netting Abrahamsson $70,000.

"It's a lot of fun and a great way to be your own boss," he said. "The new owners did not have to do one thing to the place."

In 2006, Abrahamsson and his wife, Fay, bought a 3,700-square-foot four-bedroom, 3 1/2-bathroom home with a pool and extensive grounds for $490,000, intending to live there during the renovation and flip it. The original business plan called for a $120,000 renovation budget and putting it back on the market for $750,000.

Unfortunately, the house flooded and the real estate market turned down, so the Abrahamssons decided to hang on until the market improves. In the meantime, Alan Abrahamsson opened a renovation business, Design Enterprises, to fix up other people's homes.

Despite the potential pitfalls, the Abrahamssons remain optimistic. Eventually, they would like to downsize to a smaller home and do a flip on the side.

More Stringent Loan Terms

New Haven real estate agent Mary Jane Burt of The Pearce Co. has noticed "a lot of out-of-towners are looking at New Haven for opportunities to get in on the cheap," though they tend to rent the properties more than they do buy them to flip. Those who invest are buying properties at the low end of the market — $150,000 to $200,000 — if they have access to capital. The expiration of the $8,000 tax credit for first-time homebuyers has contributed to the overall real estate slowdown, Burt said.

Bank loans for investment properties are still possible, but the terms of the loan would be more stringent than for an owner-occupied property, said Edward Steadham, a spokesman for Webster Bank. For example, if an investor with excellent credit wanted to buy an investment property, he or she would pay 2 or 3 points more on the loan than a similar property he or she planned to live in.

On the shoreline, there are very few flips, due to the lack of inventory of lower-priced homes and difficulty getting traditional bank financing, said Karen Stephens, owner of Page-Taft Real Estate. There are bargains, to be sure, but only for cash buyers or those with partners who will stake them some money.

"You will not see crazy appreciation in property values," Stephens said. "We can expect 3 to 5 percent a year, so it's not a great time to flip. The smart investor these days is buying property and holding on to it. It's a timeless way to invest your money."

Making Real Estate Money-Terry Vaughan's 60-Second Real Estate Course

Perhaps you have heard other real estate "gurus" talk about 25, 50, or even 100 different ways to buy real estate for no money down. In reality, there are only four possible ways to buy real estate--with or without any money down. I'll try to simplify the "nothing down" philosophy once and for all.

I'll use simple numbers to explain the "60-Second Real Estate Course." The real estate market in your area may have a lesser or greater value, but that's not important. What is important is the concept, not the dollar amount. You can apply these concepts to any property, regardless of the price.

First, let's define "equity." Equity is the market value of a property, minus the amount of liens or encumbrances. The most common encumbrance is a loan secured by the property. This loan is called either a "mortgage" or a "trust deed," depending on the state where you live. (Some states have both.)

There can be more than one loan secured by the property. The first loan made is called the "first" mortgage or trust deed, the second loan is called the "second," and so on. Other liens or encumbrances might be unpaid property taxes, a mechanic's lien or even an unpaid small claims judgment.

Let's imagine you are negotiating the purchase of a house for $100,000. There's a $60,000 loan (mortgage) against the property. When you subtract the $60,000 loan from the $100,000 purchase price, what remains is the seller's equity: $40,000. This is properly referred to as the seller's "equitable interest."

The bank that made the loan owns the balance of the property. Since the bank has an interest in the property--the $60,000 loan--the seller, in essence, has become a partner with the bank.

All that ever happens in any real estate transaction is, the buyer and the seller find a way to give the seller their equitable interest, so the seller can go away happy.There are only four ways to do this.

Pieces 

One way sellers can receive their equitable interest is in "pieces." I say pieces because I don't want you to think strictly in terms of cash. You can think of the equity as owned in pieces or payments.

If the sellers receive their equity in pieces, and the bank continues to receive its equity in pieces, or payments, the sale can take place. Everyone with an equitable interest in the property is satisfied. Pieces go to the sellers for their equity, and pieces go to the bank, until the equitable interest is fully transferred.

Lump sum 

The second way the sellers can receive their equity is in the form of a "lump sum." This could be a purchase for all cash, or the buyers could obtain a new mortgage and make a cash down payment for the balance of the purchase price.

This is often referred to as a "cash-to-loan" transaction. The bank is paid off when the new loan is made, and the sellers receive a "lump sum" of cash for their portion of the equity.

Different form 

The third way the sellers can receive their equity is in a "different form." The equity can be paid with almost anything that has a perception of value the sellers consider equal to their equity. Instead of cash, they may agree to take a condo in Hawaii, or perhaps a motor home, or maybe some IBM stock. The possibilities are limitless.

A combination of pieces, lump sum, and different form

The fourth and final way the sellers can receive their equity is through a combination of the other three--pieces, lump sum, and different form.

Perhaps the buyer assumes the $60,000 loan. The bank is satisfied because it continues to receive its monthly pieces. To the sellers, the buyer offers $10,000 cash, a motor home and a $20,000 note at 10% interest, due in five years.

You can use any combination that the buyer and sellers perceive as an equitable exchange. The possibilities are limited only by the imagination and the negotiating skills of those involved.

I developed the "60-Second Real Estate Course" to help eliminate confusion when a deal starts getting complicated. Whenever this happens (and it still does on occasion), I say to myself, "There are only four ways to put this deal together. Which will work best for both our purposes?"

To do that, I must identify the seller's needs; I must uncover the seller's perception of value. If it's in alignment with mine, we have the potential to put together a deal. All I have to do then is convince the seller that what I have to offer is a fair value in exchange for the property. Remember, there are only four ways to do it. 

Making Real Estate Money-Foreclosures

Buying Foreclosures

Foreclosures are divided into 3 phases.  First phase is the pre-foreclosure and that is when the home owner is still in control and if they have any equity then you can work directly with the home owner.  How ever if there were no equity you would want to do a short sale.  The second phase is the auction; this is usually reserved for the experienced investor because of the financing, the property inspection, and the attached liens.  The third phase is what we call the REO; it stands for real estate owned.  This is where the property has not been sold at the auction and the lender gets it back.  This is the safest way to buy a foreclosure because all the incumbencies have been removed and you can also inspect the property before you buy.  Now I am going to say this and it is very important.  Not all foreclosures are a good deal.  So it is important that you act like a real estate detective and get all the facts about the property before you buy.  This is a very important part of the process and the more you know about the deal the better it is going to be for you.  It really is all about the numbers.  Now that sounds simple but it really is not.  When I say it is all about the numbers I mean the number of properties to choose from, the amount of research that you do, the cost and expenses versus the potential profits, and the number of offers that you make.  So depending if you are in a deed state or a mortgage state the foreclosure process could take anywhere from 21 days to 120 days or longer.  If your in a state that gives you a shorter time to do your homework, you need to find the most efficient and fastest way to make a decision about each property that you are interested in.  So remember a foreclosure is an opportunity to find a good deal.  It is not always a good deal and in today’s market there are some homeowners that are being evicted from their homes and they are leaving their properties in a complete state of disrepair.  They are putting holes in the walls, taking out appliances, ect.  So if you are if you are looking at a property that you are not allowed to go inside and se the condition of the property.  You might be buying a property that would easily cost you more to fix up than it is worth.  So again be sure to so your due diligence on each and every peace of property.

            Well people say why invest in foreclosures?  Simply foreclosures are at all time high which presents an outstanding opportunity.  High instant profit margin for the well-trained investor.  You can buy at a steep discount in m any cases.  The future trends for finding deals are up because borrowers are defaulting on their loans, A.R.M.S are resetting to higher percentages, falling property values, balloon notes coming due, unstable money markets, and security markets causing financial loses and uncertain economy which leads to layoffs.  There is always a steady inventory of new property.  Foreclosures are not really understood well or worked very well.  Most people don’t even understand the process;  there is minimum good information available to the public. 

Some properties can be purchased for little of your own money.  As we said before the sellers are definitely motivated and banks don’t want properties so they want to get rid of them as quickly as possible. 

            Why are foreclosures growing?  Foreclosures area fact of life.  Anytime a debtor breaches an obligation of a security document, like a mortgage deed, trust or something like that.  The lender has the right to foreclose on the property.  The grantor most likely does not want to acquire the property but they do want repayment of the funds owed.  Now in today’s markets we are seeing lenders lowering interest rates.  Extending loan terms and there is even talk about forgiving of the mortgage amount.  Even so there are tons of foreclosures to work.  There is an orderly process to the foreclosure, which allows the opportunity to cure the situation.  However some homeowners are not in a position to cure the default.  This may happen because a number of reasons.  Loss of job by one or more home owners, financial crisis need for immediate cash, a health or maybe family problem, business failure or down turn, divorce between couples causing a need for property liquidation.  Death of the property owner resulting in payment default.  Adjustable rate mortgages can increase quickly in times of high interest rate and result in the property owner not being able to make payment.  Balloon payments, these are large payments that cause challenge for the homeowner.  Job transfer, borrower may have two mortgage payments, out of state owner or out of Towner.

            Lets talk a little bit about pre foreclosures.  Many times you can catch the situation before the property has gone on the auction block.  We call this time period pre foreclosure.  The property is in default and several months behind in payments.  The owner may have no means of curing the default yet the clock is ticking towards the time the auction will take place and everything will be lost.  Now given that a foreclosure on a persons credit record is the single most devastating item preventing any future borrowing for years to come.  A homeowner should be very eager and happy to work with you.  Without your help they might not just loose their home but their credit will be destroyed.  A fundamental key of making money in the foreclosure market is understanding why the property went into foreclosure.  Perhaps the owner just had a temporary cash shortage.  You may be able to help them and take an equity position in the property in return for rectifying the situation.  Or the owner maybe financially devastated and just wants to dump the property before their personnel credit is destroyed.  You can help solve their immediate problem and give them a new start.

            When we talk about finding foreclosures there are many sources to aid you in finding foreclosures.  Hopefully you can find the foreclosure before it is too far in the foreclosure process and all possibility of redemption has passed.  In today’s market there is more opportunity to find foreclosures than ever before.  Following are a few locations to begin the search and will be going into much more detail in other courses of this product.  They are classified sections, legal newspapers, attorneys, FSBO’s, realtors, auction companies, IRS auctions, bankruptcies, probate court, and county courthouses, town hall or registrar of deeds.