Real Estate

October 31, 2009

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Filed under: Real Estate — Tags: , , , , , , , , — admin @ 11:51 pm

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October 30, 2009

Proceedings For Foreclosures In Georgia

Filed under: Real Estate — Tags: , , — admin @ 7:25 pm
David Faulkner asked:


Options for Avoiding Foreclosures

Homeowners in Georgia who fall behind in their mortgage payments don’t have much time to get their situations turned around. Why?

Foreclosures in Georgia are not a matter for judicial review. The banks which hold mortgages do not have to present their cases for foreclosure in court; unless the defaulting property owners’ purchasing agreements state differently, proceedings for foreclosures in Georgia can begin at the lender’s discretion.

However, some lenders, before instituting foreclosures in Georgia, will offer the homeowners the opportunity to make good on their missed payments. Others will simply add a portion of the owe amounts to the homeowners’ monthly payments until they are caught up; but the homeowners will have to be able to manage larger monthly payments. In view of the fact that they are already in arrears on their lower ones, this solution may not be effective for all of them.

One other option which lenders offer to enable their borrowers to avoid foreclosures in Georgia is to refinance their homes with smaller monthly payments, provided the homeowners have insurance which will cover any delinquent amounts. But there are insurance companies which will cancel a homeowner’s policy as soon as this coverage is invoked.

If Foreclosure Is Unavoidable

If, no matter what help the lenders have extended, the homeowners cannot meet their monthly payments, foreclosures in Georgia are inevitable; the homeowners will be given notice of the foreclosures fifteen days before the process begins.

The lenders, under the laws for foreclosures in Georgia, are obligated to publish their intent to sell the properties for four consecutive weeks in the newspapers where the properties are located. The notices must detail the physical information and mortgage of the properties, and the location and times of their sales. They will also contain the names of the former homeowners and the mortgage holders.

Foreclosures in Georgia are sold at the Court House of the county in which the properties are located, on the first Tuesdays of every month form 10:00 A.M. to 4:00 P.M. with the exception of New year’s Day and July 4th; if either of those days falls on the first Tuesday, the sales will be postponed until the next Wednesday. http://www.foreclosureshomeguide.com/Foreclosure_Properties/Foreclosure_Information.php on Foreclosure Information.

Successful bidders on foreclosures in Georgia must pay the full amount of their bids to the property’s owner, unless the successful bid was a minimum placed by the lender.

Even though there is no all-encompassing national foreclosures procedure, the basic method of publishing upcoming foreclosure auctions in local newspapers is the best way to find listings of foreclosures in your area. Most state foreclosure laws require that a lender publish the intent to auction a foreclosure throughout the four weeks just before the sales date.

National foreclosures are so many and diverse that the best ways to find ones which meet your needs are to search on the Internet for foreclosure listing services; to visit a public library and study the newspapers for the cities where you’d like to bid on foreclosures; or to find a real estate agent who deals in foreclosures.



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Florida’s Anti-investor Legislation, Stature 501.1377 and the Foreclosure-rescue Consultant

Filed under: Real Estate — Tags: , , — admin @ 7:25 pm
Dave Dinkel asked:


On May 28, 2008, Governor Crist of Florida signed into law Statute 501.1377 (HB 643/SB 992) or so called Anti-Fraud Legislation. The real estate investing community has labeled the new legislation as anti-investor, despite the statute formally being called “Foreclosure-rescue Transactions”. The legislation targets certain types of foreclosure-related transactions including any action or method that postpones or stops a foreclosure transaction, the purchase of a foreclosure property, and the lease optioning of a foreclosure property back to the homeowner.

There are two types of individuals covered by the statute, the first of which are called Foreclosure-rescue Consultants. These individuals may or may not be investors and their efforts are focused on stopping or postponing a foreclosure for the homeowner whether or not they collect a fee. Before this legislation took effect, an individual could charge a homeowner an upfront fee for loan modification, short selling his home, or any service that would stop or postpone the homeowner’s foreclosure. As of October 1, 2008 any person deemed to be doing foreclosure-rescue consulting can no longer collect any fees before all services are complete as specified in a contract between the homeowner and the consultant. This means that if a consultant spends 10 to 30 hours on a case, and the end result is exactly as proposed in the contractual agreement with the homeowner, the consultant may not be able to collect his fee after all. It depends on whether the homeowner decides to abide by the terms of the contract or not.

There are literally thousands of legitimate foreclosure consultants who for many years have saved homeowners from foreclosure or eased the burden of their foreclosure and charged a reasonable upfront fee to do it. The well-meaning sponsor of this legislation was focused on a few scam artists who took foreclosure victims’ money and never made an effort to complete the services promised. Ironically, the true victim in this legislation will be the homeowner who now can only seek the very expensive help of an attorney to do the same work a non-attorney can easily do.

Originally included in the legislation were bankruptcy attorneys who have to charge a fee before the bankruptcy filing. However, attorneys were later exempt by the State’s Attorney General who explained he would not enforce it against attorneys. So every attorney in Florida is now exempt from charging upfront fees for loan mitigation, foreclosure postponement, short sales, and any other service that stops or postpones a foreclosure. This has created a new and vast market that was formerly unprofitable for attorneys in most cases. This legislation now gives attorneys a whole new client base to work on.

When real estate investors realized what the legislation meant to their careers and independent small businesses, they reacted in the only way they knew – to try and find “loopholes” by which they were exempt from the severe penalties of this statute. As with attorneys or wannabe attorneys, if you get five together, you will get five opinions. In this case many were trying to escrow the payment(s) for services rendered or charge in small increments as the work was completed, such as an application fee, submission fee, and other “step-by-step” fees. These are illegal under the statue and subject to fines of $15,000 per incident and possible jail time.

Also included in this legislation was specific wording about contract clauses and the requirements of the foreclosure consultant interacting with a homeowner including:

1.) The homeowner must have the contract for at least 24 hours before signing it and this right cannot be waived or modified, as are the waiver rights for the maximum fees that personal injury attorneys can charge. 2.) The homeowner must receive from the foreclosure consultant a copy of all documents that he signed within three hours of signing them. 3.) The homeowner has a three-day right of recession or cancellation of the contract without penalty and any funds collected by the foreclosure consultant must be returned to the homeowner within ten days. 4.) The date of the agreement must be shown as well as the name and address of the foreclosure consultant and it must be signed and dated by the homeowner and the foreclosure consultant after the date the homeowner received the original contract for review. 5.) The contract must be in 12 point or larger “Upper Case” print which we believed must have been a mistake but after speaking to the Attorney General’s Office, they confirmed the entire contract must be in upper case letters. 6.) The contract must explain the exact nature of the proposed services to be provided, the total charges for each. 7.) The contract contains very specific language that cannot be modified in any way and recommends that the homeowner contact his lender or loan servicer since they may do the same service as the foreclosure consultant for no charge. 8.) No upfront fee, money, property or other form of payment may be accepted by the foreclosure consultant until all services are completed.

This is a brief overview of the first part of Florida Statute 501.1377 and is not meant to be a legal opinion advice and is for educational purposes only.



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Foreclosure Home: Are Distressed Properties A Profitable Real Estate Investment?

Filed under: Real Estate — Tags: , , — admin @ 7:02 pm
Simon Volkov asked:


A foreclosure home can be a profitable real estate investment. However, it is important to understand the pros and cons of this type of investment venture before plunking down your hard earned cash. While you might be fortunate enough to locate a foreclosure home in perfect condition, chances are you will need to engage in physical labor before the property is fit to live in or rent to tenants.

Your quest for the perfect foreclosure home should begin by obtaining pre-qualified financing. This will provide you with extra bargaining leverage and ensure you are qualified to buy the distressed property.

When seeking a foreclosure home for investment purposes, there are four options available. One of the most popular options is to purchase distressed properties through foreclosure auctions. Although you can usually buy foreclosure homes under market value, buying from an auction can lead to many headaches.

In order to buy a foreclosure home at auction, you must be prepared to pay the asking price along with any tax or creditor liens which may be attached to the property. Many foreclosure properties are sold “as-is” and require extensive repairs and renovations. Another downside to purchasing a foreclosure home at auction is sometimes the homeowner refuses to leave their property. You will be responsible for evicting the homeowner, which can be a harrowing experience.

Less stressful ways to invest in a foreclosure home include:

• Buy directly from the Seller

• Hire a real estate firm to bid on the foreclosure on your behalf

• Work with a real estate owned (REO) or bank foreclosure specialist

If you have never purchased a foreclosure home it is best to work with a Realtor or REO specialist. Working with foreclosure home specialists will provide you greater bargaining power and may help you obtain reduced closing costs or a lower purchasing price.

Realtors and REO specialists have a wealth of knowledge at their fingertips. They can help you locate a foreclosure home more quickly than if you search for them on your own. Additionally, they can you locate distressed properties in the area where you wish to reside or invest in rental property.

Should you decide to seek out foreclosure homes without the assistance of others, you will want to thoroughly research the area. Determine the availability of public and private schools, average property values and the anticipated value growth in the area.

After completing your research, compile a list of potential foreclosure home properties. Gather the contact information of the individual selling the property, than contact them to arrange a viewing appointment.

Be certain to take along a pen and pad of paper so you can make note of potential problems. If possible, take a digital or video camera as well. Inspect the house from top to bottom and make note of any structural damage, plumbing and heating issues, pest problems, and potential renovations such as broken doors, cabinets or flooring. The more problems you can locate, the better your bargaining power.

Many novice investors make the mistake of being tempted by low-priced foreclosure homes. Realize if a foreclosure home requires extensive repairs, it can cost a fortune and quickly deplete your profit margin. Investing in a foreclosure home that has a higher price tag, but requires fewer repairs might be a better option.

Prior to making an offer on any foreclosure home, be certain to find out if there are any liens attached. Creditor and tax liens can be an enormous legal hassle that consumes a great deal of time and money to resolve.

Once you locate the perfect foreclosure home and have conducted thorough research, it’s time to negotiate with the seller or place a bid through auction. The goal is to obtain the lowest price possible. Working with a foreclosure specialist can help you waive closing costs or reduce the rate of interest on the mortgage loan.



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Companies That Help With Phoenix Foreclosures

Filed under: Real Estate — Tags: , , — admin @ 1:48 pm
Reed Lattin asked:


When you’re facing something as frightening as the prospect of foreclosure in Phoenix, there are probably many things that you’re concerned about. Losing your home is serious, and you should take the time to educate yourself about Phoenix foreclosures instead of doing nothing and just letting it happen. There are options when it comes to Phoenix foreclosure, and as long as you’re willing to research them, you can avoid foreclosure in Phoenix altogether. Phoenix foreclosures can be avoided with a few different efforts, including checking into companies that invest in real estate and want to buy your Phoenix foreclosures before you lose them completely. This is just one of the many options that you have, so you should learn about Phoenix foreclosures before jumping into anything.

Companies that invest in real estate, as well as individual investors, are always looking for Phoenix foreclosures to buy. These companies invest in Phoenix foreclosures because they can afford to. What was once your headache brought on by your Phoenix foreclosure can be a profitable endeavor for them. When it comes to foreclosure in Phoenix, finding a company that will buy your home is a much better option than just letting the process of Phoenix foreclosure happen. It doesn’t matter whether you are facing Phoenix foreclosures because you’ve lost your job, bought a house you couldn’t afford, or are struggling to make payments for any other reason. Phoenix foreclosures are completely avoidable, if you’re willing to take the time to learn about the process and what you can do to avoid it.

Phoenix foreclosures can ruin your credit, as well as any chance that you might have had at a financial future. For this reason, it’s advisable that you look for other options instead of Phoenix foreclosure, including companies that want to buy Phoenix foreclosures before they are taken by the bank, so that you have the best chances of avoiding foreclosure in Phoenix completely. Finding a buyer for your home that is bringing a mortgage might prove to take much longer than you actually have, which is why these companies are useful. You don’t have to know a lot about Phoenix foreclosures to begin with. If you’re willing to do the research and put in the effort to find an alternative, you can save yourself from Phoenix foreclosures in many different ways. However, if you do nothing, you will likely lose your home regardless.

Even if you’ve tried to work out a solution with your mortgage lender to no avail, you can still find an alternative to Phoenix foreclosures. Instead of waiting for an individual buyer to come along, which may take months, you should consider finding a company that will buy Phoenix foreclosures for cash, giving you a quick sale and an easy way out. These companies need to be researched, though, because many will claim to help with foreclosure in Phoenix only to sell your information to outside investors and breach your privacy. To keep your Phoenix foreclosure information private, make sure you find a company that works directly with Phoenix foreclosures and is local to the area. As long as you’re willing to put in the effort, you can find another solution.



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Where are You in Your Foreclosure Procedure

Filed under: Real Estate — Tags: , , — admin @ 1:31 pm
Jill Borash asked:


You need to have a clear idea of where you are in foreclosure in order to understand how you can stop foreclosure. All foreclosure procedures are different because all banks are different and all states have different laws that govern the foreclosure process. So where are you and how do you get to where you want to be?

When did you get the foreclosure notice from your bank? Take a look at these documents and see when they are dated. That will tell you when your foreclosure procedure began. My foreclosure notice came from my bank’s attorneys.

When did you get the foreclosure documents from the courts? Shortly after the bank sends you the foreclosure notice, they will file papers with the court. You will get copies of these that tell you exactly when your foreclosure was filed with the court. These documents are vital and the dates on them are very important. Every state has a different foreclosure timeline and that is what determines how long you have to save your home. As soon as your bank’s lawyers file papers with the court, the clock is ticking and you have a very limited timeframe in which to stop foreclosure on your home. In order to know exactly where you are at in your foreclosure procedure, you need to have these documents and you need to know exactly what date they were filed.

What is your state’s foreclosure timeline? Find out how long the timeframe is from when your bank’s attorneys file the foreclosure paperwork until the sale date of your home. Like I said, every state is different so you have to understand what the foreclosure procedure is for your state. It could be anywhere from a couple of months to up to a year. It all just depends on the state. Do whatever you need to do to find this information.

So now you know all of this and you know where you are at in your state’s foreclosure timeline. How do you get to where you want to be? As with most things in life, it is always good to have a plan. Even if it is a very brief plan. Part of that plan definitely needs to include talking to your bank. You will not stop foreclosure unless you talk to them. Create your own “getting out of foreclosure” timeline. Every foreclosure procedure can be stopped, you just have to know how you are going to do it.



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Refinance In Foreclosure

Filed under: Real Estate — Tags: , , — admin @ 11:43 am
Tristan Hunt asked:


People across America are increasingly being faced with a homeowner’s worst nightmare: Foreclosure. The possibility of losing your home to the bank is very real, and it’s very normal to be scared and confused as the process moves along. What’s important is to keep a cool head, don’t panic, and evaluate your options as early in the process as possible. Many people who are approaching or are currently in a foreclosure do not realize that they may be qualified to refinance while in foreclosure and save their home, mainly because by this point in the process they have experienced rejection and denial by their own lender and often several others. But if you have Equity in your home, you can refinance in foreclosure and get back on track to improving your credit.

Refinancing in foreclosure is not like normal refinancing. When you apply for a regular, or conventional mortgage refinance, the most important thing a lender looks at when deciding whether or not to approve the loan is your credit and mortgage payment history. If you have not been more than 90 days late or behind on your mortgage payments, and your FICO credit score is above 500, conventional lenders will look at your refinance application and consider it. They may not approve it, but you’ll at least get looked at. When you go beyond 90 days late on your mortgage payments, no conventional lender will review your application, no matter how much money you make or how much better your situation is now than when you fell behind. Once you are considered 120 days late or behind on the mortgage, or your credit score falls below 500, the conventional lending industry simply cannot take the risks of lending to you anymore. If you’ve been rejected for a loan during the foreclosure process, even before the notice of default was recorded, it is usually because you are over 90 to 120 days late or your credit score is under 500, or both.

You are now in a special situation, and banks don’t like “special”. They just aren’t set up for “outside the box” financing, no matter how much sense it makes, so their response is to either deny your application, or in the case of the lender who holds the mortgage on your home which has fallen behind, they do the only thing they can, foreclose on the home and force its sale at auction to the highest bidder.

In order to handle special situations like this, you need a lender who specializes in refinancing foreclosures. There are only a few out there, but you’ll know one when you find one, because the first question they will ask you is “If you had to sell your home quickly, how much would it sell for?”, followed quickly by “And how much do you owe on your first mortgage”. This is because they are trying to establish how much Equity you have in the property. Equity for these purposes can be calculated easily:

A) Just subtract the Balance of your first mortgage from the Value of your home.

B) Take that Number and divide it by your property Value (there’s that word again),

C) Multiply by 100 and you’ve got your gross Equity percentage.

Because your credit and mortgage history cannot be considered for the purpose of qualifying you for a foreclosure loan, foreclosure refinancing is all about Equity. Lenders specializing in foreclosure refinancing will routinely request that you order an appraisal and an additional appraisal review performed by a realtor, commonly referred to as a BPO or Broker Price Opinion.

Here’s a general guideline: If you have 35% or more Equity in your property, and your property is Valued at $200,000 or more, you are probably qualified for a foreclosure refinance, and you can save your home from the auction block if you act quickly. Again, this is a rule of thumb. Sometimes, you may be able to get away with having a little bit less Equity, or a little bit less Value, and in some states you will need much more Equity and a much higher Value to qualify for a refinance in a foreclosure scenario.

If you have two mortgages, a first and second, you still may be eligible for a foreclosure refinance if you meet one or more of the following conditions:

1. The Balances of your 1st and 2nd mortgages added together amounts to less than 70% of the Value of your home.

2. Your 2nd mortgage can be “subordinated”, or kept in place while you refinance the 1st mortgage.

I can’t emphasize enough the importance of acting as quickly as possible to save your home through a foreclosure refinance. The foreclosure clock starts ticking from the day on which you receive a notice of default or on which you become 120 days past due on your mortgage payments, and it can move very quickly. While most foreclosures don’t get to the stage of a property auction, sherrif’s sale or trustee sale in which you will lose your home until about 120 days from the recording of the NOD ( Notice Of Default ), in many states this can happen much more quickly, as fast as 60 days. While you delay, your mortgage company’s payoff balance, the mount required to cure the default and prevent foreclosure, will increase as legal fees and interest pile up, eating away at your Equity and robbing you of the ability to refinance out of the foreclosure. It’s easy to feel lost, almost paralyzed by the shock and fear of losing your home, but if you are serious about saving your home from foreclosure, get on the phone and find a foreclosure refinancing specialist as quickly as possible.

Don’t forget, your first priority is to save your home, and a foreclosure refinance is considered a short term loan, usually with a fixed rate for 2 or 3 years. This gives you enough time to get your credit back together and refinance at the end of the fixed period into a much lower payment. Because you have shown your current lender, as well as the credit reporting agencies and by association every other lender in the country that you could not make the mortgage payments in accordance with the terms of the loan which is in foreclosure, it’s understandable that the lender providing the foreclosure refinance is taking a substantial risk in lending you the money to prevent the foreclosure, and the financing will not be at a very low rate. However, in most cases, the foreclosure refinance loan’s payments are Interest Only, and will be lower than the payments on most forbearance, or payment agreements, which your lender may have proposed or enrolled you in prior to filing for foreclosure. And if you consolidate high interest debts like credit cards and personal loans, payoff judgments, and clear away liens, you can potentially free up a lot of cash flow from your monthly budget and begin improving your credit score with a clean slate.

Don’t waste time talking to lenders and brokers who don’t know the foreclosure refinance process inside out, there are simply too many out there who will just waste your time and money trying to learn how to get your foreclosure refinanced while you slide closer and closer to a sale date and the real possibility of losing your home. On the other hand, the right lender can help you lay out other options to save the equity in your home even if you don’t qualify for a foreclosure refinance. Find a special lender for your special situation, and you will have a fighting chance of refinancing in foreclosure and saving your home.



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Pre-Foreclosure Lists – What Are They And How Can A Buyer Use Them To Make Money?

Filed under: Real Estate — Tags: , , — admin @ 7:38 am
Thomas Bladecki asked:


There are hundreds and thousands of houses foreclosed on a regular basis in today’s markets. A pre-foreclosure happens when a person fails to make payments of mortgage loan to the banks or any other financial creditors. In this case the bank or the lender re-claims the house by foreclosing it and recovers the amount by selling it below the market value.

Pre-foreclosure lists contain the lists of thousands of foreclosed homes that are going up for auction. These pre-foreclosure lists can be an excellent opportunity for both the buyer and the potential homeowner. Buying a home prior to going to auction directly from the homeowner or bank can drop the price up to 50%. The buyer has enough time to research on the foreclosed property before investing; if you take the time to find a reliable list. Pre-foreclosure lists are considered as a reliable source of information for people investing in real estate.

Few ways to find pre-foreclosure listings:

1) A search of public records will help a person get the entire list of properties facing foreclosure. Public records like County Clerk or County Records Office does not cost a single penny. Some of them even allow individuals to search properties that have been already been foreclosed.

2) Various websites that offer pre-foreclosure lists and some even offer a great deal more information. Some of them charge a fee, either weekly or monthly to get the additional details on these foreclosed properties. Some are free to use, but the details may not be very reliable. Generally, these lists contain information on bank and government foreclosures. Through these search one can get detailed information like, complete address of the property, telephone numbers of the agent, loan amounts, lien holders and the price of the foreclosed property.

3) Pre-foreclosure listings are also available in local newspapers. Here sale notices published for public through a “Notice of Sale” advertisement.

4) Some lenders will also provide pre-foreclosure lists to the people interested in purchasing foreclosed houses.

Investing in pre-foreclosure properties has some disadvantages as well. All these above options help to gather information before buying a foreclosure house and make the deal profitable.

For an easy search on pre-foreclosure properties, these listings are normally divided in several smaller sections:

- Government foreclosure

- HUD foreclosure

- VA foreclosure

- Bank foreclosure

- Court auction

- Homeowners in bankruptcy

- Sale by owners (FSBO)

These divided sections help both the buyer and the homeowner. Through these divided sections a person can get the information on a specific type of foreclosed home. If you are in the market for HUD foreclosures, then you can view just these types of listings, saving you both time and money in the end.

To avoid the embarrassment, homeowners try to sell the home before the auction. This could be an advantage to the buyer because they sell these houses in below market rates. In pre-foreclosure lists, a person should be able to get a systematic guide to proceed in this real estate business. Following a pre-foreclosure list, one can make money quickly. Apart from searching pre-foreclosure lists, a lot of homework will be required. As long as the investor gets the knowledge from the pre-foreclosure lists, everything should go smooth and make profit.



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Foreclosure Overview & the Foreclosure Process

Filed under: Real Estate — Tags: , , — admin @ 5:08 am
Sofia Rucci asked:


A foreclosure is a legal proceeding taken by a bank or mortgage lender against a homeowner who has defaulted on their mortgage loan.  There are several steps in the foreclosure process; pre-foreclosure, auction, and bank owned.  It is possible to buy homes during each of these foreclosure steps if you know where to find them and who to contact. 

Pre-foreclosure (NOD, LIS)

A pre-foreclosure is just what it sounds, the time period between when the bank decides to foreclose on a property and when the actual foreclosure takes place.  When the bank decides to foreclose on a home, it is required to notify the homeowner of their intent.  The notification that is sent is called a Notice of Default (NOD) or a LIS Pendens.  The NOD or LIS also has to be filed with the County Recorder’s Office.  The bank is not allowed to release this information to investors, however, but investors are more than welcome to search the records at the Recorder’s Office and find out who is in pre-foreclosure.  Investors will then contact the homeowner and try to strike a deal with them to purchase their property before it is actually foreclosed on.  These deals are typically attractive to a homeowner because they want to avoid having a foreclosure on their credit. 

Auction (NTS, NFS)

Once the foreclosure proceedings have begun, a Notice of Foreclosure Sale (NFS) and/or a Notice of Trustee’s Sale (NTS) will be filed.  These filings will announce a foreclosed home that will be sold at auction.  A property auction is an event in which the public can place bids on a home that has been foreclosed on, or otherwise removed from the former homeowners.  The winning bidder is then obligated to purchase the home and becomes the new owner.  Finding foreclosure homes online is a great way to buy a house for significantly less than its value. 

Bank Owned (REO)

A bank owned, or Real Estate Owned (REO) property is one that has already gone through the foreclosure process and is now wholly owned by the lender.  Lenders will then decide to either sell the property at auction or sell it outright, often for just the amount that is owed on the home.  There have been instances where a buyer can pick up an REO house for just a few thousand dollars.  The bank just wants the money that they lost in the last deal and be done with it.  They have no interest in keeping property; that is not their business.

Buying homes in foreclosure, or after foreclosure, can save you tons of money.  The average savings on a foreclosure home that is purchased is about 30% lower than the market value of the home.  Putting that into perspective, you can expect to buy a $200,000 foreclosure home for only $140,000.  That’s average, many people save much more than that on foreclosures.  You can search all kinds of foreclosure homes in your area online.  Maybe you will be able to pick up a nice foreclosure property for investment or to move into.

For more Information on this topic visit www.buildwish.com a free Online Home & Garden Renovation & Design Directory in 100 Cities in North America. Featuring millions of Real Estate Classifieds, Helpful Articles, Contests, Virtual home tools, Qualified Trades, Forums, a moving center, free quotes for Insurance, Moving, Mortgages, Contractors, Find Foreclosures and Much More!

 

 

 



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Are Foreclosure Homes a Smart Buy?

Filed under: Real Estate — Tags: , , — admin @ 4:58 am
Mark Walters asked:


The number of homes facing foreclosure continues to grow in many parts of the country. The consensus among ordinary citizens seems to be that a fortune can be made buying foreclosure homes. Is that true or false? The truth is – it’s some of both.

Three and a Half Ways To Buy Foreclosure Properties

Buying real estate foreclosures only produces profits for those who have the knowledge required to recognize and negotiate profitable deals. With foreclosures that’s not as easy as it might seem.

Preforeclosure

The preforeclosure period offers the greatest opportunity for the novice investor. Preforeclosure can be divided into two periods. The first is where a financially distressed home owner realizes he or she will soon be unable to stay current with their mortgage payments.

If you can reach the owner during this period you have a chance to buy the home in the normal way. That is, make your deal with the home owner, get a mortgage loan and go to the close.

Ah, but how do you reach that owner. You target a housing development that first began selling new homes about three years ago. You do that because many adjustable rate mortgages reset to a much high interest rate after three years. As that date approaches many home owners begin to realize they have a problem.

You blanket that development with flyers every 30 to 60 days advertising yourself as a home buyer . Once a week you spend a Saturday afternoon going door to door and asking “Are you the folks that are planning on selling your home? No? Let me leave my card in case you change your mind.”

The second part of the preforeclosure period is at some point after the homeowner has stopped making mortgage payments and the lender has filed a notice of foreclosure (sometime called a notice of default). Now the clock is running and you must move quickly to make your deal before the lender takes the home.

The owner could be as much as six months behind in mortgage payments. You’ll need cash to bring those payments current and stop the foreclosure.

The catch is that many of these homes were purchased as real estate values peaked. Now home values are falling and the home is worth less than the amount due on the mortgage loan. The owner is “up side down” and there is no equity and no profit for you.

If there is equity you have a chance to make a good buy. There is seldom enough time to apply for and qualify for a mortgage loan. You will either need cash or the ability to strike a deal using a lease-option or to buy “subject to” the existing financing. You will need a thorough understanding of those tactics to use them profitably.

Foreclosure Auction

Your next chance to buy is at the foreclosure auction sale. Auctions are cash-on-the-spot sales. Yes, you will need cash, but even more important is the ability to research the property being sold to determine if it would truly be a profitable buy.

Many foreclosure homes have been trashed and stripped. What will the cost of rehab be? How’s the neighborhood? Is it safe to go in unarmed? Are there zoning or building permit issues attached to the property. Foreclosure auctions are not a game for the inexperienced investor.

Now we have listed the first two opportunities to buy foreclosure homes:

1. During just before a foreclosure.

2. At the foreclosure auction.

Bank Owned Homes

Opportunity number three is homes owned by the bank. These are often called REOs for real estate owned.

If there are no successful bidders at the foreclosure auction the home becomes the property of the bank. When there are many foreclosures banks end up owning thousands of homes they do not want. If you have the cash they will listen to offers. If the bank is eager to get those homes off of their books they may consider financing your purchase if you have a decent credit history. Often they want cash.

You can put together a group of investor who pool their funds to bid at foreclosure auctions or buy REOs.

Redemption

I promised three and a half ways to buy foreclosure homes, so here’s the half. In some states the owner has redemption rights. That means during a certain number of months after they have lost their home at the foreclosure auction they can regain ownership.

To redeem they must pay all money that was owed on the mortgage, pay all the costs of the foreclosure and pay any interest that accrued during the redemption period. It is sometimes possible to buy the redemption rights from the displaced owner, cover all the costs and own the home.

What about the investor who bought the home at the auction? He or she has our most sincere sympathy.

That’s it, three and a half ways to buy foreclosure homes. There’s money to be made, but you will earn every nickel!



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