Myths Regarding Short Sales

March 3rd, 2010

A short sale occurs when a lender agrees to accept less payment than the outstanding balance of the loan. Buyers of these types of properties acquire them at discounted prices to either take possession of the property for long term profits or flip them to obtain short term profits.

The short sales industry has also been clouded by many myths and misconceptions. The passing of this kind of knowledge often leads to wrong decisions or worse, inactivity for which foreclosure becomes inevitable. There’s so much information that needs to be cleared up before any investor is able to truly be able to help the seller. Here are some common myths.

Short Sale Myth #1: Short Sales Can Always Happen as Long as the Bank Doesn’t Have Possession of the Property

One thing investors should be aware of is bankruptcy. The regulations surrounding properties that are in bankruptcy status prohibit collection activity. Short sale negotiations are collection activities and what that means for investors is that short sale negotiations won’t happen because lenders won’t consider any offer. The best way to handle a situation like this is to obtain documentation regarding the bankruptcy. Is the seller really in bankruptcy? Don’t take their word for it because you’ll find that many sellers don’t have a clue about the impact of their financial decisions.

Short Sale Myth #2: Everybody Can Make a Profit from a Short Sale

While it’s true that the best short sale deal profits everyone, the truth is that the seller cannot have any monetary gains from the sale. Lenders will examine your offer through the HUD-1 form that must accompany your short sale offer. The document is then scrutinized to ensure that the seller is indeed in financial hardship and a short sale is the only option available for them.

Short Sale Myth #3: Any Offer is Valid

Even though banks are under the gun to work out a favorable deal prior to going to court, any offer is not valid. There are many factors used in determining whether an offer is accepted or denied however, in general, many banks will consider offers that are 10% below market value especially if the property has considerable equity, is in a stable market, and if the property can be resold for it’s appraisal price. Investors should take heed to factors such as market conditions, conditions of the property, and the ability for a property to fetch the market price before submitting an offer. Submitting frivolous offers will most often be rejected.

Short Sale Myth #4: Banks Will Not Accept a Low Offer

The main point I’m trying to make is that if the property can be resold at market conditions, banks will more than likely not accept a low offer. Why? They can take possession of the property and resell it themselves. On the other hand, banks also understand declining market conditions and will take those situations into account before deciding to accept or deny any offer. After all, time is money and they don’t want to lose any more of it than they have to.

Short Sale Myth #5: The Seller’s Credit Rating is not Affected in a Short Sale

While the seller benefits from avoiding foreclosure, there will still be a notation on their credit report that states that the loan was settled for less than the amount owed. That’s still a ding on their credit history and while it’s still better than FORECLOSURE in big, bold letters, it will be something that comes up should they decide to purchase another property.

I can’t stress how important it is to do your homework before working a short sale deal. Become familiar with the process by reading all you can on short sales. Talk with a mentor and ask questions if you’re unclear about what to do. You’ll not only be able to educate other investors, but also the sellers you’re doing the deal with.

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Seizing Opportunity in Government-Seized Properties

February 3rd, 2010

Most real estate investors are aware of the potential profit from buying government-seized properties — homes and other types of property the government has acquired from tax cheats, drug dealers and other criminals. Because the government isn’t in the business of renting or flipping properties, they want to unload them as quickly as possible. While this is unfortunate for the previous owner, it creates opportunity for investors who act fast and know what to do. Following are some tips.

- Educate yourself — Read as much as you can about finding and buying government-seized properties and find a mentor if possible. Many metropolitan areas also have investment groups.
- Consult a professional — When it comes to buying government-seized properties, a knowledgeable real estate agent or attorney may be worth the commission. Find an expert who has done this before so they can anticipate any problems and plan for a stress-free transaction.
- Finding the right home — You will probably find a good selection of homes on various government websites. Join their mailing list so you’ll be notified of new properties or auctions. If this doesn’t produce what you want, check the local newspapers or visit the county courthouse. Drive through the neighborhoods you have targeted and look for signs of vacant property. If you can discover a government seized property before it hits the market, you’ll have an advantage. Keep your eyes open for government auctions too.
- Inspect the home yourself — Unlike most home sellers, the government does not have to disclose anything about the condition of the property. Plus, they don’t do repairs, or warrant anything. It would be wise to hire a professional property inspector or general contractor to thoroughly inspect the home.
- Research the property — After you’ve set your sights on a property, do your homework. Start with searching the tax assessor files at your county office — either online or in-person. If possible, get into the property and perform an evaluation. Talk to the neighbors and get their opinion about the neighborhood and home values. And if there’s an expert in the area that you trust, get their opinion. You want to know the approximate value of the home and whether or not it’s a community you should be investing in.
- Make your offer or bid — Depending on whether or not you are making a traditional offer, or bidding at an auction, you’ve done your research and now have a pretty good idea of the value. Make your offer accordingly and stick to where you need to be in able to make a profit. Be sure to read all the rules and regulations associated with buying the property because they vary greatly — from bidding over the internet to having to submit your offer through an authorized agent.
- Stick to the terms — Once again, terms vary from county to county, so know what they are and adhere to them. Some agencies require a 20 percent down payment and the balance due in 30 days, while other may require full cash payment. Some accept certified check, while others only accept cash or credit cards. Understand the terms before you submit your offer.

The market for government-seized property is hot right now. Month after month thousands of properties are being seized by various government agencies, and if you know how to buy them, you could be purchasing them at a fraction of their fair market value.

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Finding Bargains in HUD Foreclosures

January 27th, 2010

If you’re a real estate investor looking for a bargain, be sure to consider HUD foreclosures. These are residential properties, typically a condo or single family home, obtained by the U.S. Department of Housing & Urban Development due to a foreclosure on a FHA-insured mortgage. Note that HUD becomes the property owner after the foreclosure and then puts it up for sale to recoup any losses.

Over the past several years, HUD foreclosures have increased, giving investors many choices. And because of the sub-prime lending predicament, more home buyers are utilizing FHA-insured loans, which will likely result in increased HUD foreclosures in the future. This increase could lead to an excellent opportunity for investors.

HUD foreclosures attract a variety of potential buyers, but priority is often given to bidders wanting to live in the property. Of course, cash offers, large down payments and other conditions are taken into consideration. In some markets, certain groups of citizens, such as firefighters, law enforcement, teachers, government and nonprofit employees, are given priority. Some even get up to 50 percent off the sales price.
Keep in mind the condition of a HUD home can vary greatly and all foreclosures are sold on an as-is basis. In addition, HUD does not warrant the property and is not responsible for repairs. So, be sure to get it inspected. Your discounted offer should be based on anticipated repairs — even complete renovations — that will be necessary to make the home habitable and up to code.

Purchasing a HUD home is considerably different than the normal home-buying process. HUD properties are sold using a bidding procedure that puts investors at the back of the line. For the initial 10 days a HUD home foreclosure is put up for sale only bidders that intend to occupy the home are allowed to submit offers. If no offer is accepted, then bidding is expanded to include others.

Most HUD foreclosures are posted on listing websites by various management companies contracted by HUD. All offers on HUD properties must be processed by a HUD-registered agent or broker, usually online. HUD will cover some of the sales commission and closing costs — percentages vary — but a common structure would be that HUD pays five percent for broker commissions and up to three percent for customary closing costs. If the buyer’s agent is not HUD-registered, the buyer will have to pay that agent’s commission separately. Be aware that when HUD considers an offer it will subtract the commissions and closing costs from the purchase price; an agent with a lower commission will probably be viewed favorably.

As with most real estate offers, an earnest deposit must be made at the time the offer is submitted and varies depending on the offer price. If the bid is accepted the deposit is given to the HUD agent. After the bid is accepted a sales agreement must be submitted within 48 hours in most states and a settlement deadline is usually set between 30 and 60 days.

Lastly, if you haven’t purchased a HUD property before, consider finding an agent who has. You will also want to get pre-approved by a lender as this is a requirement to bid on HUD foreclosures. And if you’re a cash buyer, you’ll need proof of sufficient funds, such as a recent bank statement or letter drafted by your banker. Finding a HUD foreclosure is fairly easy: read the newspaper, visit your local courthouse and surf the various government websites.

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Use Commercial Foreclosures Leverage to Attain Property

December 24th, 2009

The goal is to secure that splendid 25,000 square foot ex-paper bag manufacturing site on the corner. The same one that has been tantalizingly begging to be turned into an indoor/outdoor child’s petting establishment! The time to make the move is now to secure that dream! What has prompted this renewed interest in the commercial property? The ‘For Sale or Lease’ signs on the building and the little phrase on the bottom of those advertisements, ‘Pre-Foreclosure Special Financing Accepted’. Let the games begin.

Financial Dealings Involve Tact and Professionalism

The key to assessing the viability of purchasing a commercial property, especially one that includes amounts that could finance third world nation’s annual expenditures, is how best to finance the deal. Hands-down, commercial property, especially distressed unoccupied for years sites, are worth licking the old chops as there are many reasons for the benefits of attaining these gems. The pre-foreclosure advertisements are normally written in locations that appease the lending institutions yet are not without prideful reconnaissance by the soon to be ex-owners of said business. For reasons best left unseen and not spoken of for this review, the business went under and the business owner must now salvage the bare essentials from the failed endeavor and begin again or not. This is the time when professionalism and tact will pay off and in a big way. If the dream of owning that piece of property, for the next ‘great idea’ is in mind and the backing is already nailed down, then there are methods in which to obtain that prize. Trust this guy on that. This is not the first ride in the turnip truck.

Early Smart Bird

The world of commercial foreclosures can best be summed up in one brief and concise phrase, ‘the early smart bird gets the pre-foreclosure worm’. This is one of the best methods for obtaining a commercial piece of foreclosed upon or about to be foreclosed upon properties and it can be done relatively expeditiously. Start by researching both the owner and the lender of the property in the sights. This will answer any and all of the most immediate questions regarding price, size, geographic amenities, demographics, age of building(s), and all the good stuff. There is no need to speak to anyone at this juncture of the game and believe this man; it is a bit of a game with numbers replacing pieces on the game board. This is not to say that the seriousness of the foreclosure should be ignored or worse accentuated, heavens no, that would be is terribly uncompassionate and goes against every fiber of a real business venture. Celebrate when the first 100,000 widgets are packed and ready to ship to Indonesia, then hoot and holler and high-five, even virtually.

Timing of the Call to the Owner or Lender

After all the pertinent Internet research work has been completed, now decision to give the owner or the banker, depending upon the age of the foreclosure, a call, can be made. If it is the owner then the leverage that can be used is monumentally exponential. If it is the bank then that is another topic but just as lucrative. The amount that is in foreclosure can be the entire mortgage plus interest to obtain the property yet in a few select cases the take-over and save my business option exists. It is these prizes, these diamonds in the rough that have proved to be just the right amount of buying leverage to close the deal. Ask Pepsi how the firs plant opened in Michigan and the research will tell you that it was through a failed independent bottler who just so happened to float the down stroke of the property.

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The Key to Starting a Business in the Foreclosure Market

December 16th, 2009

There comes a time when the market is so right that a move has to be made. The time is now as the mortgage crisis has created a plethora of foreclosed upon properties that are in need of a business that will be extremely profitable while being enormously ethical. The steps to owning such a business in the real estate side market is going to have to be initiated by you. The key to starting up the vessel that will make a profit for the foreclosure business entrepreneurs needs to be prepared.

Learn from those who have been in the business and are doing it right now. Suffice to say that although smarts and maturity are required for any business along with the hard work that will run off most of the people in the life of the entrepreneurs, working with the right team will save you time and money.

The key is the drive to be a success and do it ethically and morally. This way one can sleep at night knowing that the foreclosure, inevitable anyways, was made as honest as possible. Now the point that is being made here is not to sweep in, tucking the wings under the blazer, and gift a family the home back that is not what a successful business person is required to accomplish. Rescuing a family that has gotten themselves into a position to lose the residence is not the fault of the entrepreneur striving to alter his or her business existence. The guilt trips and the sneers will always be there as the bank account swells to maximum capacity. Yes, there is a boat load of cash floating around in the foreclosure market and it is not up for grabs it is up to the smarter investor.

The key to starting a very profitable foreclosure business is right inside you. There is a very fine line between the ones that make it and the ones that end up losing it all. Just what the degree of separation of a success and a failure is can be very difficult to pinpoint and history has shown that very few really know the answer to this age-old question. The bottom-line is that hard work will always be the partner and cannot be a silent one as it must scream at the top of its lungs, win. The first step in starting a business is a business plan and the passion to make that plan into a viable reality. There is so many that start off with a fantastic sales/marketing idea that on paper looks like a bonafide winner, yet it closes up before it has even bought the first property. The key is inside you. Take action.

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Best Practice for Securing the Foreclosure Deal

December 10th, 2009

The foreclosure deal is one that requires both careful handling and a penchant for good timing. There are reasons in the control of the buyer and reasons out of the range of control of the buyer. Knowing how to adequately transverse the line between the two is an all-important factor for success in the foreclosure market. The best practice for securing the foreclosure deal involves a buyer and a seller. Shall we?

Brief History of the Foreclosure

The foreclosure has been an instrument of recovery ever since the inception of the term centuries ago. From the very first time a home owner could no longer afford or chose not to pay the rent on the mortgage, there has been the art of foreclosure. This has evolved into one of the most lucrative industries the world has known. The banking industry depends upon the foreclosure as a means of recouping what was previously lost to the sands of time. The real estate market would not be as an attractive if not for the foreclosure. Hated or loved wanted or despised the foreclosure is an instrument that transcends both time and economic barriers.

How to Nail a Foreclosure Deal

The ability to seal the deal in any foreclosure transaction will make a real estate individual into an overnight sensation. Such is the reality for many of the real estate foreclosure realms best and brightest and some of that sales magic can be learned, some is innate. For this review the area that can be learned will be the primary focus. There is little one can do about the innately acquired sales magic as this was created around 10 months before the birth of the foreclosure-star. Do not despise the popularity and the success of the few as the cost that is normally associated with that brilliance in foreclosure bargaining is steep and hard to handle. Be happy that the foreclosure sale is something that can be adequately learned and from that education a very fine living will be manufactured.

Best Practice for Landing the Deal

Everyone desiring to be a success in the foreclosure market needs to understand the best practices of the industry. Since the foreclosure is a depressing and sometimes very frightening reality for an increasing number of Americans every year; the need for professionalism and compassion, with a business twist, is mandated. The wow factor is required in order to raise the bar in the foreclosure market and there are a few techniques that will accentuate and enlighten even the novice real estate entrepreneur to greatness. These are referred to as best practice, best practices, ways, techniques, etc… the goal of the phrasing and terminology is to implant the seriousness and the importance of the foreclosure from first bank notice to sale of property. The world is a very tough place for many millions of individuals and the United States, usually quarantined against such housing atrocities, sits right in the middle or near the end of one of the worst economic debacles we have known, ever. The importance of knowing how to best handle a foreclosure deal is the one that is to be learned and practiced. Profit is the primary motivator for foreclosures and this has to be respected and best practices makes certain that this is achieved and achieved well.

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How to Solicit the Biggest-Lending Institutions for the Most-Prized Foreclosures

December 2nd, 2009

The banks are not in the business of maintaining properties, that is not the role of the average lender. How to best obtain those prized foreclosure properties are on the lists for many of the real estate hunters of the world. This leads to some very interesting and essential routes to take for the attainment of those valuable pieces of information. The goal is to find the best properties in to which the lowest amounts of financial prowess are needed to acquire. Here are some of the sweetest paths to real estate foreclosure heaven that can be taken.

Importance of Background Checking the Background Checkers

The science and to some the art of soliciting the banks that are the best-known and well-heeled ones in the industry, starts with a little background checking. This is the opportunity to check out those institutions and is a little like turnabout is fair play as to the amount of times these lenders pulled a background on the real estate hunter! First of all, the researching of these lenders is very important as this will wean out those that are financially strong and thus have harder lines. The goal is to locate the banks and other lending institutions that have the most to lose, as in cold hard cash, by hanging onto the unsold and unoccupied dwellings. Once these prime targets are located it is time to launch step two, the solicitation of these banks for the most prized properties in distress.

Golden Rule of Location

In order to launch step two of the deal it is important to use the golden rule of location before the calls are made. Say for instance that the lender is located in Chicago and the targeted residential area is Memphis, there is little reason to waste time phoning this lender as the market is not in their territory. This does not mean that the bank could not have a market presence in the metropolis that is Memphis; it is only to say that for this program it is unlikely. Stick to the locational parameters of the region in which the homes are located, this will streamline every conceivable angle. Once the working list of available and viable banks that are geographically inclusive, has been accumulated, it is time to start dialing for dollars.

Balance Sheet Blues for the Banks is Smiles for the Real Estate Foreclosure Hunter!

The most influential banks, that will be readily available to discuss the foreclosed upon properties they possess, are the ones that have the deepest debt to income balance sheets. This information was of course located on the annual prospectus that was pulled up online during the research phase. The telephone call is then ready to be made and this is what to say. Start off with a great salutation and roll right into the solicitation of the foreclosed upon properties available in the area. The voice on the other line will either direct the call to the appropriate department or representative or handle this one their selves. This is all dependent upon a couple of factors. The first being that the employee on the line could be the one that has the keys to the castle, so to speak, and wants nothing better that to speed along the movements of these unsold properties. The second is the employee will know what the call is all about and wish to assist in any way possible. The possibilities are endless!

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Foreclosure Secrets Event!

November 13th, 2009

Jam packed event filled with information you can use to make money now! Learn about recession proof investing and attracting all the money you need to finance your deals!

Discover:
* How 2 Struggling employees with no opportunity for advancement used their proven system to do over 160 deals in the last few years.
* How banks proceed with foreclosures and what you can do to take advantage of the holes in their process.
* How to make money in real estate even if you have a job that takes up your entire day.
* Learn one Foreclosure Secret so powerful, not knowing will almost guarantee your failure.
* Instead of being a victim of the crippled economy, we will show you how to profit from it.
* Let us teach you how to build your credibility in the real estate investment market. Soon your name will equal dollar signs!
* Need Money for Real Estate Deals? Craig and Don will show you how this will never be a problem again!

This special event is happening on Wednesday, November 18th at 7:00pm EST (registration starts at 6:30pm EST) at the Braintree Sheraton Hotel.

The complete address:
Braintree Sheraton Hotel
37 Forbes Road
Braintree, MA 02184

Visit http://www.refortunemakers.com/event or call 800-556-0626 to reserve your seat now!

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When To Buy In The Foreclosure Process

November 12th, 2009

The process of foreclosure can be intimidating at times, but, done correctly, will bestow you with immediate equity. The anticipated speedy counteroffer may be difficult, but slow and accurate decisions offer desired rewards of foreclosure. Keeping track of foreclosure auctions and searching through local newspaper and country records office are the best as they specialize in foreclosure properties.

When to buy in the foreclosure process is a thoughtful query. With the record of low interest rates and declining stock market, it is risky for small investors, and hence many are investing their money in real estate. This is a best time to invest in foreclosures and also to negotiate residential real estate. The present market conditions prove to be the ideal time for investors to purchase foreclosure properties for private residence, resale or rental. The economic downturn has increased the upscale homes to go for foreclosure and the concept that foreclosure properties are obtainable in felony areas is incorrect. Homes in well heeled areas and beachfront make ideal foreclosure properties. The foreclosure process is worth investing as it is as cheap as 30 to 40% below the market. Yet, the savings is twice if the property held in mortgage is in default when it is acquired from the lender.

Appropriate investment time is when the foreclosure process is navigated. Effort and time spend on foreclosure process yields desired savings. However, consumers find the foreclosure process daunting. One thing is certain that good buys are obtainable, provided adequate research is done with persistence and patience. The foreclosure process begins when mortgage payments of a property owner lags behind. These owners struggle financially for over a year and then try to give up, and hence the house definitely needs general maintenance on the whole in association with minor repairs such as roof leaks or missing bulbs, dirty walls, carpets or broken yards o appliances.

The safest deals are the properties owned by the banks. They are ideal to invest for inexperienced foreclosure buyers. This entails no risk, no liens, no taxes and no eviction of tenants. The lender here may willingly offer attractive financial terms and accept down payment lesser than the market rate. The risk of title insurance is also eliminated in such foreclosure process. Similarly, buying foreclosure properties is simple with good credit record, as banks offer the full price or more. In case the purchased property is meant for rental, then banks demand only 10% down payment. Individuals also having good amount of equity are facilitated with credit to purchase a foreclosure. Definitely, foreclosure homes located in good areas when purchased at below market values are a sound investment strategy that is certain to appreciate. The appreciation is tax-free, if it is a primary residence.

All the foreclosures are not earlier owned homes as some homes are also new. Such homes can be identified easily. The slow economy has left the upscale and mid-scale home builders perplexed to find buyers. In such circumstances, the banks that sanctioned construction loans attempt selling it by taking possession of the homes. They hire real-estate agents to handle such deals. Daring investors can locate homes that are in the process of default and in such cases the homeowner is ready to accept a value that is between the market value and the equity also makes a good bargain. Conversely, foreclosure buys bestow bargains, but claim persistence and is a rewarding proposition with risk.

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Riding the Foreclosure Wave to a Better Life

November 4th, 2009

Are you thinking about climbing aboard the wave and riding the foreclosure wave to a better life? 2009 has seen the home mortgage industry be turned over onto its head and the casualties that are seen on a daily basis anywhere in America are disastrous at best. From the small Middle America towns to the hustling bustling big metropolitan areas the scene has been repeated since the start of the recession. There exists a movement to uncover these failed mortgages and busted dreams then profit from their mistakes. There are many names for this type of opportunistic business person and regardless of the meaning and feeling behind those titles there is one undeniable fact. There is a very good chance to recover from debt by purchasing one or a few of these homes in a foreclosure sale and buy.

The first step in searching for these foreclosed homes is to research the neighborhood. Now the knee-jerk reaction for some buyers will be to scan the Internet for a list that shows the listed and sometimes unlisted bank takeovers and then go after those regardless of the location. When you first start out you should consider buying local. The reasoning behind this “think globally, act locally” is that there are enough foreclosures in the town called home…and it saves on travel expenses. The percentages do not tell a lie and the truth is that the severity of the foreclosure problem is located in every town and city in the United States.

While searching for these prize homes that have been sitting on the block and not moving since 2008, one should brush up on the state’s foreclosure laws. This is the very important legal research that sounds intimidating, but has to be completed as the consequences can be extreme.

If done correctly and as efficiently as possible, the foreclosure industry can turn a battered life into a bettered life in one sale. The numbers are on the side of the intelligent buyer of foreclosed homes as this person has the deed to the home and can wholesale, sell, remodel, then sell, or move right in! To say that the win-win is a reality is to be exactly right on target. If the life that you are currently leading is less than desirable then belly up to the foreclosure buffet and get ready to dive in!

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