Foreclosures 101

Oh, yes, I want to buy a foreclosure at 50% of Market Value, change the locks and put a
real estate sign in the front yard and make a ton of money in 30 days. Oh yeah, I don’t
want to put a penny of my money into the deal either!

Well, everyone wants to do that, but I’ve never seen it happen!

The reality of foreclosure investing is far different than what many people have seen
either through infomercials or books that have been written. We don’t sell books, so I’ll
tell you what I’m aware of in the foreclosure investment field. First, everyone I know who
is an active investor works an awful lot more than people working 9-5 jobs. Second,
serious players either have a significant amount of money of their own or have an investor
backing them up. Third, houses that are going to sale almost always need a lot of work to
bring them to Market Value. Fourth, finding a solid property to purchase isn’t a matter of
picking what you want, it’s a matter of finding something that works economically, keeping
track of it, finding out all you can about it, then beating out all the other investors
who are interested in it. Sound discouraging? People treating this business seriously
invest a lot of time and energy into finding and following properties.

So, is it possible to make money in the foreclosure business?

Sure, the key is to know your strengths and weaknesses.

The first example is the major problem most beginning investors will have. What is the
Market Value of a property you are interested in? Experienced investors will usually all
have a property valued close to the same amount (3% variance). They will use local
Multiple Listing Service comparable sales, Title Company comps and experience to come to
that value. If you are not fully aware of what a property will sell for on the open
market, you cannot do anything with a property. All decisions regarding a property are
based on the price it will receive, Know The Value!!

The second issue of importance is the law. If you know of a property where money can be
made, you do not want to run into legal issues because you structured a deal that is
illegal in your state. Yes, states have laws regarding what you can and cannot do with
owners who are defaulting on their home loans. Do your research, find out whether your
state uses Mortgages or Trust Deeds and the legal timeframes and implications of each.

The third issue is money. It certainly helps if you’ve got a good amount to back your
purchases, but if you don’t, it is not impossible to do deals. You do need enough to be
able to find properties, keep track of properties and cover on-going office type expenses.
I was once told, “Money should never stop you from doing a deal”. It’s true. If
you have a deal, someone to invest in it is easy to find. If investors don’t want to
invest, it’s not a deal.

The fourth issue is knowledge. Federal tax liens, partial interests, leased land,
property information wrong, unpaid property taxes and wrong common descriptions are all
things that have hurt investors. If you are not aware as to how to check for these things,
you shouldn’t be investing in foreclosures. The things that will make a deal head south
are the things that are not obvious.

Time to evaluate strengths and weaknesses.

If you don’t have a strong grasp of market values in your area, aren’t sure about your
state’s legal requirements, don’t have significant money to invest and don’t know how to
follow up on real property information, you need to spend some time learning the things
you will need. Read, make contacts and talk to people involved in the business. They are
easy to find, they will be at local Trustee or Sheriff’s Sales.

However, if you have a good knowledge of the requirements and think you can learn as you
go along, you can probably pursue this market.

Foreclosures 101 Source Information: Foreclosures 101

How do I find Foreclosures?

There are a plethora of places to look when you want to find foreclosure properties. The key is finding them before someone else does. You can find foreclosure properties on the web, newspapers, lis pendens lists, seminars, direct mail, word of mouth, friends, real estate agents, real estate offices, and lending institutions just to name a few.

The internet is a good place to search for foreclosure properties. Several foreclosure listing companies actually search out notifications of default and sell a subscription to those who are willing to pay for this information. Just remember, this is the easiest way to find properties, so beware of competition. Also beware that some of these subscriptions are just a way to make money and provide little or outdated information on these foreclosure properties. If you decide to test one out, make sure they give you a free trial period so you can see how current the listings are.

Source:  Foreclosure University – Where to find foreclosures.

If that’s too much trouble, find a real estate broker that specializes in Foreclosures, REO and  Bank Owned properties.

Disclaimer

Information for Foreclosures 101 is a reprint of material provided by other web sources, and should not be considered as authoritative, or legal, advice. Please consult an attorney prior to making any real estate transaction decisions.