Home Foreclosure Investing

Buying a Foreclosure Property - 10 Tips to Help You Succeed With Foreclosure Investing

During downswings in the economy, more higher end properties go into foreclosure, so the feeling that foreclosure properties are only obtainable in high crime regions is incorrect. Beachfront and homes in affluent areas are always part of the mix of foreclosed properties available. You can purchase foreclosures for as cheap as 50% under market, but many foreclosures sell for just 10% under market. Yet the savings can be twofold if the property is bought from the mortgage lender who carries the mortgage loan that is in default. Certain mortgage lenders may be prepared to waive some of the closing costs, maybe even provide a break on the interest rate or the down payment. Often in real estate the place to invest is in foreclosures.

Many Market circumstances make it a perfect time for small to medium real estate investors to purchase 1 or more foreclosure homes for their personal residence, resale or rental

Information is King

The beginning investor should learn to navigate the foreclosure process. If you put the time and effort in it will translate to savings. If you spend five hours a week researching, it is well worth it.

For many consumers the foreclosure process can be very disheartening. Good properties are obtainable, but finding those properties demands research, preparation, doggedness and patience. The foreclosure process starts when a property falls in arrears on a mortgage loan. Numerous owners of property that fall into foreclosure have been struggling financially for a year or more before they give up, which normally means that the house has not been receiving general maintenance for a while.

This might include everything from missing doors to ripped out kitchen sinks. Remember front yards, broken appliances and windows, and dirty floors, carpet and walls are found in even the wealthy areas of foreclosures. This could be a positive or a negative for a home buyer. Homes in poor condition might fetch bargain prices, but if you make the repairs and then resell the property you might just make a small fortune. The 1st unwritten rule of real estate is location and does apply to these situations. If you walk into the home and trash is everywhere, but the foreclosure is in a rich area with high resale values, just hold your nose, walk through the entire home and look at making an offer well below asking.

Investing in Foreclosures

How to Purchase Foreclosures

When a mortgage lender determines to foreclose on a property, a default notice is usually filed. Default notices are public record and for investors the 1st step in finding a house in foreclosure. An investor looking for foreclosures can also purchase magazines or better yet subscribe to a website that does all the work for you and list all defaults in your area.

Once a house has been located, search public records. You'll need to look for outstanding liens on the property, since these will often drive up the price of the purchase price. Liens are generally placed on a house for outstanding property taxes. Be sure to also pull comps (sales in the area) to help asses a true value and the likely profit.Explore local state foreclosure laws. A few states such as Pennsylvania and Ohio do require the mortgage lender to sue the homeowner and get a court order to sell the house, a process known as judicial foreclosure. There are other states including Texas and California which follow the non-judicial foreclosure process, which does not need a lawsuit to sell.For beginner investors, buying from the mortgage lender is the safest way to purchase. Virtually all foreclosures are returned to the bank or investor during auctions. While homes in great locations and in respectable shape generally do not sell to far below market, rundown homes, however, can be picked up well below market.

Safest Way to Purchase Foreclosures

Lender owned homes provide the safest deal for buyers who are new to foreclosures. There's no risk of taxes, liens or tenants to evict, only what shape the property is truly in. A mortgage lender who is anxious to sell just might be willing to offer very attractive terms.The mortgage lender might offer to finance the home at interest rates under the market or even allow a lower than normal down payment. If the mortgage lender has already ordered an appraisal and their deal includes title insurance, which is normal, then much of the risk connected with purchasing foreclosures early in the process can be avoided.

Finding Hidden Foreclosures

Foreclosures do not have to be previously owned homes, a few foreclosed properties are brand new. These homes are not as easy to identify and rarely appear on national lists. In many areas, when the economy slows it leaves many builders of new mid to upper end properties over extended with few buyers or prospects. When this happens, the banks that supplied the construction loans take possession of the properties and then attempt to sell them. These are the famous hidden foreclosures because no one associated with the sale of these homes will refer to them as foreclosed properties.

Innovative investors often find homeowners who are about to go into default and are attempting to keep some of the equity in the property. If found in time the homeowner is ordinarily willing to receive a small percentage of the difference between the equity and the homes market value. Pre-foreclosure buys do offer outstanding bargains but they require persistence most of all. Creditors are often hounding homeowners at this stage, so it can be very trying to actually get through to the homeowner. If the homeowner is contacted, the buyer could be in for a big surprise. Homeowners in default might not have phones or electricity, and they might have a variety of personal and legal problems. What's more, they more than likely need some place to live before they can move out of the house the buyer wants.

This can be a high risk, high reward proposition, and is not for first-time foreclosure buyers.

The Auctioneer

Many auctions happen on the county courthouse steps, and they present two distinct disadvantages: Buyers may not be able to inspect the home, and they will have to put up the entire purchase price the same day. HUD runs auctions to help it unload properties it has acquired through defaults on federally backed mortgages. The great deals are hard to find if you go this route, but the cost of getting started with good credit can be very low as many mortgage lenders will loan the full price of the foreclosure or more.

If the property is to be used as a rental, many banks may require as little as 10% down. Foreclosure properties purchased in good areas at below market values that appreciate yearly can be a strong investment strategy for many buyers. properties used as rental properties give many investors valuable tax deductions while the house increases in value and builds equity.

Article Source: http://EzineArticles.com/2012137

How to Profit From Real Estate Foreclosures

The majority of investors seldom think of real estate foreclosure investing as the highly profitable investment that it is. Why, because most people don't have the time to learn the secrets or do the leg work to find properties in foreclosure, or they are reluctant to trust foreclosure investing advertisements --foreclosure auctions or sales through lenders. RealtyTrac the leading online marketplace for foreclosure properties, released its May 2006 report--Colorado, Georgia, Texas post highest rates. U.S. Foreclosure Market Report shows 92,746 properties nationwide entering some stage of foreclosure during the month, an increase of less than 2 percent from April 2006, but still a 28 percent increase from May 2005. Report results indicate a national foreclosure rate of one foreclosure filing for every 1,247 U.S. households during the month. RealtyTrac publishes the largest and most comprehensive national database of pre-foreclosure and foreclosure properties, with more than 600,000 properties from more than 2,500 counties across the country, and is the foreclosure data provider to MSN Real Estate, Yahoo! Real Estate, AOL Real Estate and Knight Ridder Online.
Currently there are 13,318 pre-foreclosure properties in Maricopa County reported by

RealtyTrac(TM). Seventy-five percent of these homeowners will avoid foreclosure. How? They will be saved by Pre-foreclosure real estate investors, the investor, who understands foreclosure investing secrets.
Experts predict foreclosures will increase nationwide in the coming months if the rate of home appreciation remains slow. This foreclosure prediction is the same in every area of the country. The economy is slowing, people are losing jobs and they can't keep up with mortgage payments. Tens of thousands are in the first stage of losing their homes--pre-foreclosure!
There are three stages to buy a foreclosure property:

Foreclosure auction
Buying from the lender after the foreclosure sale
A fourth investment opportunity is reinstating the home owner's loan.
A licensed real estate agent, who specializes in foreclosure investments, develops relationships with investors, thus when a home is in Pre-foreclosure, the agent turns to these investors, if the loan can be reinstated. Reinstating the home owner's loan usually requires several thousands dollars. However, this type of home foreclosure investing can be part of your portfolio, if you know the secrets or you have developed a good relationship with foreclosure realtors.
Receiving a foreclosure notice, does not mean a homeowner will automatically lose their home. Real estate appreciation has allowed many homeowners to pull out their increased equity to pay what they owe or to sell the home and pay off the loan, avoiding a foreclosure battle. Those who have already refinanced or used a home equity loan and spent the money or there isn't enough equity, do not have a hedge against foreclosure. It is, also, predicted that many homeowners with ARM loans face a difficult refinance picture.
The Mortgage Bankers Association of Arizona reports nearly 40 percent of all home loans in metropolitan Phoenix are adjustable. Nationally, about 30 percent of all mortgages are ARMs.
Mortgage Bankers Association of Arizona reports, the number of subprime ARMs jumped by 50 percent in the state last year, making the situation potentially worse for Arizona's housing market. The Subprime loans, which carry high interest rates, typically are taken out by borrowers with poor credit histories.
"Record numbers of people lured by low initial teaser rates have taken out adjustable-rate mortgages that are putting them in vulnerable positions as rates rise," said Jay Luber, a vice president with First Horizon Home Loans in Phoenix.
This creates a perfect opportunity for the informed real estate investor to come to the rescue of the distressed homeowner, and at the same time make a good return on their investment.

Pre Foreclosure Profits and Opportunities and Locating Them

It's a win-win proposition. You, the real estate investor, can help the homeowner save their credit and make a nice profit at the same time. This is called Pre-foreclosure real estate investing. "Pre-foreclosure is where the most return on the investment can be made," states Don Myers, real estate agent and Pre-foreclosure consultant at the Arizona Department of Foreclosure Assistance, Inc., a non-profit organization, Tempe. AZ--DonBMyers@gmail.com
If real estate Pre-foreclosure investing sounds like something you want to know more about, here's a recommendation--"Contact a Pre-foreclosure real estate specialist. Unless you know the secrets, it is difficult to find and move quickly enough to get in on the ground floor of the majority of opportunities. Don't make the mistake of spending thousands on programs offered by TV Pre-foreclosure pitchmen," Myers stated, "a Pre-foreclosure specialist does all the leg work and offers you the opportunity to invest or pass. With a real estate foreclosure specialist you know you are on firm legal ground in every investment."
A licensed real estate professional, who specializes in foreclosure, is the secret to foreclosure investing success. Pre-foreclosure real estate specialists look for new investors and that new investor could be you.
Dorothy M. Neddermeyer, PhD, author - Article Source: http://EzineArticles.com/238024
A foreclosure is the process by way of which a lender can take over the property of a person who has taken a loan. There are many reasons for the owners inability to pay the loan; death of an earning family member, divorce, loss of job and employment, mental illnesses, alcohol or drug addictions and many more. Foreclosures happen when banks, credit agencies or any other financial institutions repossess property. You can find foreclosure listings for properties that include homes, condominiums, residential properties and commercial properties. The foreclosure process begins when for some reason; the owner of the property fails to pay back the loan amount, the mortgage amount. The lender then takes the property back and forecloses the lien on the property that the lender had placed. Investors find foreclosure listings on website that specialize on finding, listing and maintaining foreclosure listings. You can also use real estate agents that specialize in foreclosures.
To find foreclosure listings is relatively easy these days, as foreclosures are increasing very rapidly in today's market. Most experts think that this year foreclosures will reach record highs. An investor can find foreclosure listings for all parts of the country on foreclosure websites that have a nationwide database.
Traditionally April is considered a month where the new home sales pick up. However, the real estate market is very slow as potential buyers are on edge about buying real estate. New sales are down compared to the number of foreclosures. Since foreclosures are nearing an all time high in the United States, an investor or a buyer can make money when they find fore
closure listings.
Foreclosure Home a Opportunity - Tips and Stages of Foreclosure Process
When an investor can find foreclosure listings and make money, they can buy at discount prices; many of the homes are available at 10-50% below the current market prices. To do this they find foreclosure listings for such homes. There is also a glut in the market and this is the right time to buy and this is true for the entire country. Investors find foreclosure listings as there are more and more properties that are been foreclosed.
You find foreclosure listings at websites that list information about foreclosures and the current real estate market. The first thing to know is where to find the properties that you can invest and make money. These properties are available with various agents and a growing number of resources on the internet. In order to find foreclosure listings where you live find a website that has a nationwide database. This means that you can find foreclosure listings about all the foreclosed properties in the various cities and states in the United States.
For the investor, buying at these low prices will enable them to make money in foreclosures, since they can resell the properties later when the market comes back up. While the home owner can benefit from buying the property and save money too. They can use the money for other purposes such as renovating the property or even fund the education of their children.
You can also find foreclosure listings for Bank foreclosures known as REO's (Real Estate Owned); properties that are owned by the bank. When bank foreclosures take place, the prices are typically set at the remainder of the amount of the debt or the loan amount. Find foreclosure listings for them on the websites too banks are sometimes willing to take less then what is owed, this is called Short Sale. Depending on which state you are in, the foreclosures deals can take 6-12 months.
You can also find foreclosure listings through the county office these lists are also available on many of the foreclosure websites. It can be difficult to find a reliable source where you can find foreclosure listings giving complete and vital information. Make sure the website where you find foreclosure listings that are updated daily.
For many homeowners it can be an investment in second homes too, when they find foreclosure listings for the right property. Many websites also gives useful tips about when to purchase properties and how to purchase the properties.
Find foreclosure listings from such websites that enable you to locate and find the brokers and agent information as well. When you find foreclosure listings that give you every detail about the foreclosures it will make it much easier to research and purchase the property. The process of buying the foreclosed property is not very difficult. It just takes a bit of research, time and effort to find foreclosure listings that are reliable. Then the prospective buyer or investor can give a written contract to the lender such as the banks or any other credit institutions to start the process of purchase.
Depending on the policies of the banks or the credit institutions, down payments can range from as low as $500 or up to 10-20% of the total amount of the outstanding mortgage amount. This means that if the outstanding mortgage amount is $156,000, then the investor would need to deposit $15,600 in order to start the purchase process. The remainder of the funds and the financing needs to be worked by the investor. The mortgage rates currently are extremely low and can range from 6% - 6.8%. Depending on your credit history, date, price terms and conditions, great deals can be worked out between the lender and the investor.
is a user-friendly website that offers current information on the foreclosure market that is plaguing the US today. The website offers great resources concerning Home Foreclosure Help
Pre-Foreclosure, Foreclosures and For Sale by Owner (FSBO).

The most likely result in the foreclosure process is that the homeowner will lose ownership and then possession of their home. However the foreclosure procedures vary depending on which state of the USA.

Let me explain. There are two types of foreclosures and each state of the USA follows either of these procedures.

1. Foreclosure by Trustee Sale.

When a property is purchased in the states that follow this foreclosure procedure, the county issues a deed which a trustee holds until the mortgage is paid. When the homeowner defaults on the house payment, the bank or lender notifies the trustee to begin foreclosure proceedings. The property is sold and the proceeds from the sale goes to the lender to cover the loan.

2. Foreclosure by Judicial Sale.

In the states that follow judicial foreclosure, when the homeowner defaults on the house payment, the bank or lender files a claim for the balance of the loan from the homeowners. The courts work out the settlement but this can take up to six months or even longer to resolve. During this time, unless the borrowers can work some solution out with the bank, the chances of losing the home is excellent.

So what happens when homeowners miss a couple of house payments? The lenders send out reminder notices. One will arrive probably a fortnight after the first missed payment. When it time for the next payment the 30 day notice will be sent and probably late fees will be added. If the homeowner does not contact the bank as is often the case, the next letter is at 60 days and is more serious. At 90 days the bank commences formal proceedings. Their attorney then posts out the Notice of Default notifying the borrower that they have failed to fulfill their payment obligations. It is also published in a publicly accessible publication such as the local newspaper, a fortnight to several weeks prior to the auction.

It is during this stage that the homeowner should be taking action and not suffer from the dreaded paralysis of analysis. It is also the best time for foreclosure investors to initiate some form of contact. In most cases the best option for the homeowner is to sell up and find somewhere else to live.

Whether you sell computer software or invest in foreclosure properties, any successful business owner will tell you there is always required reading. In the case of investing in foreclosure properties, the required reading is the weekly foreclosure notices. For these types of investors the foreclosure process starts to get serious when the Notice Of Default (NOD) or the Notice of Foreclosure is posted. It is a public document and the investor needs to find where to find it. The requirements for posting foreclosure notices vary depending on where you reside. As a foreclosure investor, it is important that the investor determines the requirements in that state.

Once the Notice of Default is posted you can bet that every man and his dog foreclosure investor in their area will pick up the scent and knows about the property. The competition increases and any investors interested in buying the property prior to auction are likely to be trying to contact the homeowners.

Hopefully you can now see the advantage of contacting the homeowner prior to the posting of the foreclosure notice. Unfortunately the only way of knowing this is by the grapevine or word of mouth. The investor who arrives first and whom the homeowners trust the most is typically the investor who will most likely get the property.

It is not always easy contacting distressed homeowners in this pre foreclosure stage. This why many foreclosure investors prefer to wait until the official foreclosure notice is posted. Some homeowners remain in denial and may be unwilling to accept the fact that foreclosure is imminent. The posting of the NOD removes any doubt and may spur the homeowners on to take action.

What useful information does the foreclosure investor find on the Notice Of Default?
* Lists the names of the homeowners so you can personalize your approach.
* The name of the attorney or trustee in charge of the liquidation process.
* The location of the property or a legal address so that you find out the information you desire.
* The name of the bank or lender foreclosing on the property.

Every bit of research the foreclosure investor does on the property being foreclosed upon is going to assist him in putting together a deal that benefits everyone involved.

Just because a Notice Of Default is posted it does not necessarily mean that the property is going to be auctioned off. Any time prior to the sale, the homeowners can work with the lender to cancel or at least delay the foreclosure sale.

For this reason it is important for investors to watch the properties from the day the foreclosure notice is posted to the time they are sold. Sometimes an investor may find that a particular foreclosure sale is adjourned and by following the adjournments the investor can find out when the property does go up for sale. If patient the investor may be able to contest the property with less competition

Summing up, if you find out about prospective foreclosure properties prior to the posting of the foreclosure notice and if you can handle dealing with distressed homeowners during the pre foreclosure period, you have the competitive edge. The next best thing is to do your required reading and take action to contact the homeowners.

Article Source: http://EzineArticles.com/3796717