Top Five Tips for Buying a Foreclosure Property Below Market Value

Contributed by: Jim Saccacio, RealtyTrac Chief Executive Officer

If you feel like the escalating costs of real estate have priced you out of the market, think again. It may be time to investigate the vast opportunities available in the foreclosures market.

For people willing to do a bit of homework, the foreclosure market offers some of the best opportunities available in real estate today. Experts point toward significant growth in available foreclosure properties, so there’s never been a better time to line up your resources and educate yourself about this previously hidden market. It’s not unusual to save from 10 to 30 percent of the market value on a foreclosure property, and certain properties offer savings of 50 percent or more! There really are bargains out there. You just have to know where to look.

Web-based services such as RealtyTrac give consumers access to foreclosure and pre-foreclosure information that was previously available only to professional real estate brokers and investors. Today, homebuyers can use these services to identify and research potential home purchases, as well as to find the tools and professional resources they need to help them close the deal. RealtyTrac, which provides all the foreclosure data for both MSN House and Home and Yahoo! Real Estate, has already compiled a list of over 550,000 foreclosure properties across the country.

The keys to a successful foreclosure property purchase are diligence and patience, along with taking an educated approach to investing in this market. RealtyTrac CEO Jim Saccacio offers five tips to help you close a deal on a foreclosure property:

1. Learn about the different types of properties and the foreclosure process.
Not all foreclosures are the same! You need to educate yourself on the difference between the three basic types of properties, including notice-of-default (NOD), notice of trustee sale (NTS), and real-estate-owned REO, as well as the positive and negative aspects of buying at each stage of the foreclosure cycle.

As a rule of thumb, the best savings can be made at the pre-foreclosure stage, where home owners can avoid a foreclosure and lenders can save the time and cost involved in going through the process. Another critical point in the process is immediately prior to the auction date, when all parties might be most open to a last-minute solution.

2. Secure financing early
It’s important for a buyer to be pre-qualified before engaging in discussions with a seller. This ensures that the buyer is in a financial position to purchase the property, and is in the strongest possible position to negotiate.

3. Engage a real estate agent as a “buyer’s representative”
There’s a distinct difference between a buyer’s and a seller’s representative. Buyer’s representatives have the home buyer’s interests at heart, and are charged with finding the right property and negotiating the best price for their clients. Picking the right real estate agent will make your life much easier. Ideally, select an agent who specializes in the foreclosures market and has specific experience in REO properties.

4. Do your homework
Purchasing foreclosure properties is somewhat more risky than buying traditional real estate properties. But, with that risk comes reward in the form of much higher potential savings. With the right examination and due diligence, buyers can significantly reduce the risks. As with any purchase, timing is everything! But, it makes sense to give any property under consideration a thorough examination, including determining its condition and value, finding out the amount in default and the remaining loan balance, and running a legal investing report to make sure the property is free of any financial liabilities. Of course, it never hurts to foster a positive relationship with the seller!

5. Make a realistic offer
If you want to be taken seriously as a buyer, you must be realistic when preparing an offer. Lenders aren’t likely to give properties away, particularly in a real estate market where prices continue to rise. Additionally, homeowners in financial distress may be difficult to deal with, particularly early in the foreclosure process. An educated buyer—one who knows how much is owed on the property and what its market value is—can usually come up with a realistic offer; one that offers significant savings, while meeting the requirements of the lender.



Stephan Iscoe
Publisher,
MoneyMakersNews.com

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Learn the Insider Secrets of Buying Bank Foreclosure Properties

What You Need to Know About the Foreclosure Crisis

by Shawn Buryska

For several years low interest rates and low down-payment percentages enabled home buyers to get into increasingly larger and more expensive homes. Then as home prices rose, home sellers took advantage of the “equity” in their existing homes to move up to even bigger, more expensive homes. Housing prices continued to rise, which brought talk of a housing bubble into the picture and speculation regarding what would happen when the bubble burst. And the consequences of a burst housing bubble add many challenges and obstacles to overcome in the housing market.

During the last year we’ve been experiencing the fallout from the bursting bubble as the high volume of homes for sale pushed prices down and homeowners found themselves unable to get out from under unaffordable mortgages.

Now the big news is the “foreclosure crisis” and what this means for the housing market.

One of the challenges in trying to completely understand the magnitude of this “crisis,” is identifying and interpreting the data correctly. The most commonly cited resource for foreclosure statistics, RealtyTrac, is a marketplace for foreclosure properties. The site’s data includes several types of foreclosure filings in determining their statistics, including default notices, auction sale notices and bank repossessions, making it possible for a property to be included more than once in certain statistics.

According to RealtyTrac (realtytrac.com), foreclosure filings increased 75% in 2007 from the previous year, with more than 1 percent of all U.S. households in some stage of foreclosure, up 79 percent from 2006. There were 1,285,873 properties in some stage of foreclosure during 2007. Nationally, there were 215,749 filings in December, nearly double that of December, 2006 (97%).

In 2007, Minnesota ranked 25th in country in terms of foreclosure filings with 11,557 properties having some level of foreclosure filing (default notices, auction sale notices and bank repossessions). Minnesota’s foreclosure rate (.513%) was half the national average (1.033%) in 2007.

The 1,232 Minnesota filings in December 2007 represented an increase of 1.82% from the previous month and 71.83% from December 2006. For the fourth quarter there were 4,092 filings in Minnesota, an increase of 2.2% from the previous quarter and 113.35% (3834 properties with filings).

The rise in foreclosures presents challenges to both buyers and sellers. Sellers will encounter additional competition, exerting further downward pressure on home sale prices. However, while foreclosure properties may be lower priced as the seller tries to recoup some of their losses, buyers need to use extra caution when considering a purchase. These properties typically have not been well-maintained and may require costly improvements or upgrades to be habitable. A professional home inspection is essential when considering a foreclosure property. Traditional sellers are more well-advised than ever to be sure their property is in pristine condition to outshine the competition.

While the rise in foreclosure activity shows no signs of slowing down anytime soon, the government is working to assist financially troubled homeowners. In late 2007 President Bush announced a deal with the mortgage industry that would freeze some mortgage interest rates for up to five years. For details on this program, contact the Hope Now Alliance, which is a private-sector group of lenders, loan servicers and mortgage counselors.


Real Estate in Rochester MN can be provided by Realtor Shawn Buryska, who specializes in southern Minnesota MLS database searches, finding Rochester MN homes for sale or rent, or selling your current home or condo.



Stephan Iscoe
Publisher,
MoneyMakersNews.com

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Learn the Insider Secrets of Buying Bank Foreclosure Properties

Seven Sure-fire Ways You Can Avoid Foreclosure

Although it's a situation none of us ever wants to be in, home foreclosures are on the rise. If you ever reach the point where your lender is ready to foreclose on your home, the following tips may help you delay or even avoid foreclosure proceedings.

Tip 1: Deal with the problem head on.

If you can't make your monthly payment, face up to it and take steps to deal with it. Avoiding the problem will only make things worse.

Tip 2: Your lender is your friend.

The best way to avoid foreclosure is to maintain a dialogue with your lender. Although it may not seem that way at times, it is in their best interests to help you avoid foreclosure.

Tip 3: Do your homework.

It is important to know what rights you have should you go into default. Go over your loan documents so that you know what will happen and the time frame in which it will happen.

Tip 4: Consider talking to a housing counselor.

Housing counselors are available through grants from the United States Department of Housing and Urban Development. These counselors can take a look at your situation and help you get your finances organized. Some counselors will even represent you in negotiations with your lender.

Tip 5: Spend your money wisely.

When trying to avoid foreclosure it is important to spend money only on necessities. Take a look at your finances and eliminate unnecessary expenses so that you can make your mortgage payment and feed your family. Eliminate luxuries if need be, including cable TV, health club memberships, and eating out at restaurants. You should also consider delaying payment on unsecured credit cards if that money is needed for paying your mortgage.

Tip 6: Consider cashing out.

Take a look at your assets and consider selling them for cash so that you can pay your mortgage and any back payments you might owe. This includes higher-ticket items like jewelry, furs, cars, and boats. Lenders will be happy to work with people who are demonstrating that they will do whatever it takes to make their house payment.

Tip 7: Don't pay a fortune for someone to help you stop foreclosure.

While the vast majority of these companies are legitimate, they are simply offering negotiation services through a HUD approved counseling service (see Tip 4). In many cases, the HUD counselors will help you for free.

The important thing is to stay calm and know that there is help available for you.



Stephan Iscoe
Publisher,
MoneyMakersNews.com

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Learn the Insider Secrets of Buying Bank Foreclosure Properties

Discover Four Simple (But Not Easy) Steps To Real Estate Investing Success

Real estate investing is always good and sometimes it's red hot. When it's hot dozens of real estate seminars begin rolling across the country and thousands of people spend thousands of dollars for investing education.

It's startling to learn that of all those thousands of eager folks who attend these seminars only about 5% buy even one investment house. Why? The real estate gurus sell the "sizzle" and make profiting from real estate sound easy. The truth is that it's simple, but not easy.

Here's a quick plan that will enable anyone to begin building financial independence.

There are basically four steps to investing in single family homes:

1. Buy homes below full market value. Yes, people really do sell homes for less than the home's full value. The key is to understand that most home owners will only consider a purchase offer that is all cash and within 5% to 10% of their asking price.

The successful investor learns to find financially distressed home owners who have no choice but to sell for less than market value. They have lost their job or been suddenly transferred; they are divorcing; they been living beyond their income; the family has been overwhelmed with medical bills and, not uncommonly these days, their money has gone to support a drug habit.

Those are examples of motivated sellers. They have to sell and they will accept something other than a conventional, all cash offer.

2. How do you find motivated sellers? You work at it! Like any business it is important to develop a little marketing plan. One that is simple, yet very effective, is the one that was proven 75 years ago by the Fuller Brush company; door to door sales.

You are selling your skill as a home buyer to people who must sell. Your are there when they need you and you have the skill to help them solve at least part of their problem. With door to door prospecting you will learn more and buy more homes quicker than any other method. However, most people just won't walk door to door for three or four hours per week. OK, there are other ways.

You can watch public notices for the announcement of foreclosure sales. Meeting with a home owner right after they've received a notice that they are about to lose their home allows you to deal with a very motivated seller. Other public notices that provide buying opportunities include probate, divorce and bankruptcy. You can follow the Homes For Sale listings in your local newspaper or Internet site.

You can telephone the names found in these notices or, and this is the least time consuming, send a postcard expressing your interest in buying their property. It will produce buying opportunities, just not as many as personal contact.

3. After you've found a motivated seller you must understand how to frame offers that provide benefits for both you and for the home owner. A good real estate investor quickly learns that this is not a business of stealing property, but of solving problems in a way that benefits the seller.

The home owner is in a tight spot of some kind and you can save them from public embarrassment and, in most cases, give them at least a little cash to get a new start.

No investor can afford to leave cash in every deal. No one but Bill Gates has that much available money. You must use creative techniques like, leases, option and taking over mortgage payments. Little or no cash is needed for those deals. You can find plenty of reasonable priced educational material on those subjects in book stores or on EBay. The same education that seminars sell for thousands of dollars.

4. You make your profit when you buy! Never make a purchase until you've carefully determined exactly how you will get to your profit. If you hold it as a long term investment will the monthly rental income more than cover the monthly mortgage payment? Will you sell the deal to another investor for fast cash? Will you do some fix-up and sell the property for full value? Will you quickly trade it for a more desirable property? Have a plan before you buy.

There you have four steps that even a part-time investor can execute in three to four hours per week. What's the missing ingredient? Your determination and perseverance. If you will unfailingly follow the plan for a few months you will be well on your way to financial independence.

Stephan Iscoe
Publisher,
MoneyMakersNews.com

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Learn the Insider Secrets of Buying Bank Foreclosure Properties

Finding Motivated Sellers

What makes a real estate deal, a deal? Well there are many reasons why, but one of the most significant sources of great real estate deals has nothing to do with the real estate itself. Sure...there are rundown homes that are selling for pennies on the dollar, but its selling for pennies on the dollar for obvious reasons!

Where the hidden "gems" are found is within the people who own the home. It's actually the situations that they are in, such as foreclosure, divorce or maybe a death in the family that present the opportunity. It's the situation that gives the real estate investor a chance to get the property cheaper than it's actually worth. Why are these situations so valuable? They present a possible problem to the current owner, where they may need to sell the property very quickly and at a price more favorable to the buyer, namely you!

The urgency to solve their existing problem gives you a chance to be a problem solver. This generally creates an opportunity if you know how to solve problems.

Uncovering The Hidden Gems!
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Since the majority of the time, "distressed sellers" aren't in plain view, we have to search for places that will provide us the information that will gives us hints as to their possible situation. These "hints" of information can be found at your local County Recorder's office.

The County Recorder's office has a myriad of information that can lead you to where the deals are. Here's some of the examples of listings that you may investigate through public records and some other tips that don't require research via public records:

1) Notice Of Default - this is a notice that the bank sends out to the borrower notifying them that they are delinquent on their mortgage payment. This information is readily available as it is public record. Ask your County Recorder clerk to assist you on finding this valuable information.

2) Notice To Condemn - this is a notice that is sent out to the homeowner notifying them that all or a portion of their property doesn't meet building or zoning code for that particular county. The homeowner has a certain time frame to fix it, or the County will force the owners out and condemn the property. You don't want to deal to much with the major fixer upper type, but sometimes people put on add-ons to their homes, without hiring a contractor to do the work. The results are sometimes not up to building code, which if not fixed within a certain time frame, can lead to the County to condemn it.

3) Notice Of Divorce - this is a preliminary filing to an inevitable divorce. Usually before the actual divorce, there is a hearing, and that hearing produces a formal date in which a divorce will be finalized.

4) Delinquent Property Taxes - these are self explanatory, however there are certain laws on how the State proceeds on recouping property taxes. You would do best to talk to an attorney about the process in your State.

5) Pending probate court cases where the beneficiaries live out of State. These cases are assigned to an "executor" to liquidate the assets for the beneficiaries. They can be a relative or possibly an attorney. You would simply contact the executor to see what price range the beneficiaries are asking for. Most times, the beneficiaries want to sell fast, because they have no interest in handling the affairs in a different State or they don't have the time to.

6) Out of State owners can usually qualify as a possible lead to a good deal. The property or situation though, has to dictate the reason as to why these owners would be motivated.

7) Rental houses - the idea behind rentals is that some rentals are on the market, because owners may have tried to sell in the past with no success, and are no stuck with a property that they really don't want. A good indicator you might want to look for, are houses that may have uncut trees or grass within the front yard. Broken window or graffiti may also be a good indication of an unwanted property. These are all things that are cosmetic, and can be fixed up with a clean up crew.

8) For Sale By Owner - some of these homes may not have enough equity to pay a realtor. These are prime candidates for a subject to type deal.

When doing any of these deals, you should always let the seller talk more, while you listen to their situation. People who are in difficulties tend to talk about their problems to make them feel better.

If they don't like to talk much, ask pertain questions as to why the house is selling or how quickly do you need to sell the house. By understanding their situation, you can better understand how you make an offer on the property. As a real estate investor, you are always looking for a reason to give you, the real estate investor, a benefit in the deal.

Here's some of those benefits you are looking for:

1) Lower price offering.

2) Subject to deals (see my other article on this topic).

3) Flexible pay plan or price offering.

4) Low to no downpayment required.

The main theme in these techniques, are two fold: getting a good deal for you the investor, and picking up the property before it becomes known to everyone else!

Another good idea is to have a handyman check the property to ensure that it is in good condition and if repairs are necessary, to get an estimate on the cost. This combined with the seller's situation, gives you a better idea on what your offer is going to look like.

Happy Property Hunting!
Stephan Iscoe
Publisher,
http://MoneyMakersNews.com
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Learn the Insider Secrets of Buying Bank Foreclosure Properties