Tips For Successful Real Estate Foreclosure Investing
Posted on December 29, 2008 at 11:15 am
If you are interested in the real estate industry you may want to consider foreclosures.
Even though this industry has fallen off a bit, it is still a great way to make money.
The most important thing to remember about foreclosure investing is that there are many details to consider. Not only will you need to become familiar with your own situation, but you will also need to know a lot about the foreclosure industry in your area.
But with that being said, foreclosure investing is not a difficult thing to do. If you become familiar with all of the small details you can be a success in no time at all.
The first thing you need to know about foreclosure investing is how it works. Generally speaking, a foreclosure is a property that the bank owns due to the fact that the owner of the property neglected to pay his or her mortgage.
In turn, the bank owns these properties and is forced to sell them back to the public in order to recover the money that they lost. And to go along with this, the bank usually attempts to sell foreclosures quickly because they are not making any money by holding onto them. All of this works out to the advantage of a foreclosure investor.
Getting started with foreclosure investing is quite easy. Now that you know what foreclosure investing is you need to know where to find the properties.
There are several ways that you can do this, and you should look into each option so that you get the best selection possible. Search the newspaper and online and you should not have any problems finding foreclosures to invest in.
When you are finally ready to buy a foreclosure property you will need to become familiar with the steps necessary in your area. Buying foreclosures is different for each county. Some of them have foreclosure auctions once a week, whereas others only have them once a week. It really depends on where you live, and how your county operates.
Overall, foreclosure investing can be a great way to make money. You may have to learn a bit about the industry before starting, but after you are comfortable with what is going on you should be well on your way to success and when you finally begin to realize what foreclosure investing can do for you, you will then be able to make the most out of every transaction.
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Short Sale Negotiation – Tips for Pre-foreclosure Investing
Posted on December 4, 2008 at 5:53 pm
In short sale investing, one of the biggest challenges you’ll face are negotiations with the bank. Putting together a short sale deal can be lengthy and involve a lot of preparation. Plus, you’ll need to work with the bank to come to a price you can both agree on.
First Contact on the Phone
You’ll start short sale negotiations with the bank by contacting their loss mitigation department. It can be difficult to make first contact with the bank. You may luck out when you first call, if you get an automated response system. Some of these systems will have you input the homeowner’s account number and the phone tree automatically directs you to the correct department.
If you don’t get lucky, your best bet is to call customer service and ask for someone who is qualified to make sales on pre-foreclosures or just ask for the Loss Mitigation Department. If you draw a blank with the person on the phone, try asking for the ‘foreclosures department’, ‘short sale’ department or ‘loan modification’ department. If all else fails try asking for someone in charge of loans and they might be able to direct you to the right person.
Always, always remain polite and calm on the phone. These are people you’ll be dealing with on a regular basis. Once you get that initial phone call out of the way you’ll have the right phone number and name to call every time from there on out.
After you get the right person on the phone, introduce yourself and explain that you are in short sale investing. Let the bank officer know that you are interested in a particular pre-foreclosure and would like to set up a short sale deal. It’s helpful to put together a check list of points you want to cover in introductions and even a short script that you can read from to introduce yourself. Practice the script so it sounds natural.
The Short Sale Package
At this point the bank officer should let you know what materials they’ll need from you to begin negotiations. These materials are sent back to the bank in a short sale package. This package is a way of providing the bank with all the foreclosure information they’ll need, your first offer on the property and is also a way of culling the serious investors from those just expressing interest.
In short sale negotiation, the short sale package is very important. One of the best foreclosure tips you can get for negotiation is to make sure this package includes all the materials the bank has requested and more. It often includes;
a hardship letter from the homeowners,
estimates for any needed repairs to the property,
your estimate of the property’s market value,
copies of the homeowner’s income tax returns and
most importantly your cover letter with your offer price for the property.
Banks will often set aside incomplete short sale packages when they receive them. You may not even be notified by the bank if your package is missing a certain document. So, be sure to double check that package before sending it.
Down to the Figures
Short sale investing usually involves a bantering about of numbers concerning the pre-foreclosure. When the bank receives your short sale package, they will order an appraisal of the property. This is called a Broker’s Price Opinion (BPO) and gives the bank a price to aim for in negotiations. It is usually completed within 10 days of the bank ordering an appraisal, but if they are backlogged it can take longer.
When the BPO is completed and approved the bank contacts you to negotiate a price on the property. The bank won’t tell you what their estimated BPO is on the property, but they will usually talk in terms of price range when negotiating.
The bank officer in a short sale investing deal will try to get as close to their BPO as possible. This doesn’t mean that they won’t accept a price lower than the BPO, they can usually take a deal that’s at least 83% of the BPO. You can usually tell how willing the bank is to accept your offer by the way they negotiate over the phone, especially if they call you back later to continue negotiations.
Your job in a short sale deal is to provide plenty of written evidence for your low offer and back up that information in negotiations. Real estate investing can be a great way to make a high return on your money, even more so when you get involved in short sale investing. However, you’ve got to convince the bank first.
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Housing expense ratio reaches alarming levels
Posted on October 9, 2008 at 8:13 amHousing expense ratio reaches alarming levels
More than 7.5 million American people — almost 15 percent of homeowners nationwide with mortgages — spent half their incomes or more on housing costs in 2007, according an Associated Press report that examined data just released by the U.S. Census Bureau. In addition, about 19 million homeowners — nearly 40 percent of homeowners throughout the [...]
More than 7.5 million American people — almost 15 percent of homeowners nationwide with mortgages — spent half their incomes or more on housing costs in 2007, according an Associated Press report that examined data just released by the U.S. Census Bureau.
In addition, about 19 million homeowners — nearly 40 percent of homeowners throughout the nation — are now considered “financially burdened,” spending at least 30 percent of their incomes on housing.
That’s bad news for countless families located across the United States who are finding it harder and harder to make ends meet.
Of course, hindsight is 20/20. And if mortgages were issued correctly perhaps it could have helped minimize the recent affects of the housing downturn on both sides of the deals (lenders and borrowers).
To do that, lenders and buyers across the board should have followed a safer debt-to-income ratio standard that historically hovers around 28 percent.
Here’s how that looks:
- Yearly Gross Income = $45,000 / Divided by 12 = $3,750 per month income
- $3,750 Monthly Income x .28 = $1,050 allowed for housing expense
- $3,750 Monthly Income x .36 = $1,350 allowed for housing expense plus recurring debt
Clearly, this is not the only reason behind the current economic mess, but it is certainly a contributing factor. Mix in balloon mortgages, rising debt, unemployment, fuel prices and several other ingredients and we can see the reason foreclosures are occurring and the economy is struggling.
For information on how to avoid and/or stop foreclosure click here.
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Southern California home sales drop to a 20-year low
Posted on February 28, 2008 at 11:06 amSouthern California's housing slump hit a new bottom last month, despite low interest rates, falling prices, and promises of government assistance.
According to statistics, less than 10,000 homes were sold in the six-county region. That's the first time that has happened since DataQuick began keeping records in 1988. Additionally, 1 out of 4 homes sold had been foreclosed, putting additional pressure on home values.
Read the full article
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Finding Deals on Foreclosed Homes
Posted on February 27, 2008 at 11:06 pmThose looking to buy a home today can find great deals as a result of the rise in foreclosure rates. Keep in mind, there are risks involved in buying these homes, but they can often be bargains.
You can search bank websites since banks often list their foreclosed properties for sale online.
You can also look up government-owned listings. The Department of Housing and Urban Development lists the foreclosed homes that it owns on its website as well as through local real estate agents.
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Foreclosures up 57 percent in January
Posted on February 27, 2008 at 12:07 amThe number of homes facing foreclosure rose 57 percent in January compared to a year ago. Lenders are being forced to retake possession of homes they couldn’t unload at auctions, a mortgage research firm said Monday.
According to RealtyTrac, over 233,000 homes have recieved at least one notice from lenders related to overdue payments. Nearly half of the total involved first-time default notices.
The worsening situation came despite ongoing efforts by lenders to help borrowers manage their payments by modifying loan terms,
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Foreclosures Could Affect Home Appraisals
Posted on February 21, 2008 at 8:53 amYou may think that foreclosures don't affect you, but the housing crisis could directly effect your home's value. There are 2,000 homes that have been foreclosed on in Butler County over the last three years.
In Butler County, there 2000 homes that have bee foreclosed on over the last 3 years.
At a sheriff's foreclosure sale for a house in Liberty Township's Falling Waters neighborhood, $230,000 is where the bidding will start.The home's appraised value is $345,000.
People who live in the neighborhood say it's not just homes in foreclosure that are going for less than the original purchase price.
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Government And Lenders Join Forces To Fight Foreclosures
Posted on February 19, 2008 at 9:53 amGovernment leaders and lenders are working together to help to all homeowners at risk of foreclosure, not just those with subprime loans.
A program called Project Lifeline would allow seriously overdue homeowners to suspend foreclosures for 30 days while lenders try to work out more affordable loan terms.
Six of the largest lenders will participate in the plan.
The same banks are taking part in the Hope Now program which was initiated late last year. That plan freezes rates on some high-cost subprime mortgages for five years. Read the story
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Lenders offer a relief in foreclosures, will it help?
Posted on February 19, 2008 at 8:21 amThe Bush administration has offered a hold on foreclosures to stem the widening housing crisis, with the help of several major lenders, including Wells Fargo. But the latest figures from 2007 show foreclosures in major urban areas increased nearly 80 percent last year, and local foreclosures continue to rise.
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Federal judge refuses to block foreclosures
Posted on February 15, 2008 at 12:53 amHomeowners facing foreclosure could have a hard time defending themselves. A federal judge has refused to temporarily block many Hennepin County foreclosures.Judge Joan Ericksen on Wednesday denied a request for a temporary restraining order against foreclosures initiated by a national electronic mortgage registry. The case is being closely watched by the real estate financing industry because the registry initiates an estimated 40 percent of metro-area foreclosures.
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