Monday, July 30, 2012

Home Foreclosures And Big Profits? Just Another Myth

Everyone would like to find a way to make a lot of money without doing a lot of work. Getting rich quickly seems to be the American dream. And if you watch a lot of late night television, you might think that you have found the ticket to fast riches by investing in foreclosed homes. There are advertisements that offer to tell you the "secrets" of buying distressed property with no money down and five figure profits in as little as 48 hours. Other advertisements state that foreclosed houses are available "in your area" at rock-bottom prices or that some troubled owners are "desperate to sell." Can this be true? Is there easy money to be made buying and selling foreclosed property?

Home foreclosure is the process by which a home is taken from a buyer by someone with a lien against the property. Most of the time, the lender initiates this when the buyer has not made payments on the mortgage for an extended period. Lenders are not really interested in taking back houses; they would much rather have cash. As a result, foreclosed houses are usually sold at auction in so that the lender might recoup their investment.

Due to rising interest rates and rising house prices, many people have found themselves with mortgages that they cannot afford. But are people really letting houses go at auction for pennies on the dollar? Can you buy a foreclosed home today and sell it next week for a huge profit?

The truth is quite a bit less exciting then the advertising would suggest. Here are some reasons why buying and selling foreclosed property isn't all it is made out to be:

There is tremendous competition at the auctions. Believe it or not, you will not be alone if you appear at a real estate auction. In fact, in these times of sky-high prices, bidders will be plentiful as everyone is trying to save a few dollars. Most of the time, the hammer price on such auctions will be very close to, and sometimes higher than, average market prices. The competition is fierce.

You must pay, in full, right away. If you do purchase a home in a real estate auction, you will be expected to pay for it, in full, immediately. If you don't have six figures in liquid cash sitting around, this might not be for you.

A lot of such property is damaged. Property damage is common, and you may not be permitted to do a full inspection of the property or the damage ahead of time. This is truly a case where "buyer beware" can apply.

There may be title issues. It may or may not be possible to obtain a clear title on the property. Most professionals who buy such property spend countless hours doing title research, thus putting a dent in the notion that you can make money this way on a part time basis.

What about the owner who is desperate to sell before the lender forecloses? The current market is still pretty lively. No one is going to sell you property at one third off when they can just put a "for sale" sign in the front yard.

The idea of making a fortune buying and selling foreclosed property is lucrative for those people who market books about the topic. For everyone else, it's an expensive, risky, time consuming job. If you are looking for a quick dollar, you won't find it in foreclosed property.

About the Author:
©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including, a site devoted to information regarding home equity lending.

Monday, July 23, 2012

Pre-foreclosures Are The Best Opportunity

Before a bank actually takes back a property during a home foreclosure; a period of time must be served in which a public notice is given. This is known as a pre-foreclosure and it is your best opportunity to begin reaping the huge profit potential available in this sector of real estate investing. It is easy to locate pre-foreclosures because banks must publish significant details related to the pending foreclosure for the public auction that usually follows.

Why is it better to take advantage of this situation at pre-foreclosure rather than waiting until the property has actually been foreclosed upon by the bank?

This is a golden opportunity for you, first, because it means that if you are able to convince the homeowner to sell the property to you rather than waiting out the foreclosure you can avoid haggling for the property when it goes up for public auction. You see, if the homeowner is unable to come up with the cash to make the mortgage current then the next step will be for the property to be sold at public auction. This means that you'll be bidding against several other interested parties and there is a chance that you may lose out altogether or else have to pay more than you need or want in order to obtain the property.

Secondly, when you attend a public auction you need to basically have cash in hand or be able to put your hands on the money in a very quick fashion. When you deal directly with the seller you have a little leeway here. You don't necessarily have to walk in with a cashier's check.

In some cases the bank will actually purchase the home back at the auction and then they are stuck with trying to sell it after the fact. This is not a desirable situation because it is usually not in the bank's best interest to make it a well known fact that they have foreclosures. While they need to get rid of the properties for financial reasons, it is simply not good publicity, to make it known that they have foreclosed on someone's home. This can make it more difficult for you to deal with them. In addition, the bank will be incurring fees every day they hold the property and you may end up paying more money than you would have if you had been able to attain the property directly from the homeowner.

About the Author:
Sal Vannutini is the creator of Foreclosure Wizard. Dramatically increase your foreclosure investment profits, with one, easy to use software program. Get your free special report:

Monday, July 16, 2012

Short Sale Success Secrets With Foreclosures

If you’re an active investor in real estate investing, you may already realize one of the biggest issues real estate investors face: Finding Great Deals.


With foreclosures at a 52-year high, there are thousands of deals available on the market, if you know where to find them and how to secure them. The first challenge you'll face once you locate the property is that most of these homeowners are mortgaged to the hilt. They have no equity, and big loan payments. In fact, many actually owe more than the property is worth!

Most investors will walk away from these deals because they see no obvious profit. That's because they don't know about the Short Sale.


The concept behind the short sale is simple: your goal as a real estate investor is to convince the bank to sell for less that is owed as payment in full. Of course, this concept is easy – buy the foreclosure from the bank at a big discount, sell the real estate, and make money! So how does it work?


Step 1: Always Do your research.

Many new real estate investors make the mistake of waiting until some subscription service sends you the list. The disadvantage is that a ton of other investors are also getting the list. If your first contact is to send a letter, forget it. Your letter will be lost in the huge pile the homeowner is getting from all sorts of other investors, credit repair etc. 99% of the time these go directly into the trash or a big basket unread. If you go directly to their door you've got a chance.

So if you're going to mail, be the first to act when the default notices are printed in the local newspaper. Or be the first at your courthouse, if that's where they're filed first. The key to finding investment-worthy properties is to act quickly. Be disciplined and mail out the letters the very same day—in fact take them to the post office. In this business, the early bird really does catch the worm.

Tip for Success: If you don’t have a company that publishes your notices of default, check with local title companies or bankruptcy attorneys to see if they offer these services; you need somebody familiar with the subject that visits the courthouse often.

Step 2: Develop your marketing strategy.
When you have located foreclosures, make sure your timing is swift. Mail your initial letters of approach to the homeowner the same day you discover the property. Placing ads in your local papers also helps to generate leads and find homeowners eager to avoid the credit penalties involved with foreclosing.

Tip for Success: A typical advertisement strategy taught in real estate training is to get listed in real estate or credit section of the classifieds. These ads typically have a bold, to the point headline, such as “Avoid Foreclosure” or “Stop Foreclosure, Today!” If you are targeting a specific property type, or reaching for higher market values, specify this in your ad. (Instead of simply “Avoid Foreclosure,” add your target market to the bottom of the ad. Example: “Avoid Foreclosure, call 1-800-555-1212. 500K and up.” You’ll make more money in real estate by reaching for high-value properties, and an ad like this shows your prospects that you specialize in helping those with higher value homes avoid foreclosure.

Step 3: Work with the homeowner.
You can’t get anywhere without the cooperation, and often gratitude, of the homeowner. The homeowner you are working with has obviously run out of options, but you’ll need their trust and confidence if you plan to short sale mortgages. Remember, in these situations, you are often looked at as the “rescuer”. Make sure you explain the homeowner’s part in the process thoroughly. Once they deiced to allow you to work with them, there is important paperwork you need them to fill out and sign:

1. an “Authorization to Release” form that gives you permission to contact the lenders and the foreclosing attorneys.

2. a sales contract – signed but leave the purchase price blank. You may need to change the numbers as you negotiate with the bank

3. a financial statement – to show they can't afford to make the payments

4. a hardship letter – to explain in personal terms what happened.

Tip for Success: Remember that this is a stressful time for the homeowner. It’s easy to get caught in the excitement of a prospective short sale profit. You can get them to make a decision when you are able to convince them that this is the right option for them Emphasize the benefits of working with you, and then ask for them to take action. Make sure to let them know that once your contract is signed, and the bank accepts it; they’ll be free to move on with their life.

Step 4: Negotiate with the bank.
Although banks don’t enjoy taking a loss, it is a simple fact of the lending business that short sales are a necessary evil for lenders. Indeed owning the property (a non-performing asset) is even more expensive than selling it for a loss. Consider:

Banks use short sales to drop unwanted property quickly without having to deal with the REO office and go through the long process of putting the home back on the market. When you speak with the Loss Mitigation department, remember, this property is actually costing them money! Federal regulations require somewhere between $300,000 and $800,000 (or more!) to be held in reserve by lenders, which is many times over the actual price of the bad debt.

When you call the bank and ask for the Loss Mitigation Department (the department that handles properties that are in foreclosure) tell the person handling the account that you are trying to help Mr. X with his foreclosure and you are willing to buy the property from him, but due to the condition of the property/declining values/etc. you are only willing to pay X amount. This is where your negotiations begin.

Be firm and polite, but don’t ever make threats to not buy or be forceful in your approach. Loss mitigators are often busy and overworked, and they want to see you as somebody who is minimizing the damage – and hassle – of the bad debt.

Tip for Success: Larger banks are the easiest to deal with when working with short sales and foreclosures. This is because the larger banks have more resource, more experience, and more loans! While there are some larger banks that don’t work with short sales at all, other banks, such as Wells Fargo or Fairbanks Capital, tend to work with a much larger volume of short sales.

Once you have worked with enough short sales, you’ll find that you have inside contacts at some of the larger banks; be friendly, ask them about their day, Develop a rapport. Sometimes, they’ll open up about problems they’re facing or current trends, which of course, you’ll need to keep on top of!

You don’t have to be a real estate pro to see the potential for making money with short sales, and now you definitely have some great tools to get started. Great deals in real estate are out there, and with today’s market, your potential for profit is limitless. Just keep in mind: do your research, market your services, and treat the homeowners and lenders with respect. When you use this approach with short sales, you can make a win-win for everybody, especially the officers at your own bank when you cash in on your profit!

In the next article, we'll discuss the tricks and tips in convincing the bank to take a big discount on the short sale.

Best of Success,
Richard Odessey

About the Author:

Richard and Michelle are experienced investors and founders of the premier site on the internet - training real estate investors to do high profit deals. Offering Free Teleseminars by the top real estate investors, how-to tools and kits and hands-on training with personal advice from experts from the comfort of your home

Monday, July 09, 2012

How to track-down pre-foreclosure sales

How to track-down pre-foreclosure sales

If you want to invest in pre-foreclosed properties, then you need reliable pre-foreclosure listings. Get them and a simple pre-foreclosure sale can be your chance to make the deal of a life time.

In real estate business everyone wants to make a healthy profit. Either individuals looking to buy a house with a dire budget, or bargain house hunters, all buyer s’ goal is to spend as little as possible. The major problem is that many people simply don’t know how or where to actually find those hard to pin down investments. It can be really difficult to come across unusually good deals when buying on the open market. If you’re really looking for savings that will create lots of initial reserves and maximum potential investment value, then you have to consider a pre-foreclosure sale as your best option.

Pre-foreclosure sales can turn into bargain deals on great homes, which can sometimes provide savings of as much as 50% off your initial purchase. How can this happen? Easily, providing it is dome correctly. A pre-foreclosure sale entails the direct contact between the homeowner, sometimes the lender, and the buyer, and that is a win-win situation. On one hand, the homeowners win because they make a pre-foreclosure sale, get the money and pay back the loan, so they are no longer in default; on the other hand, the buyer is also a winner, purchasing the property at a substantial discount and under a flexible sales agreement, depending on one’s negotiating abilities.

As a rule, the first step in every business is the most important and the most difficult, at the same time. When buying pre-foreclosures, the most important step is to get your hands on at a pre-foreclosure listing. Not just any listing, but a reliable, comprehensive and frequently updated pre-foreclosure listing. You don’t find these sorts of listings every day, still there are various medium that offer related information, namely local newspaper, lenders, and online services.

Local newspapers carry classifieds, which are informative but they are not updated on a daily basis and they provide information only for the local market. Lenders or banks can also be a source of information, provided you are lucky and get through the right officials willing to help you with a pre-foreclosure listing; otherwise, it is a waste of time.

Probate and divorce lawyers can also come up with long lists of homeowners willing to sell their houses very fast. It may sound awkward for some of us, but this is a daily reality. And if you have any moral issues, that you take advantage from someone else’s misfortune, think of it this way: they need to sell immediately and you offer to help them. You give them the money and they get rid of another major problem. These unofficial pre-foreclosure listings can lead to pre-foreclosure sales even before the properties hit the market.

Last but not the least, the internet proves to be a resourceful location when it comes to pre-foreclosure listings. There are many websites that will make lucrative offers like free listings, which are alluring for many people. What people don’t realize is that, most of the times, free listings are outdated and have hidden costs attached. So, the best option is to find a detailed, comprehensive and daily updated pre-foreclosure listing with no hidden costs attached, that can be efficiently and successfully used. A good start point is, a reliable foreclosure listings online service, where you can also peruse for valuable pre-foreclosure sale tips.

No matter how you get the information, always remember that pre-foreclosure listings are the most significant step in your real estate venture.

Monday, July 02, 2012

7 Big Reasons To Invest In Pre-Foreclosures

Looking for an "in" to real estate investing?

Working a nine to five job swapping time for money can be incredibly dispiriting. After the futility of it all hits home, it's all you can do to limit the number of home business opportunities you investigate to twenty per week.

One of the more compelling home business opportunities is real estate investing. Real estate investing is the perennial wealth builder, and the transition from working a job to achieving wealth through real estate investing is becoming increasingly well documented.

You've probably thought about investing in real state yourself but you've not gone for it because you thought you needed tens of thousands in savings for a down payment, and perfect credit along with strong banking relationships.

Well, you can get all that together if you want. It doesn't hurt to have those resources. But it's not necessary to have a huge pile of cash and perfect credit to buy a house cheap and resell it for a profit.

It's especially not necessary in the preforeclosure market. Preforeclosures are houses in the default phase of foreclosure; where the bank has filed initial foreclosure papers but the Sheriff Sale or Trustee Sale where the bank auctions off the property, or repossesses it if no-one buys at the auction, hasn't occurred yet.

Buying during the preforeclosure period is one of the best ways for anyone to get involved in real estate investing. With little more than a few hundred dollars and some specialized knowledge you can buy a house at a substantial discount and resell it retail picking up a five figure profit check in the process.

Don't believe it?

Well, let me give you seven reasons why it's true:

1) When people are in default on their mortgage they have stopped making payments to the bank. So when you are negotiating with the seller, and the bank, right up until the point where you buy, no-one is making the payments. For novice investors worried about holding costs this is a huge advantage.

2) Preforeclosures are a very well defined niche market. One of the most deadly mistakes rookie investors make is trying to be a jack-of-all-trades, going after any and everything they can lay their eyes on. The result of this lack of focus is they are soon back at their jobs. By being a very defined market, preforeclosures allow you to develop focused marketing campaigns and standardized processes to get deals completed and closed.

3) One of the fundamentals of real estate investing is contacting and talking "only" to motivated sellers, and avoiding all the rest. Sellers in preforeclosure are some of the most motivated sellers you will find. Their world has been turned upside-down, they are about to lose their house, and their motivation is such that they just want out of the house and the bank off their back. By buying houses from people in preforeclosure, creating 30%+ equity spreads on houses often in good condition is not a difficult thing to do.

4) Buying houses in preforeclosure enables you to create unusually large equity spreads. Recent economic uncertainty has caused a lot of foreclosures, and rising rates will cause more in coming years. If banks had to take back all of the properties that went into foreclosure the FDIC would shut them down. They know this, so they try not to take properties back they don't have to. By requesting the Lender discount what is owed on their payoff, large spreads of equity can be created on houses that are totally "maxed out" with loans. This can't be done on loans not in default.

5) Because Lenders are under pressure to liquidate bad loans rather than take the property back, large discounts can be negotiated. After becoming familiar with the issues that cause Lenders to discount, larger and larger discounts can be achieved as you hone your negotiating skills.

6) If your plan is to buy and hold the property, having good enough credit and financials to get bank financing excludes a great many people from getting into real estate. On top of that, if you do get a bank loan, your financial exposure is at it's maximum when everything is in your own name and personally guaranteed. Buying houses in preforeclosure allows you to simply take over the existing financing already in place. No qualifying needed. You can take title to the property in a Land Trust, begin making payments on the existing mortgage(s), and still get all the tax advantages, appreciation, depreciation without any of the risk of being personally liable for the mortgage and the property.

7) If you have ever bid at auction for property at the courthouse steps, you are only too aware of the competition breathing down your neck. Lots of mind games. The 40 thieves are talking trash to you trying to get you not to bid. If you are Larry Bird, no problem. Make sure you have $500K on your credit line though. However if you are not the 'Bird' and you don't pack half a mil' of credit, you can sneak in and avoid this NBA showdown by buying the house during the preforeclosure period... before the auction.

Make no mistake about it, there are many ways to make healthy profits in real estate investing. But when you look at how easy preforeclosure makes it to buy houses cheap and resell for five figure profit checks, all the while helping people out of agonizing life circumstances, it makes little sense to pursue real estate investing any other way.

About the Author:
Ben Innes-Ker is a father, best-selling author, and real estate investing warrior. He has developed the "Foreclosure Investing Letter" to help real estate entrepreneurs buy foreclosures with less effort and higher profits. To receive your 5 part mini-course that reveals real estate investing basics anyone can use to achieve this too, visit:

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