How to Creatively Finance A Foreclosed Property Purchase

Creative Financing of a Foreclosed Property

Here is 3 quick methods of funding your home purchase:

Assume the current loans:
Some lenders will allow you to assume the payment. Always ask the seller if they have an assumable loan. Sometimes, this will be real simple especially with older VA and FHA loans

Take Over Loan: (also known as a wrap loan)
This is a situatin where the seller simply wants to walk away and tells you to take over the payment. You'll still need to do your research and make sure there aren't any undisclosed liens. You must use a title company in all instances.

100% Lender Financing:
If you have good credit, you can often find 100% financing from your better mortgage lenders in the area. You might even qualify for 125% financing which will allow you to actually walk away with cash at closing so you can fix up the house.

Investor financing:
Let's say you find a hot deal and it is way below market. You can often find many investors which will go into a joint venture with you and split the profits. You found the foreclosed house and they'll put up the money. You sell and split the profits in half.

These are just a few ways. There are many other methods of getting the house funded.
Just find a good deal and the rest is easy !

filed under: foreclosure investing

Risks and Rewards Of Foreclosure Investing

Foreclosure Investing

There are many inherent risks as well as tremendous rewards when investing in foreclosures. I can't tell you the number of times I've noticed someone buying a foreclosed house not understanding that he/she is getting a whole lot of liens that are sitting on that house.

Why??? Because they didn't do their research.

I recently came across a great little article that goes into this same topic titles:
"Comoaring The Risks and Rewards of Foreclosure Investing"

"Buying Pre-Foreclosures

Buying pre-foreclosures involves working directly with the homeowner and sometimes the lender. Your goal is to create a Win-Win scenario. One win is for the homeowners (they make a sale) and one win is for yourself (you buy the property at a substantial discount).

To accomplish a successful purchase, most experts recommend the following: (1) locate loans in default, (2) evaluate and narrow selections to pursue, (3) inspect the property, (4) evaluate the property owner's needs, (5) determine the market value of the property, fix-up costs, potential sales price and profits, (7) arrange default work out by negotiating with the owner and the lender, (8) close on the property, repair and resell it quickly.

Pros: This is a great investing opportunity if done correctly. Discounts off market value can range from 20% to 35% on average. A low cash down payment is possible if structured properly. You have ample time to research properties. Unique and flexible sales agreements are possible.

Cons: It is sometimes difficult to contact the property owner. You will usually have a lot of competition. The court house research can be cumbersome. You may need to negotiate with the lien holders." .........

http://www.trel.com/foreinvest.html

Good luck and DO YOUR RESEARCH

file under: foreclosure investing

Online Auction Resources Bring Foreclosure Buyers and Sellers Together

Foreclosure Auctions

Online auction type sites are making it easier for buyers and sellers to come together.
Sellers need to sell and buyers are looking to buy. RIGHT?

Here is a great concept and service --- But with any type of investing, be careful and don't let your emotions get the better of you.

RISMEDIA, March 7 —Jamacor, Inc., a national online pre-foreclosure auction Web site that brings together sellers and real estate buyers and/or investors, has debuted at www.preforeclosureauction.com.

The Web site targets people who are facing foreclosure and need to sell their house fast as well as people who are just motivated to unload their house quickly and are looking for someone to give them the best offer.

Good luck and do your research
Ed

Foreclosure Auctions

Yahoo Real Estate is a Great Tool If You Are Looking For Foreclosures

Foreclosure Searches

If you are looking for a great tool to search out the forclosure listings in your area, here is one that we've all come across in the past. YAHOO!

Yup Yahoo! has a great feature that not only will allow you to search for Real Estate Listings in your area, but will also help you find foreclosures and all sorts of other property data.

Here is a quick way to search what you are looking for.

Goto www.Yahoo.com

Click on the Real Estate Tab



Put in a zip code or area that you are interested in searching





You'll see several listings of homes in your desired area.
You can sort by lowest to highest and start making some notes.
It really doesn't get any easier than that.

You then start checking the comps (values in the area) by using anothe free research tool I'd mentioned in an earlier blog post called zillow.com

This will give you the approximate values in the particular neighborhood.

I'm about half way done with a video of how I go from start to finish in finding a forclosure home, researching the values, contacting the owners and selling or flipping the property.
As soon as it is done, I'll upload it to Google Video and give my readers the link to view it.

You can really spend a full day on the computer and find enough property to keep you busy for a month. And if you land one of those in escrow, well then we're talking some good income.

Just get busy and play with all these free tools.
Finding the foreclosure home or even a below market property is only a matter some intelligent research.

Good luck

Ed

filed under: foreclosure research

San Jose Business Journal: Foreclosure activity up 15% in California in fourth quarter

Foreclosure Activity Is Up

As adjustables start rising, homeowner's will start facing larger payments which will cause more opportunities for speculators.

This is a prime market for buying below market homes.
San Jose Business Journal ran this article recently:

Foreclosure activity up 15% in California in fourth quarter
Silicon Valley/San Jose Business Journal - February 10, 2006

Foreclosure activity in California was up 15.6 percent in the last three months of 2005, according to a report released Feb. 2.

Lending institutions sent 14,999 default notices to California homeowners during the October-to-December period, according to DataQuick Information Systems.

That was up 19 percent from the third quarter, and up 15.6 percent from 2004's fourth quarter.

All regions of the state saw an increase in foreclosure activity, ranging from 10.5 percent in the Bay Area to 19.6 percent in Southern California.

Santa Clara county saw a 5.6 percent increase, while Santa Cruz saw a 14.8 percent increase and Monterey went up 25.3 percent.

Dataquick said foreclosure activity hit a low during the third quarter of 2004 when 12,145 default notices were recorded. Defaults peaked in 1996's first quarter at 59,897.

"There's always going to be a certain amount of financial distress. People lose their jobs, have medical emergencies, get divorced, pass away or make bad money decisions at a certain rate. Because of the rise in home values, much of that financial distress has been covered by the increasing amount of equity that people have had in their homes. That equity is now being created at a slower pace, and default activity is inevitably on the rise," said Marshall Prentice, DataQuick president.

The annual home appreciation rate in the state hit 22.8 percent during the second quarter of 2004. Since then it has come down. In fourth quarter 2005 it was 14.5 percent. The appreciation rate is expected to fall below 10 percent sometime this summer.

The median amount owed when the default notice was recorded was $6,862 in fourth-quarter 2005, up from $6,130 for the same period a year ago.

Dataquick said that only about 5 percent of homeowners who find themselves in default actually lose their homes to foreclosure. Most are able to stop the foreclosure process by bringing their mortgage payments current, or by selling their home and paying the home loan off.

files under: Foreclosures Properties on the rise

Listing of Great Real Estate Search Tools

filed under: House Foreclosure Tools

If you want to get better results, you'll need better tools!
When I research house forecolsures, I use as many tools as I can get my hands on. Especially online one.

There are maps, free foreclosure listings, Government foreclosures and many types home value evaluation tools all available for your taking.

Here is a terrific listings of some of the best Real Estate Research tools I've found compiled in one place. Courtesy of Gary Price at SearchEngineWatch.com

And don't forget to visit my post about Zillow.com



filed under: House Foreclosure Tools

Watch Values Carefully: Foreclosure Flipping Inflates Prices

Foreclosure Flipping

When checking the values of foreclosed properties in a neighborhood, watch for flippers as they sometimes will artificially inflate the actual home prices.

Ada Focer is a Boston-based journalist writes a fantastic article on how speculators, flippers, fraudsters and the uneducated buyers all come together in a labyrnith that causes skyrocketing prices and increase the foreclosure cycle.

"Take, for example, the case of a buyer with absolutely no savings. Two identical houses are for sale on the same street. One is selling for $50,000 and the other is selling for $100,000, but the first would require a $5,000 downpayment. The seller of the second house is willing to take back a second mortgage for all the buyer's cash expenses. The buyer has no choice. They must buy the more expensive house or not buy at all.

That does not prove the house is worth $100,000. The financing was not typical. The buyer was not in a position to negotiate anything; the seller, in fact, was able to set the price. And arguably, the buyer was not particularly well-informed or acting in her or his own best interest in taking on a mortgage in excess of the property's true, $50,000 value."

So do your due diligence and check all the prices in the area.
Be careful and invest wisely.

Ed
filed under: Foreclosure Flipping

Check Out IRS Website for Free Listing Of Seized properties

IRS SEIZED PROPERTY LISTINGS

One of the most asked questions I get is where to find listings of foreclosued and seized properties.

This is probably one of the best and most overlooked sites for finding seized property.

IRS (Department of Treasury) maintains a free listing of seized homes, land and personal property. In fact they used to email/mail updates but they've given up on that!

Go check it out. It's free :)

http://www.treas.gov/auctions/irs/cat_Real7.htm

Happy Hunting
Ed

files under: IRS SEIZED PROPERTY LISTINGS

Beware Of Foreclosure State Laws In Your State

Foreclosure Law

Different States have different rules when it comes to foreclosures. Beware of them as this can cost you lots of headaches.

Some states allow for a redemption of the foreclosed property for several days after the sale.

Wikepedia offers a nice description of Foreclosure and explains various terminology.

"In the United States, there are two sorts of foreclosure in most common law states. Using a "deed in lieu of foreclosure," the bank claims the title and possession of the property back in full satisfaction of a debt, usually on contract. In the proceeding simply known as foreclosure (or, perhaps, distinguished as "judicial foreclosure"), the property is exposed to auction by the county sheriff or some other officer of the court. Many states require this latter sort of proceeding in some or all cases of foreclosure, in order to protect any equity the debtor may have in the property, in case the value of the debt being foreclosed on is substantially less than the market value of the immovable property (this also discourages strategic foreclosure). In this foreclosure, the sheriff then issues a deed to the winning bidder at auction. Banks and other institutional lenders typically bid in the amount of the owed debt at the sale, and if no other buyers step forward the lender receives title to the immovable property in return."

So check the Rules and Laws and make sure to consult a professional before you invest.

Ed

filed under: Foreclosure Law