Posts Tagged ‘foreclosed homes for sale’
The current economic environment with millions of mortgages in trouble can lead to a gold mine of opportunity for investors with cash on hand or access to credit. But, how to find foreclosures is an issue that must be addressed before investors can fully profit from the situation. This article will examine how to find foreclosures.
The first step in how to find foreclosures is developing a list of properties. There are several sources for this.
One thing you can do is contact a real estate agent who specializes in how to find foreclosures. Because it is increasingly difficult for agents to make traditional sales, many are developing niche specialties. One of these specialties is foreclosure listings. These agents develop relationships with banks who have pre-foreclosure and foreclosure listings. Working with an agent can reduce a lot of hassles. But, you also have to realize that the banks will factor in their fees into the final negotiated price.
Another way to find foreclosures is to go to individual banks’ web sites. Scouring these sites individually provides a free way to get lists of foreclosures. Similarly, you can look at classified advertisements, especially the legal notices section. You can also go to the courthouse and pull the records for foreclosure filings.
When you are answering the how to find foreclosures question this way, you are investing a lot of your time in just gathering leads. Time is money. For most investors, the thing that makes the most sense is to subscribe to a how to find foreclosures database.
Many of these foreclosure listings have free initial periods of 3 to 7 days. After that, you will pay $40 to $50 a month for updated listings.
It is important to know which kind of list or lists you are buying. There are three main lists of how to find foreclosures.
The first is the pre-foreclosure list. This is a compilation of people who are behind on their mortgage payments but who have not yet lost their homes. If you get involved with the homeowners and banks involved at this stage, you will be working as a short sale investor. This means that you buy the home for less than the mortgage amount, the bank writes off the difference, and the homeowner walks away without a deficiency judgment on their credit records. Often homes bought at the pre-foreclosure stage are in the best physical condition.
The next list is the directory of upcoming foreclosure auctions. After a bank repossesses a home, they are required to auction it off to the highest bidder. This is because they can usually get a deficiency judgment against the homeowner who defaulted on the mortgage. They are required to get the highest price at auction and only go after the homeowner for the difference. In many cases, there are no bidders at the auction and the bank buys the home for $1 over the deficiency. A savvy investor can pick up good deals at auction.
Finally, there is a list of bank owned homes. These are the properties that the bank bought back at auction. They are now sitting vacant, depreciating in value, and taxes are accruing on them. Banks are quite eager to get them off the books. As such, you can often pick them up for 20 to 30 off of percent of appraised value (and the appraisal is less than it would have been if you had bought them in pre-foreclosure).
How to find foreclosures begins with finding a good list of troubled homes to start with.
Land foreclosures allow savvy investors to purchase a piece of land in order to build a dream house, lucrative commercial property and more. If you have cash on hand, land foreclosures allow you to get a bargain price on prime property.
Land foreclosures are pieces of property that were financed and the owners have defaulted on payment of the loan. As a result, it has been repossessed by the lender. The lender, however, does not want the property. They want the money for the property. As a result, they are looking for a new buyer and are often willing to part with it for below appraisal price.
The longer a lender has land foreclosures on their books, the more eager they are to dump them. Whoever owns the land must pay the property taxes. Because this land is not generating any income for the lender, it represents a net drain. That is why lenders are so eager to get rid of land foreclosures.
You can buy land foreclosures at three stages. The first stage is pre-foreclosure. In pre-foreclosure, the original owner still owns the property but is behind on the payments. If they can arrange a sale with an investor, they may be able to save their credit. The lender is motivated to work on the terms of the sale with the investor because they do not want to take on responsibility for the property if the owner walks away.
In may ways, you are doing everyone a favor when you buy a piece of property in pre-foreclosure. The land owner gets to walk away with their debts clear. The lender or bank does not have to assume the property. And, you get a deal.
If no pre-foreclosure sale is made and the owner defaults, the lender must pursue a foreclosure which ends when the property is sold at auction. Land foreclosures can often be picked up for a song on the courthouse steps.
But, often there are no buyers at auction and the bank buys the property themselves. At this point, they will publish a list of land foreclosures that they are willing to sell at a discount just to get them off the books. Typically, investors pick up land on the bank’s books for 20 percent or more off the appraisal price.
If you are planning to invest in land foreclosures, it is important to become familiar with the process of buying. This is a unique form of real estate investment and there are many traps for the novice buyer. You should know that up to 85 percent of short sales never go through – largely because the investor either doesn’t know the process well enough to carry it out or because their own financing falls through.
Land foreclosures can be a good way to build your wealth. You may be able to get your dream property for a song. But, if you are unprepared to finish the deal, be prepared for a lot of heartache when it comes to land foreclosures.
Many people see the current economic crisis and housing troubles as an opportunity in disguise. This is how you can make the most of it and how to buy foreclosed homes.
The first step in how to buy foreclosed homes is to understand what these homes are. These are properties that lenders have taken back because the homeowner has not been able to repay the mortgage. The home was used as collateral and the home was repossessed.
The next step in how to buy foreclosed homes is finding a list of these distressed properties. You can scour the internet and look for individual lists or pay a small fee for a subscription fee that gives you access to a large database of homes. You can also work directly with one of the increasing number of real estate agents who are dealing primarily in foreclosed properties.
Next up in how to buy foreclosed homes is understanding the financial realities of such properties. For instance, distressed homes sell for as much as 30 percent off the appraised value. However, often they have significant property damage that must be considered. Recent reports have shown that property owners who are getting evicted from their homes are ripping out the copper pipes and selling them for scrap. While this will be considered in the appraisal price, the reality of largely rebuilding what is essentially a shell must be taken into consideration.
Another factor is whether there are a lot of empty homes in the neighborhood. People don’t want to move into these so called “ghost towns,” so in many cases, the property values continue to decline.
If you find a property that makes sense from a financial perspective, the next thing in how to buy foreclosed homes is to check the tax lien status. Many of these abandoned properties have unpaid property taxes on them. Find out who will pay them. If you will be responsible for thousands of dollars in tax liens, make sure you figure that into your financial assessment of the home.
Once you have determined that the property makes sense from a financial point of view, the next step in how to buy foreclosed homes is to secure financing. Unless you have hundreds of thousands of dollars in capital sitting around, buying distressed homes requires that you be able to access financing for the properties. Having a good credit record helps, but in these troubled economic times, banks are being difficult about lending to everyone.
The final thing you need to know about how to buy foreclosed homes is that the paperwork will be more complicated than it is when purchasing a home in the traditional manner. This is especially true when a government agency is involved. But even if you are dealing with a lender only, the paperwork is enormous. You may need to consider having an experienced foreclosure real estate agent or even a real estate attorney involved in the transaction.
Becoming educated in all the steps of foreclosure buying is important before you invest the time in pursuing a deal. That’s how to buy foreclosed homes.