The Hardship Letter:

Learn More about this Important Piece of the Short Sale Package

By Lauri Waddell

When a short sale is negotiated with the lender, a hardship letter from the homeowner is requested in the short-sale package. There are several purposes for the submission of the hardship letter which we will explore.

The hardship letter is a letter to be written by the homeowner detailing the events that led up to the default and pre-foreclosure of the mortgage. The letter should detail, in chronological order, the events that caused hardship which ultimately led to financial duress and the default of the loan. As investors, we must always keep in mind that “Life happens to good people.” No one intentionally chooses foreclosure. Our job as investors is to assist the homeowner in documenting the events that led to the preforeclosure of their home. We do this with an empathetic and professional approach that gives the homeowner dignity in the process of letting them tell their story.

Continue reading "Short Sales and Foreclosure Investing: The Hardship Letter" »

Posted 01:12 PM | Permalink | Comments (0)

A Key Element of a Successful Short Sale

The BPO: Broker’s Price Opinion

By Lauri Waddell

One of the items that seems to bring the most challenge in a short sale package is the lender’s perspective of the value of the property. This article will address how to legally and ethically show the lender what the true value of the property you are trying to negotiate the short sale for should be.

Continue reading "Short Sales: The BPO (Broker's Price Opinion)" »

Posted 06:51 PM | Permalink | Comments (2)

FICO (the credit scoring company) sends out a e-newsletter with interesting information. The latest one included a question about the impact foreclosure has on credit scores. If you are a foreclosure investor, you should understand this. Here’s the question and answer as published by myFICO.

Continue reading "How do foreclosures and bankruptcies affect credit scores?" »

Posted 10:31 AM | Permalink | Comments (2)

Foreclosure strategies:

Short Sales Can Lead to Tall Profits

It’s a scenario that could happen anywhere: Joe and Mary bought their house for $250,000, put just five percent down, and took out an adjustable rate mortgage. Three years later, the market is soft and overall real estate values have declined. Joe and Mary’s house has a fair market value of $230,000, their loan balance is $225,000, and their mortgage has reset—and now they can’t afford their payments.

Can you help them? Possibly—if you can negotiate a short sale with their lender.

Continue reading "Short Sales Can Lead to Tall Profits" »

Posted 11:02 AM | Permalink | Comments (2)

I saw an online news headline that read:

Housing Bust Gets Scarier
Former NBA Star in Foreclosure

Oh, please! That an irresponsible professional athlete managed to make and squander millions of dollars has absolutely nothing to do with the state of the real estate market today.

Don’t buy into the media doom and gloom. Are there a lot of foreclosures out there? Yes, and that means opportunities for foreclosure investors.

For savvy investors, this market is not scary at all – it’s exciting and full of opportunity.

What do you think when you see headlines like the one above?

Posted 01:36 PM | Permalink | Comments (0)

On Dec. 20, 2007 President Bush signed the Mortgage Forgiveness Debt Relief Act of 2007. The goal of the legislation is to help Americans avoid foreclosure by protecting families from higher taxes when they refinance their home mortgages.

Under current law, if the value of your house declines, and your bank or lender forgives a portion of your mortgage, the tax code treats the amount forgiven as income that can be taxed. The Act creates a three-year window for homeowners to refinance their mortgage and pay no taxes on any debt forgiveness they receive.

Continue reading "President Bush signs Mortgage Forgiveness Debt Relief Act of 2007" »

Posted 11:39 AM | Permalink | Comments (0)

Important information for foreclosure investors:

Consumer Alternatives to Foreclosure

If you’re investing in foreclosures at the preforeclosure stage, it’s important to know all the options homeowners have.

By Jordan Taylor

You’re a real estate investor, not a consumer counselor—so why do you need to know what options a consumer who is facing foreclosure may have? Because the more you know, the more effective you can be as an investor.

Continue reading "Consumer Alternatives to Foreclosure" »

Posted 08:16 PM | Permalink | Comments (0)

The State of New York and the FBI have indicted six people, charging them with participating in a wide-ranging “home foreclosure rescue” scheme, in which they defrauded homeowners of the titles to their homes and caused lenders to hold millions of dollars of bad loans. The details are outlined in “Six Charged in Multimillion Dollar Foreclosure Rescue Scheme.”
What’s frustrating about this and similar stories is that it’s possible to make substantial amounts of money investing in foreclosures ethically, honestly, and without hurting anyone. How much you make depends, of course, on you. But the point is, you don’t have to defraud anyone to build wealth. And these criminals cast a shadow on the ethical investors and make it harder for them to invest.

This scam obviously took a lot of intelligence and work to put together. If these folks had taken that energy and use the legal, ethical strategies we teach, they would probably be getting ready for a wonderful Christmas with their families right now instead of facing criminal charges and possible lengthy prison terms.

Jackie

Posted 02:30 PM | Permalink | Comments (0)

President Bush has unveiled a plan designed to reduce the rate of foreclosures by extending the period of “teaser” rate for subprime mortgage holders for five years.

If—and this is a big if—the plan works exactly as it’s supposed to, there will still be plenty of foreclosures. According to the news reports, to qualify for the plan, a borrower must have a loan originated between January 2005 and July 2007 with a reset scheduled between January 2008 and July 2010; made all payments on time; and can’t afford the reset payment. Unfortunately, there are plenty of people who are now and will be in the next few years facing foreclosure who don’t meet those parameters. What’s more, it’s not clear just how much help this plan is going to provide people who do meet the parameters. Read “Up in ARMs – the Mortgage Bailout” by Matthew Graham for a view you’re not likely to get in your daily newspaper or on the network news.

This is still an excellent time to learn and use foreclosure investing skills and strategies.

Posted 03:42 PM | Permalink | Comments (0)

If you’re investing in foreclosures, you may encounter prospective sellers who can’t pay their mortgages and are considering bankruptcy. In fact, as a foreclosure investor, your biggest competitor is not other investors, but bankruptcy. You’ll find it helpful to have a good understanding of the bankruptcy process and what it can and can’t do for debtors.

Here’s a link to a post on MyFico.com that discusses bankruptcy basics: click here to read Bankruptcy FAQ.

Posted 05:20 AM | Permalink | Comments (0)

States are cracking down on foreclosure assistance scams, and that’s a good thing. People in foreclosure have it tough enough without being preyed on by con artists.

If you’ve taken foreclosure investing training at Wealth Intelligence Academy, you know how to legitimately and profitably invest in foreclosures, and how to create a win-win-win situation that benefits you, the homeowner, and the lender. Remember that foreclosure laws vary by state, so be sure you are in compliance with the laws of the state in which you are investing. Also, be sure you are communicating very clearly to the homeowners you work with so they understand what you’re doing and how the transaction will work. Don’t let yourself be confused with scammers who deliberately mislead and defraud consumers.

Here’s a news release issued on Oct. 19 by the Texas Attorney General about action that state took against such a foreclosure scammer:

Continue reading "Foreclosure Investing: Be sure homeowners understand what you’re doing" »

Posted 04:27 PM | Permalink | Comments (0)

If you’re investing in foreclosures, especially in Texas, you will be interested in what Texas Attorney General Greg Abbott is asking lenders and loan servicing companies to do to prevent foreclosures in that state.

Continue reading "Texas Attorney General Abbott proposes foreclosure prevention measures" »

Posted 02:27 PM | Permalink | Comments (0)

Foreclosures are likely to be a popular investing strategy for at least several more years. How do you find foreclosure opportunities? Consider David Cowgill’s advice at http://www.realestateweblog.org/how-to-find-foreclosures-where-do-i-start.php#comment-181

Posted 06:58 PM | Permalink | Comments (0)

We periodically get requests for information about foreclosure lists. While we don’t recommend any one list source over another, we can tell you about resources that you can check out yourself.

Melissa Data has just announce an online foreclosure list that allows users to select records from criteria that includes city, zip code, county, state, recorded date, and stage of foreclosure, then purchase and download a list immediately.

In a news release issued by the company, John Hull, Melissa Data vice president of list sales, said: “With the upset in the subprime industry and the financial strain of rising adjustable rate mortgages, foreclosures have reached record levels. As unfortunate as the situation is, it’s an opportunity for savvy investors looking to grow their property portfolios. By using the Foreclosure List, investors can get up-to-date information on foreclosures anywhere across the country, or in a specific area.”

For more information on the Melissa Data Foreclosure List, visit www.MelissaData.com/foreclosure.

Posted 05:33 AM | Permalink | Comments (0)

Here’s a story from the Associated Press about the increase in foreclosures:

LOS ANGELES (AP) — The number of homes facing foreclosure surged 58% in the first six months of the year from last year, the latest sign of growing problems in the mortgage industry, a data firm said Monday.

In all, 573,397 properties across the nation reported some sort of foreclosure activity in the first half of this year, including receiving notices of default, auction sale notices or being repossessed by lenders, Irvine-based RealtyTrac said.

That was 32% higher than the last six months of 2006.

Continue reading "Foreclosure activity continues to rise" »

Posted 04:23 PM | Permalink | Comments (0)

Another aspect to the current high foreclosure rate investors should be aware of is this: With lenders stung by losses related to mortgage defaults, the amount of available credit may be restricted and that may prevent some potential buyers from purchasing their own homes. One solution is to help buyers with strategies such as lease options.

The credit issue is discussed in “Credit Crunch May Follow Mortgage Crisis, Warns Study.”

“New mortgage laws that restrict access to certain loans would be an overreaction to the current foreclosure situation and deprive hundreds of thousands of Americans the opportunity to own their own homes, according to a study released today by the American Financial Services Association (AFSA).

The study, conducted by the Center for Statistical Research (CSR), finds that more restrictive mortgage regulation would deny credit not only to those who would actually experience a foreclosure, but also to the whole class of borrowers in a particular risk category -- the vast majority of whom would otherwise use the credit successfully.”

To read the entire article, click here.

Jackie

Posted 10:39 AM | Permalink | Comments (0)

I recently received a news release about 60 cats abandoned at a foreclosed house. The release said that an evicted man walked away from his home in the East End of Cincinnati, Ohio, not telling anyone about the 60 or more cats and kittens trapped inside without food, water or medical attention. When the animals were discovered, the bank and sheriff’s office began working with local animal rescue groups and members of the community to save the cats, get them into shelters, and prevent them from escaping into the neighborhood when the house was cleared of its contents in preparation for rehabbing and sale.

This sad situation could have been prevented if the homeowner had asked for help from local rescue organizations when he realized he would not be able to keep his home, rather than just walking away and leaving the neglected cats for someone to accidentally discover.

Our foreclosure investing training emphasizes putting together win-win deals and whenever possible helping homeowners avoid foreclosure through strategies such a short sales and other preforeclosure investing techniques. If you are working with a seller in foreclosure who has pets, point out the importance of making the care and safety of those pets a part of the seller’s plan for coping with the foreclosure.

For more details on the Cincinnati situation, visit www.foreclosurecats.org.

Jackie

Posted 08:46 AM | Permalink | Comments (0)

Click here to see a list of the cities with the highest foreclosure rates for the month of January.

Jackie

Posted 03:34 PM | Permalink | Comments (0)

In Hamilton County, Ohio, a group has formed to help residents who are facing foreclosure. According to an article in the Cincinnati Enquirer, many of the foreclosures in this area are the result of unsophisticated buyers who purchased houses with inflated appraisals, typically in poor neighborhoods. When the buyers can’t keep up with the payments, lenders foreclose—and neighborhoods risk becoming blighted by empty, sometimes dilapidated homes.

There are several lessons here: Always operate with honesty and integrity. Don’t try to inflate the value of the properties you are buying or selling—besides being unethical, it may also be illegal. You don’t have to resort to cheating to make money in real estate.

When you do the right thing for your buyers and sellers, everybody wins—and by everybody, I mean the homeowners, the communities, the lenders, and you.

Jackie
Chief Blogger
Wealth Intelligence Academy

Posted 10:01 AM | Permalink | Comments (0)

Most of the foreclosure stories in the press today focus on what happens to the homeowners. Here’s an article that looks at the other side.

Flip side of foreclosures
For buyers, losing their house is devastating. But foreclosures create steady business for specialized real-estate agents and workers who prepare homes to sell again.
BY JENNIFER BJORHUS
Pioneer Press

The $700,000 craftsman-style house is barely three years old — 3,500 square feet and full of oak woodwork, with two fireplaces and a Jacuzzi, all on just under an acre of woods in Ham Lake.

But what most interests Craig Murphy is the eviction notice tacked on the front door. It tells him the owners were officially given the boot a few weeks earlier. Inside, the house looks clean — no hostile owners, no need to haul away abandoned belongings. They even left the appliances. That's good news for Murphy, a specialist in handling foreclosed houses. He can pretty much get the locks changed and move on to his next assignment.

Click here to read the rest of the article.

Posted 04:55 PM | Permalink | Comments (0)

Nebraska and Indiana are two of the latest states to look at placing restrictions on how foreclosure investors can operate. If you are an investor in either of these states, you need to pay attention as these bills make their way through the legislative process, because they could affect your business. If you’re in another state, be aware of this trend of consumer legislation and consider getting involved in the political process in your state to protect the interests of legitimate real estate investors and foreclosure specialists.

These bills have been introduced and could change before (and if) they are passed. To learn more about the Nebraska bill, click here. For the Indiana bill, click here.

Jackie

Posted 02:43 PM | Permalink | Comments (0)

Foreclosure rates are likely to remain high for the next few years and this segment of real estate investing offers some great opportunities for investors.

One of the best ways to invest in foreclosures is during the preforeclosure stage, which is when the homeowner has defaulted but the actual foreclosure hasn’t taken place yet. You can actually stop the foreclosure, help the homeowner out of a difficult situation, and make money at the same time.

To learn more about this, read Jordan Taylor’s article, Profit from Foreclosures by Preventing Them.

Jackie

Posted 11:59 AM | Permalink | Comments (0)

The following links have been researched and are provided for educational purposes only and are intended to serve as a resource to assist in finding legislation which might be relevant to conducting foreclosures in states that have passed such laws or are considering enacting such legislation as of September 6, 2006.

Continue reading "State Legislation Websites for Information on Foreclosure Laws" »

Posted 01:54 PM | Permalink | Comments (0)

Here’s a tip to make your short sale application go a little bit faster. When you ask a lender for a “short sale package,” what you get is (usually) a one-page list of requirements of what you have to put in the package you will submit to the lender with your short sale proposal.

When you receive that information, date it, make a copy of it, and put it in a file under the lender’s name. If you come across another deal with the same lender, you will have their information on file and can begin to gather what they will need as soon as you reach an agreement with the homeowner.

One caution: Always request a new package from the lender with every deal, because their requirements may change. But if you have their old information on file, it’s better than nothing and will give you a head start. Remember, when you’re doing short sales, time is of the essence, so everything you can do to speed things up will help.

Amy Smith
Trainer, Wealth Intelligence Academy
Foreclosure, Lease Option

Posted 10:39 AM | Permalink | Comments (1)

There is currently a growing group of states which have enacted legislation that could impact how you participate in foreclosure and/or preforeclosure activities in those states.

Generally speaking, such legislation may regulate both consulting activities and activities where you in fact purchase the property and/or re-convey it back to the owner. The laws tend to impose detailed contractual requirements and disclaimers along with a right of cancellation for a mandated time period. It is not uncommon for these laws to curtail certain conduct and limit the compensation/profit you may receive in connection with foreclosure and/or preforeclosure activities. Finally, many of these laws could be interpreted to prohibit you from taking an interest in a property under certain circumstances, and as such, could hinder techniques we teach to protect the investor.

Violations of these laws typically result in both civil and criminal penalties, including multiple damages, fines and terms of imprisonment. As of September 6, 2006, we are aware of nine states which have enacted legislation affecting foreclosure and/or preforeclosure investing: California, Colorado, Georgia, Illinois, Maryland, New York, Missouri, Minnesota, and Rhode Island.

If you are aware of other pending or passed legislation, please let us know. And if you plan to invest in foreclosures, be sure you learn the correct strategies as well as know and comply with the laws of your state.

Jackie

Posted 05:46 PM | Permalink | Comments (0)

The bankruptcy pattern has been interesting. In the months before new bankruptcy laws took effect in 2005, we saw a spike in the number of filings, as people rushed to file before the stricter laws would make it more difficult. As expected, filings declined after the new law forced consumers to clear more hurdles before getting their financial fresh start.

But while it’s too soon to evaluate the numbers, there appears to be a recent increase in bankruptcy filings and some experts think this may be part of the fallout from the creative financing deals that became so popular a few years ago and that are being credited with the rise in foreclosures. Some observers are predicting that many homeowners will try to use bankruptcy to keep their homes as their monthly mortgage payments increase by an unmanageable amount.

If you are a foreclosure investor, particular if you look for preforeclosures, this is a trend to watch. The biggest competitor foreclosure investors have is NOT other investors but bankruptcy. When people give up and let the bankruptcy courts take over, you can’t help them.

We’ll keep watching the trends. Stay tuned.

Jackie
Chief Blogger
Wealth Intelligence Academy

Posted 09:19 AM | Permalink | Comments (0)

Most experts agree that the rising rate of foreclosures across the United States is being driven in large part by the creative financing packages lenders have been offering in recent years.

So what’s the status of these types of loans now? Interestingly, they’re still very popular. According to Realty Times, lenders are paying more attention to the collateral by scrutinizing appraisals, home inspections, market conditions, and other property value indicators, but the “alternative loans” are still popular and being made at an increasing rate.

Click here to read Broderick Perkins’ article on this hot topic.

Jackie
Chief Blogger
Wealth Intelligence Academy

Posted 10:14 AM | Permalink | Comments (0)

The foreclosure rate is climbing and that trend is expected to continue over at least the next few years. Experts agree that a major driver of this trend is the creative financing packages (or nontraditional mortgage products) that lenders have developed in recent years. These loans include adjustable rate mortgage loans, often with various payment options; interest-only mortgage loans; and extended maturity mortgage loans (that is, loans with terms longer than 30 years).

If you’re interested in focusing on foreclosures as part of your real estate investment strategy, you will want to read what Sandra L. Thompson of the FDIC said when testifying before a U.S. Senate subcommittee on the risks to both borrowers and lenders of these nontraditional mortgage products. Click here to read her remarks.

Chief Blogger
Wealth Intelligence Academy

Posted 04:03 PM | Permalink | Comments (0)

Ever heard someone say that foreclosures only occur in poor areas that you’re afraid to go into? Or that trying to work out a deal when a property is in the preforeclosure stage is a waste of time because lenders would rather foreclose than negotiate?

These are myths. The fact is that foreclosures occur in all types of neighborhoods, from modest to opulent. And lenders much prefer to avoid foreclosure, which is expensive and time-consuming, even if it means taking a small loss on the loan to do so.

Read Top 10 Foreclosure Myths to learn the truth about these and other foreclosure myths.

Jackie
Chief Blogger

Posted 04:24 PM | Permalink | Comments (0)

Some “consumer advocates” claim that real estate investors are taking advantage of people in distress by buying properties that are either facing foreclosure or that have been foreclosed upon.

This is total and absolute nonsense.

Bad things can happen to good people, and those bad things might include the loss of a job, business failure, divorce, medical problems, bankruptcy, and so on. When problems like this occur, they generally compound and bring other problems such as the loss of a home to foreclosure, a damaged credit rating, and/or a default judgment against the owner that is often enforced with court authority.

Continue reading "Are foreclosure specialists taking advantage of distressed homeowners?" »

Posted 12:34 PM | Permalink | Comments (0)

There are many myths when it comes to foreclosures and foreclosure investing. One is that foreclosure investing is easy money and it is often seen as a get-rich-quick scheme. Another myth is at the opposite end of the spectrum. This myth says that you can’t make any money with foreclosures. Both of these statements, of course, are false.

However, these myths will continue to surface as foreclosure replaces the housing bubble as the next hot real estate topic. Fraud also comes into the limelight when foreclosures increase as scam artists use some of the techniques of legitimate investors to make a quick buck.

The Los Angeles Times looked at one example of foreclosure fraud last month in an article titled “Foreclosure Fraud Finds a Home.” This article looked at one family who had been defrauded back in 2004 and were still living with the possibility of losing their home two years later. Media attention like this makes it critical for the legitimate foreclosure investor to stay current with laws and investing strategies and separate themselves from the scam artists.

Getting back to the myth of easy money and the get-rich-quick scheme of investing, an educated investor learns quickly to recognize these myths and schemes and moves on to the business at hand. You have to invest the time and money into learning the strategies necessary to turn your foreclosure business into a long-term profitable one.

We’ve previously discussed the definition of foreclosures, why they are currently becoming a hot investment opportunity, and how to find them. This is only the tip of the iceberg. Even after you’ve shopped, found your property, calculated your cost, and estimated your potential profit, you still have to figure out the financing and inspect both the physical property and the title to the property.

These steps take knowledge and knowledge comes with continuing education. So how do you make a lot of money in foreclosures? You have to invest in our own education, learn the strategies, and then take action on what you’ve learned.

Posted 09:55 AM | Permalink | Comments (0)

A recent article on CNNMoney.com titled “Real estate insiders go bearish in blogs” supports the opinions of the industry experts that the real estate market boom is over and the market is setting itself up for a correction. Although there are varying degrees of opinions about the current market, the common denominator is that none of the bloggers were singing the praises of the current market.

The article goes on to say, “NAR, chief economist, David Lereah, is on record predicting price appreciation will drop to the mid-single digits.” And NAR spokesman, Walter Molony, thinks we’ll see a balanced market this year. He says, “There has been a steady rise in inventory since last fall, but, broadly speaking, it’s still a little tight.”

If you read some of the blogs discussing the current market situation, you’ll find this article to be on target. There are a variety of opinions about the market, but the general consensus is that the market has slowed in virtually every part of the country. One of these posts also quoted David Lerah as saying, “The air is coming out of the balloon. The bubble is not bursting.” What this means is that investors will need to adjust their strategies to a slower market not a market in crisis.

I found it interesting that strategies are even being as reported in a recent MSNBC.com article. This article found that some builders were looking at the current market as “an opportunity to build market share.” Other builders want to “decrease their exposure and wait out this wave of uncertainty in the market right now.”

If you live in a market where the builders are continuing to build inventory while the market remains slow, there will be opportunity ahead.

So what is the pulse in your market? Has your market slowed? Are you ready to take advantage of the opportunities to come? The news articles, blogs, and industry experts keep talking about the change in the market, the slowdown, the bubble, and even the leaking balloon.

This brings us back to the subject of foreclosures since this is the next big opportunity waiting for the educated real estate investor. Of course with any discussion of foreclosures comes a lot of negative reporting and foreclosure myths.

Posted 01:33 PM | Permalink | Comments (0)

As I’ve mentioned in previous posts, some housing markets like Naples, Florida; Medford, Oregon; and Atlantic City, New Jersey are currently overvalued and poised for a correction. Of all the overvalued markets nationwide, California and Florida have had the largest number of local markets with soaring prices resulting in overvalued properties. However, many other states have also experienced large increases and overvaluation.

Even in states where home sales may have been flat or undervalued in 2001, prices have soared. For example, in Wilmington, North Carolina prices have gone from the $120s to over $200,000. Portland, Maine had an average price of $143,500 in 2001, and at the end of 2005, it was $217,000.

There are markets that have remained flat like those found in Ohio. In Texas, some markets are even undervalued. There are also undervalued markets found in the Midwest, including markets in Michigan and Minnesota. However, these undervalued markets are not to the extreme like the overvalued markets.

According to CNNMoney.com, “Naples went from 72 percent to 76 percent overvalued” by the end of 2005. The lowest undervalued market in this article is El Paso, Texas, which is undervalued at 25%. Thus, the markets that are undervalued are undervalued by a slight percentage as compared to the extreme percentages seen in the overvalued markets.

What does all this data tell us? That most of the country has experienced rapidly increasing prices during the past five years. So what can we expect next?

In the overvalued markets, we can expect a real estate slowdown of sales combined with reduced prices. In markets that are flat, the prices may remain steady, but a slowdown in sales will still occur. In the undervalued markets, the prices may level off and even increase slightly in some markets, but the slowdown of sales experienced in the other markets will also occur.

Regardless of the market you are in, get ready to start looking for bargains. The overvalued properties will fall back in line with value-prices and many will reach that bargain price level. The flat and undervalued markets may already be bargain priced and ready for the foreclosure fallout. Increasing foreclosures in all these markets will produce an abundant supply of bargains for the educated investor to find.

Posted 06:44 AM | Permalink | Comments (0)

With an increasing number of foreclosures in all real estate markets, an abundant supply of bargains will soon be available for the shrewd shopper. So how do you find these bargains? I agree with most experts that it takes determination, research, and hard work to find the bargains. You may have to look at fifty or more potential properties to find the one bargain that will yield a substantial profit.

Is it worth it? Absolutely! Since foreclosures are cheaper to buy than other types of property, diligence will pay off in the long run. You can find foreclosures in the legal section of your local newspapers, by calling your local county clerk’s office for a list of lis pendens, or by searching the Internet for foreclosure listings with HUD, the VA, and other such web sites. Realtors are also a good source to find foreclosures and even pre-foreclosures. Developing good relationships with a few Realtors will be one of the important strategies you need to be successful in the world of foreclosure investing.

Just remember, however, that finding the property is only the first step. Once you find the property, how do you calculate the cost? You need to know all the costs, including those for repairs and loans, in addition to the purchase price to calculate the actual cost.

Even after you’ve made your initial assessment and calculated the cost, you have to determine if the property is most profitable to you as a short- or long-term investment. In other words, will you rent it out to create monthly cash flow? Or, will you fix it up and sell it for a onetime profit? Also, if you sell it for a onetime profit, will you take the profit only from the sale of the property or will you also create cash flow by providing owner financing to the buyer?

Posted 04:16 PM | Permalink | Comments (0)

As Steve McLinden wrote in a recent bankrate.com article, “foreclosure buying is a very competitive game right now,” so you have to arm yourself with education to take advantage of buying foreclosures.

First, you should know the definition of foreclosure. Investor Dictionary.com defines foreclosure as “A legal process by which the lender seizes property of a homeowner, usually due to the homeowner not making timely payments on the mortgage." In other words, if you fail to meet the obligation of your payment schedule, the lender can use a legal process to take the property from you.

This legal process is determined by whether or not the state you live in is a judicial or non-judicial state. If you live in a judicial state, the lender may choose to take the property back with a deed in lieu of foreclosure or use court proceedings to foreclose on the property. If you live in a non-judicial state, the lender will follow foreclosure procedures established by state statute without court proceedings.

How do you know if your state is a judicial or non-judicial state? You should be able to find the answer at your county clerk’s office. If the civil division of the county clerk’s office has procedures for mortgage and lien foreclosure sales, then you are in a judicial state. With the popularity of the Internet, many local government agencies will have this information readily available online. If not, call your county clerk’s office to get the information.

Once you know what a foreclosure is and what legal process your state uses to foreclose on property, you’ll be ready to take the next step.

Posted 08:17 PM | Permalink | Comments (0)

One of the biggest fallouts from a deflating housing bubble is foreclosure. If you’re in a market where real estate prices have recently increased rapidly and are now starting to fall, the bubble is deflating and there will be foreclosures in your market.

Senior Vice President and Chief Economist for National City Corporation, Richard Dekaser, looks at housing prices in 299 metropolitan areas in his House Prices in America report for the fourth quarter of 2005. In this report, we can see a dramatic change in overvaluation percentage since the fourth quarter of 2001 in the following three markets:
• Naples, Florida (2001 – 2.5%; 2005 – 96.3%)
• Medford, Oregon (2001 – 6.8%; 2005 – 69.7%)
• Atlantic City, New Jersey (2001 – 0.2%; 2005 – 59.6%)

Since real estate moves in cycles, this means that prices fluctuate up and down on a continual basis, even though the real estate market overall continues to rise steadily over time. If you look at individual properties in the above overvalued markets, you can actually see the dramatic increase in prices during this past five-year real estate cycle.

Continue reading "Housing Bubble Fallout: Foreclosure" »

Posted 10:07 AM | Permalink | Comments (0)

Let’s say that you looked at your local market and you’ve determined that your market is indeed in a bubble. “So what?” you ask. What you need to recognize is that this bubble isn’t the source of great concern, the market correction or pullback that follows this euphoric housing bubble is. So if prices where you live have recently increased rapidly and are now starting to fall quickly and the talk among realtors and investors has shifted from a seller’s market to a buyer’s market, the bubble is deflating.

How do you react to the deflating bubble? Experienced real estate investors and industry gurus recognize that the real estate market moves in cycles and prepare for them accordingly. In the March & April 2006 edition of the AARP magazine, economist Richard Dekaser provides a sample list of overvalued and undervalued markets. At the high end of overvalued markets was Naples, Florida at 84%.

When the market pulls back in Naples, Florida, there will be opportunity for some and tragedy for others. Think about it. If the market has increased rapidly and then starts falling quickly, there will be those that bought at the high side of the market and end up with what “Wikipedia” calls negative equity. Some of those will ultimately also end up in foreclosure. Because educated investors know the real estate cycles, they will be ready to start implementing foreclosure strategies as soon as the bubble begins to deflate. Will you be ready?

Posted 08:10 PM | Permalink | Comments (1)