Pre-Foreclosure
Information is everything! If you don't know what properties are scheduled for sale, you are wasting your time. You need to know what properties, how much the loan amounts are and what timeframe you are dealing with.
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Foreclousres
Banks are driven by numbers. Their non-performing assets do not generate income, they require reserves to be set aside in addition to the loan amount and large numbers of non-performing assets do not look good on the bottom line. Read more>>
Finding Foreclosures
Although it's fairly common knowledge, foreclosures occur when payments aren't made on a loan that is secured by real estate. Some of the value investors seek when buying foreclosures can come from the normal terms of the loan, some can come from price appreciation in the area where the property is located, and some can come from the lender not wanting to deal with the property. Read more>>
Pre-Foreclosure
Information is everything! If you don't know what properties are scheduled for sale, you are wasting your time. You need to know what properties, how much the loan amounts are and what timeframe you are dealing with. Local newspapers will publish the properties scheduled for sale, this will provide some information and all you have to pay for is the newspaper subscription. You can also go to the county recorder and research documents yourself, but the best way to follow these properties is to subscribe to a service that obtains records and sells the information. The best services give complete, accurate information and others provide the basic minimum, but it saves time spent looking them up for yourself. Once you know which properties are in default, you can approach owners directly to sell, arrange financing to save the property or whatever seems appropriate for all the parties involved. Door-knocking, mailing information or telephone contact, it's all based on knowing which properties fit your criteria. You can also tap on very good recent pre-foreclosure data at www.bankhouses4sale.com
Foreclosures Banks are driven by numbers. Their non-performing assets do not generate income, they require reserves to be set aside in addition to the loan amount and large numbers of non-performing assets do not look good on the bottom line. So, if the financial institution doesn't really want to be carrying these properties, why don't they sell it cheap? First, if a bank has a large portfolio of bad loans and they do not want to carry them on their books, they sell the loans as a portfolio at a discounted price to companies in that business. Second, if they have taken a property back and now own it, why wouldn't they want to get as much as they can for it? It's called cutting your losses. If you want to buy from a bank, find properties you might be interested in by either following the auction sales or using a service that gives you fresh REO information. Fresh information will allow you to put an offer into the bank before they will have any additional costs in the property and will be more likely to cut a deal. Your best opportunities are going to be properties that need a lot of work, have something wrong with them, or that are in a slower moving market. Banks seem to take forever to respond, place an offer with limited acceptance period, wait out that period, then go on to other things. Placing an offer at 60% of market value is something that probably won't fly. Be realistic about the property, your requirements and the bank's position and
an offer just might be accepted. Another possibility is to look for the dogs. Properties that have been on the market for a long time either are overpriced, are ugly or have some other problem. If you feel these problems can be overcome, a bank just might be willing to sell at a reduced price
Finding Foreclosures
Although it's fairly common knowledge, foreclosures occur when payments aren't made on a loan that is secured by real estate. Some of the value investors seek when buying foreclosures can come from the normal terms of the loan, some can come from price appreciation in the area where the property is located, and some can come from the lender not wanting to deal with the property .
While it's certainly possible to find foreclosures selling for 50% of their value, most people will find it easier, and more efficient, to focus on properties selling in the 65 to 80% of value range. So, how do you find them? Let's start at the beginning.
When payments aren't being made on a loan secured by real estate, lenders will often initiate foreclosure proceedings when the third payment is missed. When the lender has begun foreclosure proceedings, but the owner still has possession and the right to sell the real estate, these properties will usually be called pre-foreclosures. Since lenders cannot release information about pre-foreclosures, and homeowners often do not want to publicize their situation, you need an alternate way to find these properties, along with owner contact information. That source of information on pre-foreclosures is your county recorder. Virtually all documents regarding real estate transactions are recorded and kept by the county recorder, and because they are public documents, you can access and search those documents.
Most pre-foreclosures can be identified by the initial foreclosure document, which in most states, will either be a Notice of Default or a Lis Pendens. A Notice of Default, or NOD, is used in non-judicial foreclosure states, while the Lis Pendens is used in judicial foreclosure states.
In a simple world, you'd be able to find your pre-foreclosures by asking your county recorder for a list of all the NOD's or Lis Pendens recorded that week, and they'd give you the list, with names, addresses, phone numbers along with other information you might want. It doesn't work that way. But, since many recorders have established searchable websites, you can do something similar. Use the online recorders site to find the pre-foreclosures by searching for those document types. That should get you a list of owner names and document numbers. If you can't view the actual documents online, you'll then have to go to the recorder's office with your list, search by owner name or document number, and look at the document (Notice of Default, or Lis Pendens) which will reference the original loan, the property address and the default amount.
