PROFIT IN FORECLOSURES
THE UNITED STATES FORECLOSURE REPORT
FIND OUT HOW YOU CAN MAKE MONEY IN FORECLOSURES
WHAT IS A SHORT SALE? HOW TO DO
ONE AND MAKE MONEY ON IT?
IF YOU'RE A HOMEOWNER WITH A PROPERTY THAT YOU OWE MORE ON THAN WHAT IT'S WORTH, THIS INFORMATION WILL ALSO HELP YOU!
When looking for foreclosures you're going to run into a lot of properties where the amount owed is more than what the property is worth. Most investors don't even look at these, but this is where some serious money can be made. Before you try to buy your first short sale I'd suggest you take a look at the short sale courses at www.foreclosuresandflippers.com or www.foreclosureinsights.com . I usually get excited about a short sale when the property is in need of work. The reason for this is when a property is in good condition the lender knows they can list it if they take it back and have a reasonable chance of selling it. If it needs work you can generally convince the real estate agent the lender sends out to do the BPO (Broker Price Opinion) that it's worse than what it really is and get a lower value from them which you can then use to negotiate a lower price with the lender. For instance the property would be worth $400,000 if it was in good condition. It needs paint, floor coverings, landscaping and some miscellaneous repairs which you estimate you could get done for $15,000. When the real estate agent comes to inspect the property, be sure to meet them with some low comparable sales in the area and an estimate of repairs for an odd amount, say $24, 848. This makes it look like you got exact bids for everything that you'll be pointing out to them that needs to be repaired. If you do this right, you should be able to convince the agent that the property is worth in the area of $350,000. With that figure in mind you would offer the lender $300,000 explain the reason for the offer is that they have to take into consideration the selling fees, holding costs and the risk of vandalism, etc. You can also point out that values are still falling in California. If you can settle on a price of $315,000 and put the $15,000 in you would have about $70,000 as a potential profit. Remember you are also going to have holding costs while trying to find a buyer, so make sure there is plenty of room in the deal. If you're buying it to live in then you can pay a little more than you would as an investment. The way a short sale purchase works best is to be able to show the owner why it's in his best interest to deed you the property if he doesn't want to or can't sell it and may be moving anyway (don't let the owners stay in the property). Although an owner can't receive any money from a short sale (you can usually find something of theirs to buy at a premium price to give them moving money if the deal warrants it), it is still in their best interest to not have the property go through foreclosure as it will hurt his credit even more than the short sale will. Explain how much better for their credit if they do a short sale and how important a higher credit score will be. The way the credit thing is going, before long you'll need a good credit score just check out a library book.When you have the property under contract you need to get the seller to write an authorization letter giving you permission to speak with the lender on their behalf. Call the lender and find out where to send the letter and have them tell you what documentation they need to do a short sale. Some of them have their own documents that they want you to use and will fax or email them to you. When you call the lender you'll most likely end up in the collections department. Try not to waste too much time talking to them as they really can't help you, instead insist on them putting you through to the Loss Mitigation department. If they don't know what that is ask them to put you through to one of the following departments: work-out, foreclosures, short sale, loan modification or reinstatement. Hopefully one of these will ring a bell with them. Generally after you've sent them the authorization letter and you've been cleared to get information on the property they will want a signed sales agreement, a financial statement to show the borrowers can't afford the property and a hardship letter to explain in personal terms why they can no longer afford the property. Some banks may want some other documents, but these will likely be items the seller should have. After the lender gets this information they will assign it to a mitigator and he will contact you to start negotiations. It normally takes a couple of days for the lender to assign it and much of the time they have up to two weeks to contact you. I usually give them three or four days, after I've confirmed that they received it, and then I phone every day until someone talks to me.If you have checked any of the courses the gurus are teaching you'll see some pretty outrageous claims of what the bank will discount their loan to. One thing to remember is that most of them are back East and prices are quite a bit lower there than they are here in California so the percentages tend to be skewed. When you see claims of 40, 50 or even 75% discount take it with a grain of salt. Having done this for a while and talking to many loss mitigators I've come to the conclusion that you're probably more likely to get discount of somewhere around 15-20% plus repairs and costs. Although it costs somewhere in the neighborhood of $30,000 to $50,000 for a bank to go through foreclosure some of them feel that it's in their best interests to do it rather than discount too much. Be realistic when you talk to the mitigators. Get greedy and they'll probably just blow you off.The lender is going to require you as the buyer to have a signed contract of sale, loan approval letter and a estimated HUD-1 from escrow. If you haven't opened escrow you might want to check on this course at http://www.easyHUD.com to be able to make a professional looking HUD-1 that will show the lender how much they will net and it will be a form that they'll approve of. Once you've sent in the required information it's time to start serious negotiations with the Loss Mitigation department. Be sure you build as much rapport as possible with the mitigator right from the beginning and hope you keep the same one all the way through. Things tend to get messed up when a different mitigator is assigned to your file because they all have different ways of doing things. Try not to waste their time as right now they are extremely busy and they don't have time or the patience to work with you when you don't send all the paperwork they want. Don't forget to point out how bad the real estate picture is here in California, how much it costs to do a foreclosure, how much the bank has to hold in reserve, how much is costs to sell the property (for instance the sales commission alone on a $400,000 sale is $20,000 to $24,000), etc. Don't do this blatantly but try to work it into the conversation.
ONE AND MAKE MONEY ON IT?
IF YOU'RE A HOMEOWNER WITH A PROPERTY THAT YOU OWE MORE ON THAN WHAT IT'S WORTH, THIS INFORMATION WILL ALSO HELP YOU!
When looking for foreclosures you're going to run into a lot of properties where the amount owed is more than what the property is worth. Most investors don't even look at these, but this is where some serious money can be made. Before you try to buy your first short sale I'd suggest you take a look at the short sale courses at www.foreclosuresandflippers.com or www.foreclosureinsights.com . I usually get excited about a short sale when the property is in need of work. The reason for this is when a property is in good condition the lender knows they can list it if they take it back and have a reasonable chance of selling it. If it needs work you can generally convince the real estate agent the lender sends out to do the BPO (Broker Price Opinion) that it's worse than what it really is and get a lower value from them which you can then use to negotiate a lower price with the lender. For instance the property would be worth $400,000 if it was in good condition. It needs paint, floor coverings, landscaping and some miscellaneous repairs which you estimate you could get done for $15,000. When the real estate agent comes to inspect the property, be sure to meet them with some low comparable sales in the area and an estimate of repairs for an odd amount, say $24, 848. This makes it look like you got exact bids for everything that you'll be pointing out to them that needs to be repaired. If you do this right, you should be able to convince the agent that the property is worth in the area of $350,000. With that figure in mind you would offer the lender $300,000 explain the reason for the offer is that they have to take into consideration the selling fees, holding costs and the risk of vandalism, etc. You can also point out that values are still falling in California. If you can settle on a price of $315,000 and put the $15,000 in you would have about $70,000 as a potential profit. Remember you are also going to have holding costs while trying to find a buyer, so make sure there is plenty of room in the deal. If you're buying it to live in then you can pay a little more than you would as an investment. The way a short sale purchase works best is to be able to show the owner why it's in his best interest to deed you the property if he doesn't want to or can't sell it and may be moving anyway (don't let the owners stay in the property). Although an owner can't receive any money from a short sale (you can usually find something of theirs to buy at a premium price to give them moving money if the deal warrants it), it is still in their best interest to not have the property go through foreclosure as it will hurt his credit even more than the short sale will. Explain how much better for their credit if they do a short sale and how important a higher credit score will be. The way the credit thing is going, before long you'll need a good credit score just check out a library book.When you have the property under contract you need to get the seller to write an authorization letter giving you permission to speak with the lender on their behalf. Call the lender and find out where to send the letter and have them tell you what documentation they need to do a short sale. Some of them have their own documents that they want you to use and will fax or email them to you. When you call the lender you'll most likely end up in the collections department. Try not to waste too much time talking to them as they really can't help you, instead insist on them putting you through to the Loss Mitigation department. If they don't know what that is ask them to put you through to one of the following departments: work-out, foreclosures, short sale, loan modification or reinstatement. Hopefully one of these will ring a bell with them. Generally after you've sent them the authorization letter and you've been cleared to get information on the property they will want a signed sales agreement, a financial statement to show the borrowers can't afford the property and a hardship letter to explain in personal terms why they can no longer afford the property. Some banks may want some other documents, but these will likely be items the seller should have. After the lender gets this information they will assign it to a mitigator and he will contact you to start negotiations. It normally takes a couple of days for the lender to assign it and much of the time they have up to two weeks to contact you. I usually give them three or four days, after I've confirmed that they received it, and then I phone every day until someone talks to me.If you have checked any of the courses the gurus are teaching you'll see some pretty outrageous claims of what the bank will discount their loan to. One thing to remember is that most of them are back East and prices are quite a bit lower there than they are here in California so the percentages tend to be skewed. When you see claims of 40, 50 or even 75% discount take it with a grain of salt. Having done this for a while and talking to many loss mitigators I've come to the conclusion that you're probably more likely to get discount of somewhere around 15-20% plus repairs and costs. Although it costs somewhere in the neighborhood of $30,000 to $50,000 for a bank to go through foreclosure some of them feel that it's in their best interests to do it rather than discount too much. Be realistic when you talk to the mitigators. Get greedy and they'll probably just blow you off.The lender is going to require you as the buyer to have a signed contract of sale, loan approval letter and a estimated HUD-1 from escrow. If you haven't opened escrow you might want to check on this course at http://www.easyHUD.com to be able to make a professional looking HUD-1 that will show the lender how much they will net and it will be a form that they'll approve of. Once you've sent in the required information it's time to start serious negotiations with the Loss Mitigation department. Be sure you build as much rapport as possible with the mitigator right from the beginning and hope you keep the same one all the way through. Things tend to get messed up when a different mitigator is assigned to your file because they all have different ways of doing things. Try not to waste their time as right now they are extremely busy and they don't have time or the patience to work with you when you don't send all the paperwork they want. Don't forget to point out how bad the real estate picture is here in California, how much it costs to do a foreclosure, how much the bank has to hold in reserve, how much is costs to sell the property (for instance the sales commission alone on a $400,000 sale is $20,000 to $24,000), etc. Don't do this blatantly but try to work it into the conversation.
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