Hello, sylgeo-ga!
Speculating in foreclosures can be a risky venture if you don't have
a reasonable understanding of your intended market and clear goals for
your investment. There is a wealth of misleading information out there
and an abundance of "buy foreclosure properties and get rich" sites
that will quickly suck your money down the drain if you don't know
what you are doing. With that said, there is room for some good
investment, especially if you are in a healthy market, have a basic
knowledge of home inspection, real estate or construction (or a friend
who can look at the property with you) and have formulated a goal for
what you plan to do with the property - rent it, remodel and sell it
for a profit at a later date, or occupy it yourself.
Even if you can find a foreclosed property at a terrific deal, it is
essential to have a workable game plan concerning your newly-acquired
house. You will still need to pay taxes, will probably need to do a
bit of remodeling, and will likely need someone to occupy the home
until you sell it at some future date. Therefore, you need to make
sure that the remodeling costs and any other additional monies poured
into the home do not eat up more than you had actually hoped to save
by investing in the foreclosure!
I have culled out some good articles that should provide you with a
thorough understanding of the foreclosure investment process from
beginning to end.
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See "Buying a foreclosed home." CNN Money.
http://money.cnn.com/1999/02/11/banking/q_bankrate/
"Before you go bargain hunting for homes, you've got to learn to
navigate the foreclosure process. Todd Beitler, owner of the Real
Estate Library in Boca Raton, Fla. and author of a foreclosure how-to
manual, says the time and effort can translate to savings. "If
somebody spends 10 hours a week for five weeks to do research, it's
worth it."
"For most people, however, the foreclosure process can prove daunting,
Reed says. Good buys are available, but they require research,
preparation, patience and persistence.
"The foreclosure process starts when a property owner falls behind on
mortgage payments. Because the homeowner has been in financial trouble
before defaulting on the mortgage, the home likely hasn't been
maintained. This can be a boon -- or boondoggle -- for a buyer. Houses
in poor condition might fetch bargain prices, but repairs can boost
the cost again.
Read further....
==
A very good article follows:
"Foreclosures: for novices, it's a crapshoot," By Mike Giusti. Bankrate.com
http://www.bankrate.com/brm/news/real-estate/reguide/repo-investments1.asp
==
An excellent article - "Buying a foreclosed Property - Avoid the
Pitfalls." Nov 03 '05. http://www.epinions.com/content_4562788484
==
Also read "Pros and cons of investing in real estate foreclosures,"
By Robert J. Bruss. Inman News. 01/06/2006
http://www.stltoday.com/stltoday/realestate/columnists.nsf/robertjbruss/story/40817C3FA7916F2E862570EF003968BE?OpenDocument
==
The following articles touch on several issues concerning investment
in forecosures:
"Investment Properties: Foreclosures and Fixer-Uppers."
http://www.homes.com/Content/Articles/ArticleBody.cfm?ID=1_3_27
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"Buying Pre-Foreclosures."
http://homebuying.about.com/gi/dynamic/offsite.htm?zi=1/XJ&sdn=homebuying&zu=http%3A%2F%2Fwww.trel.com%2Fprefore.html
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"Inside Bank Foreclosures - Fact and Fiction."
http://realestate.yahoo.com/reinfo/foreclosure/inside.html
"Many new investors want to buy properties directly from the bank. You
never hear anyone say," "I want to buy a property from a mortgage
company, credit union or savings and loan.'
"The attraction to bank owned properties is understandable, as it is
the bank you borrow money from to buy a home. It is natural to assume
that the bank owns the property. Whether a Deed of Trust or Mortgage,
the title to your property is either held by a third party or pledged
as security for the loan, so in fact the bank does not own the
property."
"You borrow money from and give a mortgage to the bank. The mortgage
is the security instrument utilized to protect the bank from loss
should you default on the loan. Unless you bought a bank foreclosure
directly from the bank, the bank has never owned the property at all."
Read further...
==
From "Find a bargain in a hot housing market," by Liz Pulliam Weston
http://moneycentral.msn.com/content/Banking/P47886.asp
"Other motivated sellers include banks and other lenders that own
foreclosed homes. But don?t expect the great bargains often touted on
late-night infomercials. Some lenders get a premium for homes they fix
up before sale, and even neglected homes tend to get many bids from
people who?ve purchased those "get rich quick with foreclosed homes"
tutorials."
"You can find lists of foreclosed homes in a variety of places, from
commercial Web sites like Foreclosures.com to government agencies like
the U.S. Department of Housing and Urban Development (See links at
left under Related Sites.).
"Sometimes you don?t have to do any detective work. Real-estate
listings, for example, will include the fact that a home is in
probate, which is the court process that typically follows a death."
The rules of probate differ by area, but often there?s a court
proceeding involved. Offers are made public, and rivals may bid
against each other for the home. In Los Angeles County, for example,
someone who makes an offer on a home that?s in probate can easily be
outbid by others willing to pay at least 5% more.
"That?s how Sloggatt got his house. Another buyer originally bid
$400,000 on a house that was listed for $425,000. Sloggatt showed up
at the court proceeding and bid $425,500. The original bidder had a
chance to counter, but chose not to.
==
As I mentioned earlier - you need to be wary of get-rich-quick schemes:
From "CREDIT SCORING AND MORTGAGE LENDING," by Jim Woodard
http://www.amo-mortgage.com/LeadForms/NewsLetter.asp?nid=84&p=amo
"Foreclosed Homes from $3,000 - No Money Down."
"That was the bold-face heading of a recent mailing promotion,
advertising a guide to making money from foreclosed and auctioned
homes. But don't be mis-guided, states a report from the Federal Trade
Commission."
"You're likely to hear pitches for homes being sold and auctioned in
your area at great prices. But the deal isn't always what's promised.
And if you buy one of those guides, you may end up spending more than
you planned," the FTC report warns.
"The guides typically sell for about $50. The seller usually wants the
buyer's credit card number or a direct withdrawal from a checking
account. You may even be billed for a guide you didn't order, an FTC
report points out."
"In many cases, the guide selling business will bill a credit card or
debit a checking account even if the consumer never agreed to buy
anything. They get your bank account or credit card information under
false pretenses, sometimes claiming that they need the account number
to verify a credit history or to ?hold' an order.
"When the guide arrives in the mail, chances are it contains far less
information than expected. Actually, it's information that is readily
available elsewhere for free," the FTC report stated.
Bottom line: While it's possible to buy homes through foreclosure
sales, you won't find the "good deals" advertised in auction guides
sold by fraudulent promoters. Most well maintained homes being sold in
a foreclosure sale will sell for close to their appraised value, the
FTC noted. The houses that sell for significantly lower prices often
are in disrepair or located in unstable communities. Also, foreclosed
homes are usually sold "as is." They don't come with warranties, and
sellers aren't required to disclose any problems. Buyers, particularly
those who don't pay for a professional home inspector before closing
on the deal, may find themselves mired in unanticipated repair bills."
A WEALTH OF RESOURCES
======================
I think you will be able to find any other information you need with
the abundance of articles found on the "Field Guide to the Foreclosure
Market."
http://www.realtor.org/libweb.nsf/pages/fg329
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I hope this information proves helpful!
Sincerely,
umiat
Search Strategy
forclosure
pros and cons to buying a foreclosed home
investing in foreclosures
mistakes in buying foreclosed homes |
