Jan 25, 2010
Reasons to Buy Pre Foreclosures
Almost everyone has heard of foreclosures, but most people may be unsure about the meaning of the word. Usually, most people who want to become homeowners cannot afford to pay outright for the homes. This leads to the person taking a loan and dealing with periodic mortgage payments. In many cases, an individual may be unable to continue payments. The lender generally allows a certain amount of time for the individual to make his mortgage payment. If a defaulter is unable to make the payment even after the grace period has passed, banks and other lenders repossess and sell the property, usually at a discount, to ensure a fast sale.
Pre foreclosures are those properties that are in the final stages, before being taken back by the bank or the lender. It is still owned by the homeowner; however the lenders loan is in default. This means that the original owner is in charge of the property, but if he does not pay the mortgage to the bank, the financier will soon repossess the home. A loan goes into default once the mortgage payment has not been made within the required 30 days. After 90 days pass without payment, a list of people in default goes on record at the local courthouse. This list is called the 90-day Notice of Default. The bank does not yet own the home, but it does own the mortgage, which is in default.
There are a lot of benefits in buying pre foreclosures. First of all, the prices of such properties are lower. The owners are in a hurry to sell the house before the bank forecloses. So, they are more inclined to consider the offers they receive. It is possible to find pre foreclosures that are as much as 50% less than the market value. You also have the advantage of dealing directly with the owner. The buyer is in control in a pre foreclosure deal. There are no carrying costs. Until you sell, no one makes any payments. The profit is not eaten up by outrageous holding costs.
You can create equity by requesting a lender to take less than what is owed. Lenders often agree to do this because they really dont want to repossess the property. Foreclosures look bad on the banks record. This process of discount creates new equity and earns more money for you in the deal. Thus, you can create an unusually large equity spread.
Buying houses in your own name and on your own credit is quite dangerous. In pre-foreclosure deals you are taking over the existing debt, which continues to be in the sellers name. So, the finance is already in place, even before you buy. This reduces the liability, while enjoying all the tax benefits, depreciation benefits and actual appreciation of the property.
Bidding against others at auctions may not be your cup of tea. It is easier to anticipate everyones ideas and move in and complete the deal, before anyone else. It is a niche market with very little competition and therefore has space for you to learn and become an expert in building long-term residual wealth, without much money or credit. Finding pre foreclosures is the same as locating homes that the bank already owns. They are listed in the newspapers, online and with the lenders directly.
Watch the video related to property foreclosure
Los Angeles CBS reporter David Goldstein reports on convicted felon Raul Altamirano who offers to ‘help’ people facing foreclosure.
Help answer the question about property foreclosure
How do I make an offer for a pre-foreclosure property?
I have an address for pre-foreclosure from a web site that can tell you if a property is in pre-foreclosure or is already going to auction. I am looking for a second property for income purposes located within one hour from my house.
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Foreclosure information is directly available from the government. Check your local bankruptcy court and banks that have properties in foreclosure.
I am a realtor in Santa Clarita, CA and would love to assist you with this purchase. I work very heavily with pre-foreclosure and foreclosure sales, and have contacts in almost all 50 states, so I could probably get you to someone in most any area if you are not in CA.
who ever buys the property isn't buying the debt. they just buy the property. the debt has to be dealt with prior to the sale. bankruptcy can sometimes wipe out a line of credit or second mortgage look at the bankruptcy discharge paperwork to be sure. good luck
Foreclosures for Freddie Macs are handled nearly identically to those for mortgages held by private lenders. All Freddie Mac foreclosures are handled by licensed real estate brokerage firms. Simply contact the listing agent who is handling the property in which you are interested.
Prices for Freddie Mac's are similar to those of other comparable properties on the market.
you need to know usually they are an as is sale, and there could be lots of damage. You need to have it inspected, which you will have to pay, as usually a foreclosed property will not supply an inspector. Also you need to make sure ALL liens are cleared off the property, because its foreclosed, some liens follow the property and not the person. Make sure the taxes are not too far behind. Some times they are great deal, but sometimes there are things that will bite you in the butt…Just do your homework, I am sure there are sights that give you a list of must before buying a foreclosed home! Good luck!
It happens with regularity. Not long ago, we had a FHA removed from listing for a similar situation. FHA discovered that it did not have clear title to the property and immediately removed it from the market.
You need to understand just how large Freddie Mac is, and the variety of departments involved in disposing of their REO inventories. Now and then, the marketing department releases a property for listing before the legal department has cleared title.
You need a US social security number to get a loan. But if you pay cash you can buy anything you want. You could even borrow the money in Canada as long as you showed up with cash in USA.
You can buy directly from the bank at their foreclosure "auction". It is not a real auction because no one shows up. It is just a formality. The bank enters a bid for the amount they were owed by the previous owner (their borrower). They often tack on late fees and attorney fees. You have beat their bid to win and it is seldom worth the amount of the loan. But you could try. In the last 2 months, banks have started accepting lower offers. The sales are advertised in one local paper in the city of the foreclosure. You have to read all the papers to find the one. You don't get to see the inside of the house you are buying and you don't even get a key.
After that "auction", the bank hires a realty agent and a For Sale sign goes up. YOu can find those homes online at sites like realtor.com, realestateabc.com, trulia.com ( i don't work for any of them). Or ask any friendly agent to email a daily list of repo's. Then you buy one just like buying any other house. Except that the bank will do no repairs for you.
That depends on the purchase offer negotiated between you and the seller, your loan financing and other variables.