Secrets of buying piles of foreclosures...
Mike
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RE/MAX of RI
guess you're correct. Thats about the average ratio of government and bank
real estate transfers via auction.
Theres nothing secretive about buying foreclosures. Its no different from
buying anything else. All one has to do is to know where to go to get the
information. It's nothing a few phone calls wouldnt be able to handle. Ive
been buying foreclosures for 20 years and the best advice I could give
anyone is: Dont rely on gimmicks; and; Do the leg-work yourself.
First hand knowledge from the source is priceless.
Mike wrote in message <01bdd3a8$7e304120$ae47...@bill.bill.com>...
RE/MAX of RI
You bring out an extremely important point about the purchase of real estate
at auction. When people hear the word "foreclosure" they usually have
visions of getting a good or great buy. These books about "Foreclosures" and
their authors lead their readers to believe that banks want to discard any
foreclosed real estate at any cost hence there are bargains to be found. In
the twenty years Ive been doing this kind of stuff Ive never seen a bank
come out on anything but on top. What most people do not understand is that
the banks can afford to hold out for their price becuase once the bank takes
back a property in foreclosure, federal banking regulations state that the
property can be disclosed as an asset on the banks balance sheet. This gives
the bank time to hire a broker like me and eventually get THEM the appraised
market value for the property.
Thats why the guys who write these foreclosure books usually prosper. They
know, as do I that 99% of the people buying the books will not buy anything
because like most profit making endeavors in life it requires hard work.
Work that most people dont want to do. They would rather purchase a lottery
ticket and say a few prayers.
Best wishes,
Paul
RE/MAX of RI wrote in message <6sjfak$mfh$1...@news5.ispnews.com>...
RE/MAX of RI
The best advice I could give to you is for you to learn how to do a "Title"
search on a piece of real estate. If you own a home at present, or know
someone who owns a home, take the name of the home owner and go down to your
local town or city hall and go to the records section. This is usually in
the Town or City Clerks office.
Use your homeowners name and pretend that this is the name of the individual
being foreclosed on from an ad in the legal section of your local newspaper.
Ask the people in the Town Clerks office how one would find out what all the
liens are on your example real estate. This is a form of Title Search. It is
imperative that one knows what lien is foreclosing on a property. List the
liens in chronological order ( the date that they were recorded). The
earliest lien is the 1st mortgage. The second earliest lien is the 2nd
mortgage...etc.
Suppose you see an ad for a property to be foreclosed on, on Sept. 17, 1998
at 11:00am. The deposit amount may be $5000.00 due on the day of the sale.
The balance is due 30 days from the sale date. The current owners name is
listed in the ad as well as the Book and Page number (as recorded at town
hall) of the lien that is foreclosing. Usually advertised is the name of an
attorney for the Mortgagee ( the bank) or the auction company that will be
performing the sale. Call them on the phone and ask them:
1. What are the taxes, water, sewer, etc. owed on the property? You have to
pay these if you are a successful bidder. Dont take their word for it,
confirm these expenses at Town Hall.
2. Is the property vacant? If you buy it, you have to evict the current
occupants. This usually isnt a pretty picture, especially because the
occupants are usually the people that were foreclosed upon.
3. Is this a first mortgage, second, third or other mortgage foreclosing?
This is why you MUST know how to perform a Title Search. You MUST know what
mortgage is foreclosing and you cannot take the attorneys word for it. You
MUST go to Town Hall and verify what position the foreclosing bank is in.
For example, if a house has a $100000 first mortgage and a $25000 second
mortgage and you go to an auction and the opening bid is $8000, this house
would appear to be the steal of the century unless you verified at Town Hall
that it was the second mortgage that was foreclosing, of which the balance
of the first mortgage would still have to be paid by you. Lets say this
house is worth about $101000. You would have just bought this house for
$108000 ($8000 + $100000 1st mortgage). This obviously wouldnt be a very
attractive deal. The understanding of how a title search works is crucial.
Cut out 10 foreclosure ads from the legal section of the paper and perform
the title searches on all of them as well as actually attending the auctions
for all 10 however do not bid on any properties. Use the information as
practice for when you are ready. Attending the 10 sales and not bidding is
also important because it gives you an understanding of the mechanics of the
auction itself. You will see regular attendees at these sales. Usually there
are people, including myself, that go to many of these things on a regular
basis. If the regulars are not bidding, there is usually a good reason why.
The last thing is financing. Go down to your local bank and tell them what
you what to do. Will they give you a credit line for "X" amount of dollars?
Once you purchase the first property using a bank, that same bank usually
makes the next purchase easier. The more you buy, the easier it is to get
financing because you develop a track record. Once you start buying, you
will know the market value and you'll feel more confident in you bidding.
I usually flip about 4-7 properties per year as well as running my real
estate brokerage, consultation, development and appraisal businesses.
Good luck,
Paul