| If you have been wondering how to buy | | | | already in foreclosure! Quit claiming a property is |
| preforeclosures, there are a number of ways. | | | | absolutely and positively legal and is practiced every |
| Hopefully this article will seek to demystify some of the | | | | day. |
| misconceptions, skepticism, and fears that people | | | | Misconception #3: You cannot get financing for a |
| generally have about preforeclosure real estate | | | | property going through preforeclosure. |
| investing. | | | | Yes you can. As a real estate investor, you can get a |
| Misconception #1: Preforeclosure investing is unethical. | | | | mortgage through a standard mortgage broker, or you |
| Many people raise this objection that preforeclosure | | | | can get funding from either a hard money lender or |
| investing is somehow unethical because you are | | | | from a private investor under a profit-sharing |
| allegedly taking advantage of the misfortune of | | | | agreement. You do not need to use your own money |
| desperate homeowners in order to make a profit. | | | | or your own credit in order to invest in real estate. Yes, |
| While it is true that there are a few bad apples out | | | | money is needed in order to do deals, but it doesn't |
| there who use illegal scams to con homeowners into | | | | have to be your money. Overcoming any skepticism |
| signing away their homes, the vast majority of | | | | or doubt you might have in this regard is absolutely |
| preforeclosure investors are honest and ethical, and | | | | crucial to understanding how to buy preforeclosures. |
| keep the homeowner's best interests in mind, and | | | | Okay, so can you tell me how to buy preforeclosures? |
| strive to create a win/win solution for the homeowner. | | | | The answer is to follow this simple process: |
| The reality is that preforeclosure investing is all about | | | | |
| helping those people in need who have no other | | | | 1. Subscribe to a foreclosure listing service. |
| recourse. If a homeowner could save his home, he will. | | | | 2. Analyze the leads on the list to identify which ones |
| But if he has exhausted all other options, such as | | | | have mortgage balances that total less than 70% to |
| refinancing the house, working out a modified | | | | 75% of the as-is fair market value (FMV) of the |
| repayment plan with the bank, buying more time, | | | | property. |
| borrowing money from another source, or filing | | | | 3. Send postcards to those homeowners, call them up, |
| bankruptcy, and has no other place to go, then the | | | | or knock on their doors offering to help them in their |
| homeowner might look upon an investor as a savior | | | | situation. |
| who is there to solve this problem in their life. On the | | | | 4. If the property is vacant / abandoned, use a people |
| other hand, if a homeowner is able to refinance their | | | | locator service to find the homeowner. |
| home and an investor comes along and pressures the | | | | 5. Determine the fair market value of the property. |
| homeowner to sell the house and discourages him | | | | 6. Negotiate a deal with the homeowner whereby you |
| from refinancing, that is not ethical at all. | | | | take the property subject to the existing mortgage in |
| Misconception #2: Taking ownership of a property | | | | exchange for some financial incentive to help them get |
| subject to the existing loan is a violation of the | | | | a fresh start. |
| mortgage agreement. | | | | 7. Once you have the title in your name, seek financing |
| That is absolutely untrue. The mortgage company has | | | | from a private investor, a mortgage broker, or a |
| the right to demand all money due in the event that | | | | hard-money lender to reinstate the mortgage (pay it up |
| they find out that the title of the property has been | | | | to date). |
| transferred without paying off the loan. But even if the | | | | 8. Hire contractors to fix the property up. |
| mortgage company were to exercise this clause, what | | | | 9. Advertise your home for rent and / or list it for sale |
| are they going to do? Foreclose on the property to | | | | by owner. |
| get their money? Hey wait a minute! The property is | | | | 10. Sell the house and collect the cash! |