| The foreclosure market appears to be expanding with | | | | non-performing assets on their books. This creates |
| no signs of relief. The combination of overextended | | | | opportunities for investors to buy the banks' problem |
| sub-prime mortgage holders and an ominous economic | | | | properties. But, buyer beware; do your homework and |
| slowdown indicate that this is a trend that is likely to | | | | make sure that you understand you will be buying "As |
| continue for at least the next year. With all the | | | | Is" unless you manage to get the bank to fix the |
| negative news in the wind, should you venture into | | | | property before you take it over. You may find |
| foreclosures now or wait for the bottom of the | | | | properties for sale on the banks' own Web sites: Bank |
| market to hit? | | | | of America, Countrywide and U. S. Bank each have |
| Foreclosures continue to make the headlines across | | | | some. We've found over 200 listings in California alone |
| America. DataQuick foreclosure statistics showed the | | | | priced under $200,000. Carefully selected properties |
| pace slowed slightly, with September foreclosures | | | | can create some nice equity and upside for savvy |
| reduced 8% from 243,000 in August. The reason so | | | | investors. |
| many people are writing and talking about the numbers | | | | Local real estate agents and brokers. |
| is because they are more than double the pace of | | | | Often, the best source of information and access to |
| t2006 - with all indications that there are still many | | | | buying and selling property in any area of the country |
| more to come. | | | | is the local Realtor. All good agents have refined their |
| Many people think of foreclosure investors as being | | | | network over time so that thy will know about what is |
| "bottom feeders" or parasites - taking advantage of | | | | coming on the market before you may be able to find |
| the misfortunes of others. Others view them as being | | | | out. If you develop a few good contacts, they can act |
| a necessary evil - or safety net that will help to adjust | | | | as your eyes and ears to find the best deals. |
| the market price and stabilize the real estate market. | | | | Auctions. |
| Whatever you think, someone must buy these | | | | Auctions are increasing in popularity. As banks and |
| properties. Just as "vultures" have their place in the | | | | others pile up unwanted real estate holdings they may |
| natural ecosystem; so too foreclosure investors have | | | | wish to "unload" their bigger problems in a bulk method |
| a place in bringing some sanity and stability back into a | | | | such as an auction or portfolio sale. A real estate |
| real estate market that had become a feeding frenzy | | | | auction specialist may sell dozens, perhaps even |
| of over extended buyers driving ever higher prices in | | | | hundreds of properties which cover a broad |
| already over heated markets. | | | | geographic area. You can find auctions listed in the |
| It appears that the expected recovery will consist of | | | | newspaper or find auction houses in the yellow pages. |
| three stages. | | | | Just be double sure to do your homework as this is |
| 1. The mortgage credit industry needs to clean up their | | | | not a short cut to good deals. If you do not have |
| act and stop making loans that will likely result in | | | | experience or expert guidance you will probably have |
| defaults. This is already well under way. | | | | some expensive lessons in this arena. There are many |
| 2. The non-performing loans need to get resolved - if | | | | very sophisticated and financially capable players who |
| this means foreclosures then the sooner this process | | | | play hardball with auction properties. |
| is completed the sooner we can see signs of | | | | Foreclosure Servicing Companies. |
| recovery. There appear to be several more months of | | | | Although banks may sell their "REO" (Real Estate |
| this phase. | | | | Owned) directly to an investor some will hire |
| 3. Foreclosure investors may be able to get bargains | | | | companies who specialize in distressed properties to |
| and then rent or re-sell the properties at market prices | | | | take care of the details and hassles of marketing |
| that fit the credit profile of the new owners, thus, | | | | these properties. You can find them by looking in the |
| stabilizing the market. This also appears to be in the | | | | local telephone book or by speaking with some |
| early stages so there should be more opportunities for | | | | Realtors in your area to find out who provides this |
| profit in the next several months. | | | | service in your area. Title companies and Escrow |
| How much will the prices come down & are there | | | | agents usually know of these services as well and |
| really any bargains? | | | | may introduce you. |
| We have been studying data from several regions of | | | | Government and government-backed lender property |
| the country. Data Quick and RealtyTrac are two main | | | | sales. |
| sources of this data. In our unscientific study we found | | | | Government agencies ranging from FHA and VA to |
| that the discounts on distressed properties are | | | | HUD including the Department of Justice (i.e. drug |
| currently in a range from as low as 15% in Hawaii to | | | | related seized homes) sell real estate, you may find |
| over 40% in a few markets (AL,OH,PA) with an | | | | these online as well. Fannie Mae and Freddie Mac also |
| average of 20 - 25% across the board. Of course this | | | | operate information websites. Due diligence is the key |
| raises two more pressing questions. How much farther | | | | to smart investing here but, you may find that in |
| will prices drop before they reach the bottom? The | | | | general, Fannie Mae tends to list more main-street real |
| answer is, of course, nobody knows for sure, | | | | estate values. |
| however, most experts are telling us that they believe | | | | Build Wealth in Real Estate by Being Patient and |
| the bottom will be 7% - 17% lower than today's | | | | Educated. |
| market prices. This is where you must use your best | | | | Although foreclosure properties often sell at a healthy |
| judgment in each market place and realize that there | | | | discount, you will often find that these properties have |
| are differences between neighborhoods even in your | | | | many problems. After all ,the people who lived in them |
| area. The second question is a natural. How do you | | | | usually go through pretty hard times leading up to losing |
| find bargains in your area? | | | | their property. As a result, many will have neglected |
| How to Find a Bargain | | | | the repairs and maintenance. In many cases, they will |
| To locate foreclosures in your area, RealtyTrac is a | | | | have also really trashed the property on their way out, |
| good place to start. Their website lists foreclosures by | | | | tearing up the interior, even taking many appliances and |
| ZIP code and foreclosure stage, ranging from | | | | fixtures that will need to be replaced to make these |
| pre-foreclosure property to bank-owned real estate. | | | | houses habitable. You should also take into account |
| RealtyTrac is a web based service which provides | | | | the general trend of foreclosures in the immediate |
| you with the basic information you will need to locate | | | | area may have an adverse effect on your ability to |
| distressed properties. | | | | rent or re-sell for a profit; also causing the process to |
| Many I've spoken with report that they find RealtyTrac | | | | take longer. Be sure to check on comparable listings |
| data not to be totally accurate. Let's face it the task of | | | | and the most recent sales in the area to see what the |
| keeping up to date is enormous and the information | | | | trends may be. |
| entered on county records is not always correct. With | | | | The Bottom Line. |
| the huge numbers of new defaults mounting it makes | | | | Look for properties that are going to keep their current |
| the job nearly impossible. Even so, you can use this | | | | value and which have the best chance to increase in |
| service to locate potential deals. RealtyTrac charges | | | | value. If you buy nice properties in nice neighborhoods |
| you $49.95 per month for their updates and they allow | | | | this will help you to get the most out of your |
| you a free test drive for seven days. | | | | investment. Location, timing and market trend are still |
| More Sources of Bargains | | | | important even if you are buying well below the |
| REO's Bank Owned Properties.Banks and mortgage | | | | perceived market value. When it comes time to re-sell |
| lenders are not really in the Real Estate investing | | | | you want to be sure you have invested in an |
| business. In fact they are really in the lending business | | | | appreciating asset which is in demand in your local |
| and they want to collect interest on loans and the fees | | | | market place. |
| they get for servicing and so forth. But, they must deal | | | | If you want access to some more information or |
| with the large number of defaulting loans. Unfortunately | | | | analysis tools feel free to contact the author. |
| for banks, many are not permitted to keep these | | | | |