In our <a href="http://nicereohomes.com/how-do-i-get-a-list-of-homes-in-default/">last post</a>, we looked at getting a list of homes in default. Let's go to the next step past that and consider homes in foreclosure.
First, what's the difference between default and foreclosure? A Notice of Default is an official notice that payments have been missed and the lender doesn't expect the homeowner to live up to his/her end of the bargain (mortgage payments). A Notice of Foreclosure is when the lender actually takes control of the property. There's a big difference there, and you'll be surprised that a small percentage of homes in default actually go to foreclosure. In fact, <a href="http://www.credit.com/credit_information/mortgages/Understanding-Defaults-and-Foreclosures.jsp">Credit.com</a> pegs it at 1% for good credit loans and 6% for sub-prime loans.
Ok, so now that we know the difference, what about getting those lists? Well, you can use the same means as getting a list of homes in default: lenders, agents, and the internet. That's a start. However, you can also go down to the a county's records department and look at public notices of foreclosure and the scheduled foreclosure auctions. Remember, foreclosure auctions (the auctions that sell the foreclosed home before they revert back to the lender -- these auctions require cash payment) take place at the courthouse of the county where the property is located, so dig up these schedules to get a heads up.
One thing to remember -- and this is related to the low foreclosure percentage -- is that no one really wants to go through the process of foreclosure. Not the lender nor the homeowner. It's an arduous process, and most of the time, you lose less money if you find some other solution. So, if you (or your agent) are aggressive and you have the assets to swoop in, there's often a way to make yourself part of the solution for these homes in foreclosure. Just make sure you do your due diligence first.
Israel Gonzalez
Real Estate Broker
831-636-8858
<a href="http://bestreohomes.com">www.bestreohomes.com</a>
<a href="mailto: israel@topproducer.com">Click here to contact me by email.</a>
The views published here are the opinions of the writer and are not a substitute for legal counsel.
When you’re fishing around for bargain-priced homes to buy, one way to get an inside track is to try to dig up a list of homes in default. “Dig up” is the operative phrase here, as these types of things aren’t necessarily floating around in public. You’ve got a few options to look at when trying to do this:
-The lenders: Depending on the friendliness (for lack of a better term) of a particular bank’s representative, you might be able to simply call a bank, ask for the REO asset manager, and inquire about a list of homes in default. Sometimes they don’t want to disclose that information, and sometimes they’ll oblige — every person and every bank is different.
-An agent: Agents have a different relationship with lenders than the general public. If an agent calls one of his or her contacts at a bank, the list of homes in default should be easier to obtain. Agents also have access to professional resources where they get this information.
-The internet: Ah, the internet — where would modern commerce be without this? If you Googled “Homes in default” you’ll find dozens of sites claiming to have “insider lists” of homes in default. Some of these are legit, some of these aren’t. (Isn’t that how everything on the internet is?) I personally trust www.foreclosureradar.com, and I know that companies like Bluesheets can be effective.
Ok, so you’ve done your homework and you’ve got your list of homes in default. You want to swoop in and try and make a move before any auctions or sales occur. How do you do it?
Well, that’s where an experienced agent comes in. Trust me, these negotiations aren’t simple — after all, you’ve got a lender with a lot of money at risk here and a homeowner in a dire situation. An experienced agent can go in, talk the talk and walk the walk, all in an effort to make every party happy, including the person looking to buy the home. Namely, you!
Israel Gonzalez
Real Estate Broker
831-636-8858
www.bestreohomes.com
The views published here are the opinions of the writer and are not a substitute for legal counsel.
In our last post, we got into the details of a short sale. So now that you understand what’s involved with a short sale, let’s take a step back and look at the bigger picture. In other words, should you consider a short sale if you’re heading down the path of foreclosure? In many cases, the answer is yes, you should consider the short sale option in lieu of foreclosure. The trick is getting the lender to go with it, then getting the buyer. That’s why you’ll see real estate ads that say “short sale approved”, because it tells potential buyers that they are getting a good deal.
So why is a short sale better than a foreclosure? Short sales can hit credit scores by 200-300 points, sometimes even less or not based on certain circumstances. Foreclosures can be anywhere from 300-400 points, and as you probably know, that extra hundred points can make a big difference. One important thing to remember is that lenders are the ones that report short pay offs / short sales to credit bureaus. If you’re lucky (and you can always ask a lender to do this, though it’s up to them to comply), the lender may not even report it to the bureau. If that’s the case, then your credit doesn’t necessarily get hit, and you still get out of the loan/property. Not bad, right?
Here are some other things to consider. Most of the time, short sales are only applicable if you’re already in or near default status. However, if you have negotiated a short sale because of a significant life change but you’ve made your payments up to that point, then your credit hasn’t necessarily taken a hit. In other words, you can pull out and still buy a home later. Keep that in mind when weighing the pros and cons of short sale vs. foreclosure, because foreclosures require you to wait 5-7 years to buy a new home.
Also, you’ll find that plenty of official paperwork in different walks of life will inquire about whether or not you’ve gone through a recent foreclosure or bankruptcy. You’ll notice, though, that hardly any of these documents mention the term “short sale”. In other words, you might be able to get out of this without a significant ding on your record. And in a worst-case scenario, the overall hit to your credit (and official notices) are less than a foreclosure.
So the simple answer is yes, if you can, do a short sale. The trick is finding an agent who can broker the whole thing for you.
Search for foreclosure homes www.bestreohomes.com
The views published here are the opinions of the writer and are not a substitute for legal counsel.
You’ve heard the term foreclosure in the news but you might not have heard the term “Short Sale” as much (though it’s pretty prominent in advertisements these days). So what is a short sale? A short sale is simply the term given when a lender accepts less than the total amount due. That’s the short (no pun intended) description, but there’s more to it than simply a dollar figure.
Short sales can be difficult but it might be better to go through it in the long run. As of lately, it’s becoming a new trend vs. REO’s due to the fact banks are now participating on expediting the process. In a future post, we’ll discuss short sales vs. foreclosures, but for now, let’s simply look at the nitty gritty involved with a short sale. As mentioned, a short sale is when a lender accepts less than the actual amount. The key point there is that the lender has to accept it — not all lenders do, and in many cases, it takes persistence in negotiations to get it to work.
Ok, so how do you get a short sale accepted? It is ultimately up to the lender, but in general, these are the qualifications:
-The home value has dropped. This criteria isn’t particularly hard to meet these days.
-The mortgage is in or near default status. This is similar to a foreclosure, and in many ways, the short sale is the alternative out of foreclosure.
-The seller faces difficult life changes. This can be anything from a change in marital status, death of a spouse, expensive medical treatments, etc. This change must be fully documented and submitted for approval.
Like foreclosures or bankruptcy, a short sale will affect your credit score, usually by 200-300 points if you miss payments and go into default. However, it’s important to note that many types of official paperwork won’t necessarily inquire about a short sale while they may ask about foreclosure/bankruptcy, so that’s something to keep in mind.
If that’s the path you want to explore, it’s important to find an agent that specializes in the situation. The agent will help find the best balance that works for the lender and the homeowner, along with guiding you to a buyer.
Search for foreclosure homes www.bestreohomes.com
The views published here are the opinions of the writer and are not a substitute for legal counsel.
Things are almost always cheaper when you buy in bulk.That's the whole principle behind Costco, and you know what? That principlefilters into just about every other industry, and real estate is no different.With so many foreclosures and REOs on the market, there is a movement to tryand attract investors to join in a bulk sale. The question remains: is it worthit?
The answer is yes -- on several conditions.
In general, bulk real estate sales mean that multipleproperties are sold to a single entity, usually an investor group made up ofindividuals who want to take advantage of the market as it currently stands.You'll often find that builders/lenders are flexible in negotiations whendealing with bulk sales as it reduces holding costs and risk while guaranteeinga large sum (if not all) available properties in a group get moved. Think ofthe savings in marketing costs and overhead if homes don't have to beindividually sold.
For REO properties, this proves to be an interesting proposition.Most, if not all, of these properties are sold below "market value",and in sales these days, cash is king. Group investors looking to flip propertycan be really profitable if they navigate the market in a smart and effectivemanner.
Smart and effective -- that's the trick. The problem is thatyou'll see a lot of advertisements fishing around for "potentialinvestors" when really, it's just a get-rich-quick scheme that separatesyou from your money. Before you join any group for bulk sales, make sure youget to know who you're working with. It definitely helps if they have aqualified real estate agent that is experienced in both bulk sales and REOsales to negotiate things.
Make sure you protect yourself. Bulk sales can be a greatopportunity but there are a lot of sharks out there looking to take advantageof well-intentioned people.
Search for foreclosure homes www.bestreohomes.com
The views published here are the opinions of the writer and are not a substitute for legal counsel.
An asset manager can mean many things depending on what industry you refer to (and no, we’re not referring to your computer operating system’s asset manager in this blog post). Even in real estate, it can mean different things — someone who manages rental property can sometimes go by the title of asset manager.
For the purposes of buying and selling real estate (and the sub-plot of understanding foreclosures in the secondary market), an asset manager is neither someone who collects rent on a property or sorts out the different processes that Windows is running. An asset manager is the person that controls a bank’s REO listings and properties.
(And if you didn’t know, REO stands for Real Estate Owned — it’s the term given to properties that have gone through foreclosure, failed to sell for cash at the foreclosure auction, and reverted back to the lender.)
Now, why should you know what an asset manager is? More importantly, why should you find out who asset managers are?
Simple — they’re the people that you can negotiate with if you want to buy these properties. And because these properties come in such wildly varied states — some in good shape, some in bad; some in pricey neighborhoods, some in cheap homes; some are mansions, some are tract homes — getting in touch with an asset manager will help you zero in on the exact type of home you want, all while educating you on just what it would take to pry that home out of their hands.
Update: For clarification, please note that this post is designed to help you learn who the major players are as you educate yourself on
the process. However, it's best to work with the REO agent whenever you involve yourself in a potential transaction. Not only are REO
agents experts in bringing a deal to close, the asset managers will probably thank you -- they're often juggling 200+ case files at once,
which means they've got a lot on their hands!
Search for foreclosure homes www.bestreohomes.com
The views published here are the opinions of the writer and are not a substitute for legal counsel.
So, you’ve found a home in foreclosure that you’re interested in. Can you buy it out of foreclosure or do you have to wait for auctions and all of those other logistical hurdles to pass?
The answer is yes, you can buy a home out of foreclosure. However, it’s a delicate balance and requires getting all the parties to agree on it.
Think of it this way: the homeowner is in debt and can’t pay the bills, the bank is carrying a large tab and wants to get paid. If you’re interested in the home, you must essentially be the mediator to get these two partners to dance.
In theory, that sounds easy enough, but you’d be surprised at how temperamental these parties can be. The first step is to contact both the homeowner and the lender. When you do so, project a confidence that puts everyone at ease — and make it clear that your goal is to make everyone happy: you want to get the homeowner out of debt, you want to get the lender out of the bad loan, and you want this home you like. Everyone wins, right?
In most cases, the easiest part is getting the homeowner on board. If they’ve done their research, they should understand the benefits of short selling instead of going into foreclosure. So how can you win over the lender?
Well, that’s the trick, isn’t it? Some lenders aren’t even negotiable on this point. For the ones who are open to it, it’s about making them feel like their needs are getting met and that they will be better off in the end (so in some ways, it’s not unlike dating!). The best way to approach this is to hire an agent who has experience in this issue. They will know the right channels to go through and the right way to present your case so that everyone understands the mutual benefits involved.
Buying a foreclosing home can definitely provide you good value for your money, so it’s worth exploring if you are in the market, either for a new home to live in or for an investment. Just remember that there are experienced agents that specialize in these unique situations, and they can answer your (probably many) questions going into it.
Search for foreclosure homes www.bestreohomes.com
The views published here are the opinions of the writer and are not a substitute for legal counsel.
In our last post, we answered the question, “Who is Fannie Mae?”The appropriate follow-up to that is to talk about Freddie Mac, a similar organization and another major player in the American real estate market. Freddie Mac is the common name for the Federal Home Loan Mortgage Corporation. Like Fannie Mae, Freddie Mac is a government-sponsored enterprise. However, Fannie Mae has been around since the 1930s while Freddie Mac was founded in 1970.
What is Freddie Mac’s mission? As stated on the Freddie Mac website
Freddie Mac’s mission is to provide liquidity, stability and affordability to the housing market.
Congress defined this mission in our 1970 charter, which lays the foundation of our business and the ideals that power our goals.
Our mission forms the framework for our business lines, shapes the products we bring to market and drives the services we provide to the nation’s housing and mortgage industry. Everything we do comes back to making America’s mortgage markets liquid and stable and increasing opportunities for homeownership and affordable rental housing across the nation.
Currently regulated by the U.S. Department of Housing and Urban Development, Freddie Mac is similar to Fannie Mae in that it buys conforming loans from the secondary housing market. In February 2007, Freddie Mac also announced that it would buy subprime adjustable rate mortgages for qualified individuals.
In September 2008, the Federal Housing Finance Agency placed Freddie Mac (along with Fannie Mae) under conservatorship. Treasury funds were advanced to stabilize the organization and provide flexibility as the real estate market tried to recover from the subprime mortgage crisis of the past several years.
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The views published here are the opinions of the writer and are not a substitute for legal counsel.
Unless you work in the real estate industry, many of the names and terms might seem a bit confusing. One of the most popular questions we get is, “Who exactly is Fannie Mae?” The answer might be a little simpler than you think. The Federal National Mortgage Association is also known as Fannie Mae, a government-sponsored enterprise first founded during the Depression era. As a publicly traded corporation, Fannie Mae purchases mortgages to help ensure market stability. From their site
Fannie Mae operates in the U.S. secondary mortgage market. Rather than making home loans directly to consumers, we work with mortgage bankers, brokers and other primary mortgage market partners to help ensure they have funds to lend to home buyers at affordable rates. We fund our mortgage investments primarily by issuing debt securities in the domestic and international capital markets.
Fannie Mae guarantees its mortgage-backed securities by setting guidelines for loan purchases (you may have heard the term “conforming loans”). The guidelines for conforming loans fluctuate based on a variety of factors
Fannie Mae was heavily involved in the sub-prime mortgage crisis from recent years. In mid-2008, the Treasury granted Fannie Mae access to low-interest loans in an effort to stabilize the market. In one of the last notable events of the Bush administration, Fannie Mae was placed under federal conservatorship in September 2008, and US Treasury funds were used to try and stabilize the organization.
Search for foreclosure homes www.bestreohomes.com
The views published here are the opinions of the writer and are not a substitute for legal counsel.