Buying Foreclosure Property

First and foremost what is a Foreclosure Property?

A Foreclosure is a process or real estate transaction that enables a lender to recover the amount owed on a loan that has been defaulted (not paid) by selling or taking ownership (repossessing) of the property securing the loan.

The process starts when a borrower/homeowner defaults on a mortgage loan payment and the lender files a public default notice, typically referred to as a Notice of Default.

Buying Foreclosure Property Resolution

1. The Borrower/Homeowner reinstates his/her loan by paying the default amount during some type of a grace period determined by law. This period in time is also commonly referred to as a pre-foreclosure.

2. The lender can take ownership of the property after it is in foreclosure to resell the property on the open market.

3. The lender can take ownership of the property typically via an agreement with the Homeowner during a pre-foreclosure period usually referred to as a "short sale foreclosure." Note: a property repossessed by the lender is usually referred to as a REO Property (Real Estate Owned by the lender).

4. The borrower/owner sells the property on their own to a third party during a pre-foreclosure process - enabling the Borrower/Homeowner to pay off the loan amount and avoid getting a foreclosure on his/her credit history.

5. A third party buys the foreclosure property that has been foreclosed at a public auction held at the end of the pre-foreclosure period.

Steps for Buying Foreclosure Property

1. Identify Property or Home for the Buying Foreclosure Property by working with a Realtor that has access to the MLS (Multiple Listing Service) and more importantly, has extensive training for Buying Foreclosure Property.

2. Get Title Research - once the right Foreclosure Property has been found you must do a thorough Title Search on the property that you have identified and/or involve your Realtor and their Preferred Vendors. Note: You/we want to be sure there are no liens on the property that have not been cleared prior to the completed transaction.

3. Negotiate - be prepared to negotiate a lower down payment, reduced interest rate, lower asking price and/or even a reduction in closing costs. Many vendors may be willing to waive some of the closing costs or offer a reduction on the down payment or interest rate. It's clearly a "buyer's market" but you may be dealing with multiple bids when buying foreclosure property.

4. Making the Offer - most banks today have a great deal of Foreclosure inventory they want to sell, but the final price is impacted by the number of offers, the amount of inventory the bank has, location and condition of the property and other intangibles.

Note: even if the listing agent at the bank has indicated the list price is "in concrete" there still may be room to negotiate - this is where an experienced Realtor can help you understand the "playing field."

5. Financing - it is absolutely critical to make sure your financing is in place prior to making an offer; or, you have no chance of buying foreclosure property. In some markets around the US you may be competing with investors who are making all cash offers on a foreclosure; if your financing is not in place the deal will be gone by the time you line up your financing.



Buying Foreclosure Property Q&A

Q: First and foremost, has the US market bottomed out yet?

There is no comprehensive answer for this as no one really knows and a large part of the equation (answer) should be based on where you are buying foreclosure property.

The state, town and even neighborhood will have a huge impact on your strategy and whether you make money for the long run.

Q: How do you know if Buying Foreclosure Property is a good investment strategy?

There are many variables to consider; but, some of the primary issues you need to weigh include your employment position, with stability being critical and good cash flow supported by cash reserves for buying foreclosure property.

If you are married or in a committed relationship your partner has to be totally behind you in this process too - you will need their support in more ways than just emotional and at times even financial.

Q: Why would I invest in real estate now in the form of buying foreclosure property?

If you look at Warren Buffet (the preeminent investor of the 20/21st/22nd Century) he's investing billions on companies and markets that are struggling in this economy. The time to get in to a good deal is when there is stress in the marketplace and when it is in chaos.

We aren't telling you there is no risk; quite the contrary, there is a great deal of risk and any professional realtor should underscore this with you in detail.

But, prices on foreclosures are at historical lows in terms of affordability, the rental market is robust and you can get into a cash positive position in many cases, depending on what type of foreclosure property you buy.

Q: what is an ideal neighborhood or location for foreclosure investing?

You need to take a very hard look at the neighborhood around the foreclosure property you are assessing and work with a realtor that is technically savvy for astute foreclosure investing - our team sits down with investors and we look online first via Google Street View at a neighborhood to get feel for the dynamics.

In many cases we engage the "RE/MAX CENTRAL of Las Vegas Starbucks Rule 99" as our first past filter for buying foreclosure property; i.e.if there is no Starbucks and/or Freeway proximity within five to ten minutes we may tell the client we are moving on to the next foreclosure.

Also, you want to look at the houses up and down the street in the neighborhood where you are buying a foreclosure - it should be well maintained.

A good neighborhood "around" your home will help to drive the curb appeal for a rental as well as long term appreciation - don't underestimate the neighborhood, you are investing in it just like the house and it is very important.

Q: Is buying in distressed neighborhoods a good idea for foreclosure investing?

Absolutely not under any circumstances in our opinion for foreclosure investing. You want your investment property framed with a great neighborhood around it - it its surrounded by a lot of homes in disrepair you may have problems renting and maintaining it as a foreclosure.

Q: How long should I plan on holding onto my foreclosure investment property to generate a decent return on my investment?

No one has a good answer for this, unless they have a direct pipeline to Warren Buffett's cell phone. The right answer is, be prepared to wait out the market and make sure you are buying foreclosure property that is cash positive to offset your mortgage costs and don't forget to factor in ongoing maintenance costs.

Then, you won't have a lot of pressure to sell it - let it sit and appreciate, making you more money. But, again, these are chaotic times and you want to drive a good deal by working with a knowledgeable realtor who knows foreclosure investing and has been trained to handle these specialized real estate transactions.

Buying Foreclosure Listings

Foreclosure Deals

If you are Buying Foreclosure Property you should be and will want to work with a Realtor - in the end a good realtor will save you considerable time, money and most importantly give you strategic advice that ensures you make a sound investment.

You want to work with a realtor and/or agency that has a dedicated team or individual who specializes in Buying Foreclosure Property on behalf of clients. Buying foreclosures is much different from a standard real estate transaction and you want someone who has well trained, experienced, skilled and has contacts with vendors.

Short List of Services Your Realtor of Choice Should Provide

Our team of buy foreclosure experts is rigorously trained to handle these specialized transactions and will be an asset to you. We will buy foreclosures for/with you and acquire them at the lowest price in the shortest amount of time, using a proprietary research process developed in house. Click here to have an investor expert contact you.

We have extensive contacts with Banks, Lending Institutions and other sources that we can leverage to your benefit to minimize your risks and maximize your return on investment.

* Strategic Investment Consultation including Sophisticated Cash Flow Analysis
* Have access to buying Homes in Blocks for Professional Investors
* Understand Facilitating and Managing Tax Deferred 1031 Exchanges
* Sophisticated Market Analysis to identify potential Investment Opportunities
* Optimal Project Structure and Positioning
* Funding Source Identification and Presentations
* Setting up Corporate Entities for Real Estate Investment
* Property Management Department Services with approved List of Vendors

For More Information about Buying Foreclosure Property Please Visit our Web Site

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John and Ruth Ahlbrand, Co-Founders of RE/MAX CENTRAL of Las Vegas

LasVegasRelocation.com
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