Home Mortgage and Finance

Thousands of people make small fortunes every year through buying and reselling real estate foreclosure properties.  Many of these are just average people who have decided to try investing in real estate as a sideline, and discover that it can be so lucrative that it becomes their main occupation. Real estate foreclosure is probably the best avenue open to anyone seriously considering making money through real estate.

Assess The Risks

As you can appreciate, the very fact that real estate foreclosure properties are constantly coming onto the market at prices that are significantly below market value means that you can make losses as well as gains. It may appear quite simple to buy a property at a significantly reduced price and turn a profit, but never be fooled by the opportunities that present themselves, as real estate foreclosure buying can both make and break investors.

When buying a real estate foreclosure property, always thoroughly check the background of your potential investment, since such properties do not come with guarantees or warranties and there is also no safety net there to catch you should things go wrong. Therefore, it pays to learn everything there is to know about real estate foreclosure and follow a few simple guidelines to stay on the right track.

The first thing that will become obvious is that foreclosed properties mean the owner has not been keeping up repayments on the mortgage, which means that you must establish whether this is in fact the first mortgage, or whether there is also previous mortgages to take into account. You also need to realize that if the owner of the real estate foreclosure is behind in his or her I.R.S. property taxes, then back taxes will also become your responsibility.

Another thing to take into consideration is that the likelihood of the foreclosed property having been properly maintained in the months or years leading up to foreclosure will be low.  This could mean that significant modernization or refurbishment may be necessary, thus eating into your potential profits. . It would also pay you to thoroughly examine court house records or housing authorities to get as much detailed information about the property you are interested in purchasing. This way you can be sure that you are prepared for most eventualities and will most likely get the maximum returns for the least cost.

There should be nothing stopping you from joining the many thousands of others that have made their fortunes in the real estate business. After all, it is widely believed that investing in real estate foreclosure is very lucrative, with many exciting opportunities you can tap into and make your property fortune. A great place to start is to subscribe to a database of real estate foreclosure listings such as Foreclosure Magic

While some people may view it as taking advantage of the misfortunes of others, many people who have the resources at their disposal claim their only interest in foreclosure investing is strictly from a business angle. Statistics nationally indicate that the practice of buying and subsequently reselling foreclosed homes has remained at the same level for about the past 10 years.

There are many more homes sold back to lenders each year than are sold to third parties either through auction or outright sale prior to the property reaching auction. These numbers seem to suggest that the overall percentage of foreclosure investing is not necessarily rising, but that the actual numbers of foreclosures being sold are higher than in previous years. A home can end up as a foreclosure statistic for many reasons. When that happens, there are people out there with sufficient spare capital ready to buy up that property when it goes under the hammer.

From a strictly financial point of view, foreclosure investing is a means of securing property at a price lower than the current market value, and selling it on in order to turn a profit. It can be said that this process can also help surrounding property owners in maintaining the overall value of property in the neighborhood. When foreclosed homes are returned to the lender, it is not uncommon for them to be stood empty for months, if not even years, all the time falling steadily into a state of disrepair. The result of this is a depreciation in value for that property, as well as those properties surrounding it.

Refurbished And Back On Market

People who make a living from foreclosure investing are more likely to have spare capital, making them more able to fund necessary repairs and making the house ready for resale. Once repairs are complete, the property can be placed back on the market, more than likely at a much higher value than it was previously listed due to the repairs and improvements made to it. This helps maintain the property values of adjacent homes and in some cases, entire neighborhoods.

The key to foreclosure investing a quick turnaround from buying the property to putting it back on the market. The best way to get a good return from the initial investment is to get the house ready for sale and put it back on the market with minimal outlay for refurbishment, while still making a moderate return on the investment. While there may be a few land sharks swimming in the waters of foreclosure, most are in it purely for financial gain. For this reason, the standard of the finished product must be high enough for potential buyers to be interested in order to be profitable.

There will always be people who make money from foreclosure investing, but that is why they do it. It should be remembered though that the people making the financial gain play no part in the misfortune of the foreclosed homeowner, and it is better for a speculative investor to maintain the property than for it to stand as a decaying shell. In the long term, the entire neighborhood benefits from the renewed investment in the entire block,  not just one property.

Getting your hands on foreclosure listings for the area you are looking to buy is one of the first things that anyone interested in entering the market for foreclosure properties should consider doing. Foreclosure listings are available from a number of sources, including the County Records Office, realtors and over the internet in the form of searchable databases and specialist sites. Foreclosure Magic is one such site covering the whole of the US.

With so many avenues to explore, there should be no problem getting foreclosure listings for properties in your area.  If profit is your aim, you need to focus your search on bank foreclosure listings, as these usually result in quick sales at lower prices.

Winners and Losers

Although buying foreclosed homes can be a great opportunity to make money, it should always be remembered that someone has lost their home. Foreclosed properties are often available at prices significantly below market value (anywhere between five and fifty percent less than their true market value, in fact) making a wise investment choice.

A pre-foreclosure listing is another form of foreclosure listing containing details of properties, as designated by individual lending institutions, that are in default on the terms of their home loan. When looking for foreclosure listings you can choose to search for them on the Internet, check out realtors, or try out the county records. It is quite common after the property is seized that it gets placed in an auction conducted by county officials. The county in which the property is located is the county where you will find them listed, although many online databases cover the whole of the country and you simply select your own search criteria to narrow the selection down.

If you are willing to pay a fee for your foreclosure listings, a number of websites will supply you with regular (usually monthly) listings of currently foreclosed homes, or homes designated as being in “pre-foreclosure”. If you want more choice, consider checking out realtors that are operating in your community. Occasionally, when a bank is unable to satisfy the outstanding debt through a bidding process, it puts the property directly in the hands of the realtor.  It is then the task of the realtor to find a buyer for the property.

When considering pre-foreclosure listings, it is worth remembering that the lender has a duty to notify the borrower that a foreclosure proceedings are due to commence (typically a minimum of thirty days prior to formal foreclosure action commencing).  At any time during this period of notice, the homeowner may decide to sell the property in order to clear his or her debt and satisfy the terms of the mortgage.

The key to finding good foreclosure listings is to be patient and not jump in to the first deal you see. Contact realtors who you know have relationships or associations with lenders, as they are always the first to know when a foreclosed property is coming on the market. Realtors often use the term “fire sale” when referring to foreclosure listings, so you may want to use this phrase when contacting them, as they will be more likely to divulge more information if they think you “speak the lingo”.  Realtors are also a great source for bargaining tips, as it is in their best interests to get a quick sale on their foreclosure listings.

At first, you may find it a time consuming activity learning how to find the best listings, but once you have tapped into them, the rewards will be more than worth the effort.