Getting started on a foreclosure

All of you guys and girls are a wealth of knowledge. Sully and I have talked before, but just listening to you all makes me sure I have entered the right market. I am just about to close the deal with coaching and am very eager to get going, especially with the money i am laying out right now. I do have a house just down the street from me thought.The owner just reduced the price by 5k down to 40k. The problem here is I don't know where to start not even starting my coaching yet. I live in an area of upstate New York and the economy is pretty much going down the tubes. I researched the house on Zillow.com and they say the house is worth about $56k. It is a 3br-1 bath fixer upper, in a pretty nice part of town. Shd I go with renter on lease option or shd I rent to college students which can be pretty risky from what I am told. Ok put your minds to work. I am anxious to here from you all. Sully my brother, your thoughts are always welcome....Jan

I am doing a short sale, I found a house listing for $200,000, and I put in a bid for $135,000, the people are still in the house. Now this will be my first short sale I have ever done, when I went inside to look at the house I will not have to do too much work on it if the bank accept my offer. I was told by the Realtor that this house sold for $400,000 when the couple bought it. Do I have a chance of getting this property? And if the bank counter offer with another price should I walk away, because I only have $135,000 to work with. Please give me advice on this one. I had a realtor do comps in the area and two houses sold for $ 122,000-126,000, some sold for more within the last 90 days. Also the people living in the house are just waiting to be put out,If the bank do accept my offer, how should I apporach the people living in the house or will the bank take care of that?
Thank you.

I would rather go with a mature student, because my brother has a property and when he rented to a student they trash his place after spring break. Lease option, and a renter in my opinion would be safer.

Am I reading it correctly that you bid $135,000 for a house when the comps are only supporting $122,000-126,000? Will you be able to get a loan on the house with those kind of comps, or are the newer comps high enough to support paying $135,000? If this is an investment, remember not to get emotionally attached to the property. I wish I could help you out but I am way to new at this! I do wish you the best of luck and I hope that everything works out well for you!

Rhonda

Rhonda,

Several houses were selling for 225,000-259,000, the two houses I mention did have the same square feet and bedrooms of the house I am going to purchase. This is why I offered $135,000. Thank you for your response, I hope it work out also, because I am also new at this. I was told that the seller purchase the house for $430,000. Well I just have'th to wait and see what happens.

So once I have a few properties that I want to make an offer on, what is the best way to approach the owners? Just knocking on their door and asking to buy their house for cash? Writing a letter? What is your advise for the most effective way?

For example: house with loan on it for $49,000 worth $256,000. Do I simply say "I am willing to buy your house off you for $49,000 cash right now."

Is that all there is to it?

I am assuming I have to deal with the bank as well, how long does that take?

From the time the offer is made to when the deal is closed, how long does it take? What is the typical timeline I am looking at here?

Thanks guys! Once again, I couldn't do this without you.

StevenWalkermitchell,
Thanks for asking all the right questions!! I am in the same situation as you; Good credit; just wanting to find and know how to do a great deal; not just an average deal!!!!
Let me know how your deal works out..
Regards,
Scott F.

I have seen alot of good advice from Anita, Sully, Hazco, nstreet to name a few!!

KP,
Sounds good to me!

Lets see if I can answer this one. If there is only 49K owed on the property then yes you can knock on door. If these people have paid that mortgage all of this time and now cannot pay it any longer then that tells you something happened to cause that, maybe layoffs, illness, divorce or what ever. Knock on the door and tell them who you are and what you do. explain that you are aware of their financial situation with the house and you are prepared to help them save their credit and even offer relocation funds so they wont have to get foreclosed on. You offer the 49K to pay out the loan and an addition 10K for their pocket so they can find some where else to live. Now remember you will be paying bank directly so you get quit claim from them contingent upon payment. I would use a escrow company for this one so no one renigs on the other. Get it in writing. So you will give escrow money to pay out loan and they will do paperwork for title and deed to property. ALL legal like. Since you just paid off their loan they should have a really good credit score from it so it should be no problem to find somewhere else to live/buy and with the 10K you just gave them which they would not have gotten in foreclosure they should be just fine with th deal. Be ruthless in your dealing and to the point but have compassion for others and understanding and you will go a long way.

Wow! Anita you go girl; your on fire; I really like that answer!!
regards,
Scott

Good explination on what to do...

I saved it

is, i never payoff or reinstate a loan without getting them to quit claim the property to you first, you can really get screwed if you don't. SULLY.

Anita and others,

Here I am into my third property (2 rentals and trying to get a flip) and I just bought the book BARM, will have to read ASAP.

Love the short list below... I guess I still need to do number 4 ASAP. and make a special note on page 72.
__________
Regards,
DeJor Properties, LLC

what is BARM? SULLY.

lol...don't you know sully
B - Be
A - A
R - Real Estate
M - Millionaire

hahahahahaha

long day huh?

lol, ant, thats pretty funny, never knew that, SULLY.

sully wrote:

lol, ant, thats pretty funny, never knew that, SULLY.

MUMS
M= Make
U= Us
M= Millionaires
S= Sully

Hope you like it!!

Still looking for my first deal; want to do everything right!! I have been reading most all Anitas, Rinas, wmark,others, and your forums and remarks;
Thanks,
Scott F.

Thanks again for your help. I love that I can ask anything on here and get the answer I need.

A few more questions I have, and this could just be because I'm dead tired right now but, what is a quit claim mean? How does it work?

And how long does this whole process take?

Let's say I knock on their door tomorrow, when can I plan on having the house in my company's name and ready to rent out? June? July? August?

Hi Geremy,
I am fairly new to this stuff but I can tell you that the book, 'Be a Real Estate Millionaire' is a great start.
Although I found it hard to get into at first it got easier and I realized it was only the fear-factor that made it hard in the first place.

You will find lots of great help from the people on this site and questions will be answered. Try to be specific in what you need to know and then you will have lots of great advice and guidance.

Feel free to ask me anything and if I don't know the answer, we can look into it together and we both learn from it!
Welcome and have fun.

QUIT CLAIM: is a deed that is used when someone with any INTEREST in a property, (could be 5% or 99% of the property that this person holds) signs their rights over to the property to YOU. YOUR HERO, SULLY.

Awesome! Thanks sully!

I can see the sense in waiting until a mortgage is at least 5 years old. I held to this when I owned my home. Selling before at least 5 years of making mortgage payments would generally not get enough at sale, to make a profit. You barely break even in most markets. Depending on how you are paying on your mortgage of course.

I also advised our daughter of this when she wanted to 'bail-out' of her mortgage after only 2 years (due to panic at the current market). She is now holding on until at least 5 years.

As for the rest of your ideas. I anxiously await the posts from those with more knowledge than I have in this area!

Ok, when you have a property it will go thru 4 stages, preforeclosure, short sale, auction, then it becomes reo property. REO property means it was not sold at auction, at which the lender will send a rep. to start the opening bid on what is owned on the property, late payments, mortgage, attorneys fees, etc. If no one bids on the property, it will now be owned by the lender at which time, he will list it with a realtor to market and sell the property for him. Basically, REO property is just listed property not sold at auction. Hope this helps to clearify.

When you do a short sale, which is done a month or two before auction, the property owner has to agree to the offer you are giving to the lender. Even though the property owner receives no profit, it will be kinder to their credit. Once the property owner signs the contract, the contract as well as supporting documentation (comps, pictures of the property, rehab cost +labor) is presented to the lender. It will be the lender who has the final say.
As far as the offer you present, it needs to always be done with what the property is worth today, using comps of properties, exactly like the target property, has sold for within 3-6 months, within 1/2 mile, building style, squ. footage, etc. Then you take off all the expenses from the fmv to determine the price you will pay. If the lender isn't close to that figure, it's not worth your time as an investor. Keep in mind when a property is in pre-foreclosure, the property owners own the home until the day before auction.

Though we know that sellers of property that allow us to do short sale cannot make money on the sale of the house does not mean they cannot make money. If the seller makes money on a short sale the bank could claim that you paid them to take a dive and thus go after you for fraud. Instead of paying the seller for the transaction of real estate we can pay them for items like the dog kennel, basketball hoop, washer, dryer, dishwasher or hot tub. Just make sure that you create a separate bill of sale that is not tied to the property and I would suggest paying no more than $1000 total for everything you will purchase.

If you look at it like a seller: Two buyers offering to purchase their house both do a short sale, one offers $0 above their purchase but will save their credit; the other will pay $1,000. Who would you choose?

NStreet,

That's good info for me as short sales are what I want to focus on. Anything to help the homeowner and stand out from the crowd is good info to me.

Thanks again,
Jeff