Foreclosures work differently from
state to state, but the basics are pretty standard: When a homeowner starts
missing mortgage payments, the bank gives notice to the homeowner and to the
local government that the loan is delinquent. After a time, the bank is allowed
to commence a repossession process that can result in the house being auctioned
off to the highest bidder.
The process can take weeks or months to play out; anywhere along the way, a homeowner retains the power make good with the bank. Frequently, homeowners in trouble with the banks are willing to sell their homes to private buyers at a discount to market value in order to preserve what little equity they have left.
Let’s backtrack just a little bit in order to examine what happens just before a property goes to foreclosure: Whenever someone purchases a house, the normally obtain a mortgage with a small down payment for the price the house. The mortgage is secured by the property, and if the buyer defaults or is unable to pay-back the loan, the bank (or lender) has the right to foreclose and take ownership of the house. At this point, most banks sell the house to recover their loan principle. Banks do not like doing this because it costs them money and they are not equipped to really sell houses.
This means that the savvy real estate investor can take advantage of the foreclosure proceedings by closing a deal at the stage before which is called pre-foreclosure.
Pre-foreclosure is the period of time just before the bank repossesses the house in question. During this period, the bank is filing the required paperwork to become the lawful owner of the house. Each state has its own laws regarding foreclosure, and the pre-foreclosure period can be as short as 21 days in Texas, to as long as 3 months in California. At the end of the pre-foreclosure period, the house may go up on auction at the “courthouse steps,” where many investors go looking for a good valued investment property.
To invest in a pre-foreclosure property, investors must get the property before the public auction or the bank actually takes title to the house. This point is the perfect time to negotiate with the homeowner, and structuring a lucrative deal without having to compete with other investors. Without having to bid against other investors, pre-foreclosure specialists are often able to acquire properties far below market prices.
There are techniques, tips and workarounds which I cover in my courses and my workshops and which every real estate investor really needs to know. At this stage though it is sufficient to point out that the successful real estate investor is good at making a rapid assessment of a deal’s value and then getting and getting out in the shortest possible time with the greatest amount of money.
It really is that simple, if you know how.
###
The process can take weeks or months to play out; anywhere along the way, a homeowner retains the power make good with the bank. Frequently, homeowners in trouble with the banks are willing to sell their homes to private buyers at a discount to market value in order to preserve what little equity they have left.
Let’s backtrack just a little bit in order to examine what happens just before a property goes to foreclosure: Whenever someone purchases a house, the normally obtain a mortgage with a small down payment for the price the house. The mortgage is secured by the property, and if the buyer defaults or is unable to pay-back the loan, the bank (or lender) has the right to foreclose and take ownership of the house. At this point, most banks sell the house to recover their loan principle. Banks do not like doing this because it costs them money and they are not equipped to really sell houses.
This means that the savvy real estate investor can take advantage of the foreclosure proceedings by closing a deal at the stage before which is called pre-foreclosure.
Pre-foreclosure is the period of time just before the bank repossesses the house in question. During this period, the bank is filing the required paperwork to become the lawful owner of the house. Each state has its own laws regarding foreclosure, and the pre-foreclosure period can be as short as 21 days in Texas, to as long as 3 months in California. At the end of the pre-foreclosure period, the house may go up on auction at the “courthouse steps,” where many investors go looking for a good valued investment property.
To invest in a pre-foreclosure property, investors must get the property before the public auction or the bank actually takes title to the house. This point is the perfect time to negotiate with the homeowner, and structuring a lucrative deal without having to compete with other investors. Without having to bid against other investors, pre-foreclosure specialists are often able to acquire properties far below market prices.
There are techniques, tips and workarounds which I cover in my courses and my workshops and which every real estate investor really needs to know. At this stage though it is sufficient to point out that the successful real estate investor is good at making a rapid assessment of a deal’s value and then getting and getting out in the shortest possible time with the greatest amount of money.
It really is that simple, if you know how.
###
No comments:
Post a Comment