My reason for this is there are just too many foreclosures and short sales out there!!

I know this is a good thing for investors, but for regular buyers it is kind of turning out to be a bad thing. Why? Because most of the properties out there needs work and regular buyers are not willing to do the work. They want something they can just move right into.

Especially if they are FHA buyers. Who wants to deal with a 203K loan having to wait months for a contractor to do some work, the bank inspecting the work, then rinse and repeat a couple of times until the job is finished? Mostly no one and I don’t blame them!

What these buyers are failing to realize is that they are getting a good house at a great price. Most of these deals don’t need that much work. Just a little cosmetic repairs and voila! you will have a beautiful home.

Of course we investors are jumping at the opportunity to get to these homes for dirt cheap prices but I try to get regular buyers on these shorts and am having a difficult time.

… I advise that you sell your home in a short sale rather than do a loan modification or a foreclosure. However, there is even a downfall to doing a short sale.

Here is what I decided. I am going to list the positives and negatives for each of the above options and I guess you can decide which works best for you.

LOAN MODIFICATION

Pros:

• You get to keep your home
• Your monthly mortgage payment will be lower

Cons:

• The bank usually asks for a substantial downpayment
• You will still owe the bank more than what the house is worth

FORECLOSURE

Pros:

• You will no longer have the bank hassling you about a payment
• You will no longer have to deal with obnoxious tenants (if applicable)

Cons:

• You will have a negative blemish on your credit
• You will have problems buying a home for at least 3 years

SHORT SALE

Pros:

• You can negotiate that an investor pays you to take over your home
• You will not have a foreclosure on your credit report

Cons:

• The bank can come after you for the balance that was written off due to the short sale
• You may have to pay taxes on the loss amount (loan amount minus short sale price=loss amount)

These are the pros and cons to each one and I guess it is up to you to decide what works best for your and your family’s needs.

Well I am preaching that you should never procrastinate in real estate. If you do not make moves then guess what? You will not make any money.

It is very easy to tell yourself that you cannot make it. This then becomes the excuse for you not going forward and just doing something to put you one step closer to getting and closing a deal.

You have convinced yourself that you will never be able to make a dime because you do not have any money to start.

I know the feeling because I had that same thought when I first started.

I had $500 and bought the Carlton Sheets package and after reading and listening to it, I told myself that the no money down methods that he taught would not work in New Jersey. Therefore, convincing myself that I needed money to get started.

Although I started making calls, I was not fully confident until I had some money. I am not going to lie. I waited until I got some money before I purchased my second property.

It really wasn’t until I bought a couple of properties using my own money and credit before I learned the no money or credit techniques actually work.

And those techniques were learned through experience and information from the streets, not from what I learned through Carlton Sheets.

Anyway, I say all this to tell you that you can and will make money with no money down and any other way. You have to be in it to win it!

Get out there and do something! Make some phone calls! Talk to people! Do anything you can to give yourself a confidence booster.

Once you make the initial contact, the rest will come like second nature. It really is just the first phone call that is scary.

After you hear the voice of a pleasant person on the other end, even if they are rejecting your offer, you will realize that it is not that bad.

Be like Nike, Just Do It!

The main reason for this is that when people first decide that they want to be real estate investors, they go in looking at properties from a personal level.

They look at a property and decide that they are going to change the home and fix it up to look like something they would live in.

This is a bad move!

When fixing up a property rehab you must remember that you are going to either do one of two things:

1. Keep it
2. Sell it

If you keep it, then you are going to rent it out to people who have no financial interest in the property.

Therefore, you have to make decisions based on what you are willing to lose. When purchasing materials, always think of the worse and look for the best.

Assume that the tenant will destroy the item. Therefore I would advise for you not to purchase expensive items.

Don’t buy the cheapest neither. I would probably go with next to the cheapest.

In some instances you can get good quality for a cheap price. These are the items you are looking for.

If you are going to sell it, then you need to keep in mind that the new owner can always upgrade or that they themselves may just want to rent it out.

In any case don’t overdo it.

When you find yourself in a tight situation such as foreclosure you really do not want to admit to yourself that the bank is indeed going to take your home.

Your emotional connection will not allow you to fathom the thought of strangers coming in and telling you that you have “x” amount of days to gather all of your belongings and find somewhere else to live.

Especially since your name is on the deed and the house is of such beauty.

pic courtesy of Rhansman

Who do these people think they are?

Well, unfortunately, these people work for the bank, who is the true deed holder, and they have every right to evict you once the judge signs the documents at the court house giving them the o.k. to take possession your property.
Once this happens, there is no turning back.

Very seldom will the bank contact you after the foreclosure and ask if you can help sell the home and that is usually only in very distressed areas.

A preforeclosure short sale can save you two things:

Embarrassment – If you sell the home before foreclosure, then there will be no public notifications that your home was taken away from you. You also will not come home to a big yellow notice on your front door for all your neighbors to see, telling you that you no longer have possession and you now have to vacate the premises.

Credit – When you are only in preforeclosure status the bank is notifying the creditors that you are late on your loan. We all know that having lates on your report are rectifiable in a matter of 12 months.

However, if the bank forecloses on the property, you now have a judgment on your report which basically tells creditors that you are not a good payer and they had to go to court for a judge to give them back what you were supposed to be purchasing.

This can take as long as seven years to come off your credit.

Not a good look.

Short sale your property and walk away with your head held high. You can recover from this with dignity.

The main reason for this is because of the prices.  Of course the price of a foreclosure is much less than that of a home in good condition that is listed on the MLS or being sold by the owner.

This is mainly because the condition of a foreclosure is unknown and you are basically purchasing “at your own risk”. They usually need a substantial amount of work that needs to be done on it and therefore it is priced according to its condition.

I would admit that getting your investment from a home foreclosure listing is a good choice, but there is something that you need to make sure of once you are in receipt of this listing.

Are you in suspense yet?

I bet you are.

You probably think you already know.

Did you guess “price”…?

…Well that is not the answer.

Yes price is important, but we already know that the price is going to be much lower than the current market so that is already expected.

The one thing that I believe you should look for in a home foreclosure listing is the date the list was printed.

Sounds simple, but it is very important if you believe your time is valuable.

I don’t know how many times I went to or sent an investor to a property on a recently dated list and still found that the property was already sold.

You get in your car, burn some gas and ride up to a property only to see a contractor already working on it.

It pisses me off because it happens a lot more than a little. How simple is it to take a property off the list after it is sold?

Many sites don’t keep their list updated as well.

They bait you in by telling you about a property on their list that is in your neighborhood. Yes the property was listed for that price, but they fail to tell you that it is no longer available.

Watch for the date and make sure the home foreclosure listing is updated before you even bother to purchase it. If you get it for free then you didn’t lose much…

…Except your time and gas.

Although this state is one of the few with lower priced homes, many still fell victim to the subprime mortgages.  When homes were owned free and clear or at a low mortgage, owners decided to refinance, with the influence from mortgage loan officers, and pull out their equity.

This, in turn, raised the price of the home and mortgage payments. These payments then became unaffordable for the owners, which then caused the domino effect.

To stop foreclosure in Florida I would advise you to find a good attorney who specializes in foreclosures. Give them all of your information. Tell them what caused your downfall such as a loss of employment or whatever caused you to fall behind in payments.

Tell them your current financial situation and what, if any, kind of payments you are able to afford now.  The lawyer should be experienced in working with banks as the banks are also overwhelmed with foreclosures and if not handled properly, they will deny your claim.

Do stay away from solicitors that offer to work out your foreclosure for a fee.  Many of these people are just out to take your money. Many of them do not even know how or where to start to stop foreclosures anywhere, let alone in Florida.

The bank also requires that you give them all of your financial information such as recent banks statements and paystubs.  These documents inform the bank how much you are currently able to afford. They will then determine if it would be in their better interest to continue with the foreclosure and try to sell it, or to allow you to remain in the home.

When writing a hardship letter to stop foreclosure you need to include the following:

1)      What caused you to fall behind

For example did you have death in the family, lose your job or get a divorce.

2)      What your future plan is

Let them know how you intend to catch up and inform them that you can afford to pay if the payments were at least x amount of dollars lower (x being the amount you need taken off).

3)      List all necessary repairs

You may want to add a couple of things that is wrong with the home. This will sought of put the idea in their heads that the home needs repairs and therefore will not be such an easy sell. That way they would rather let you stay in it then to try to sell it themselves.

Make sure when you write your hardship letter to stop foreclosure that you make the letter as personal and sincere as possible.

Years ago it was a little harder to influence the banks to not foreclose when you got behind, but in today’s terrible economy and with these millions of foreclosures on the bank’s books, they now take any kind of explanation and usually decide in your favor.

They also refinanced homes that were at an affordable original purchase amount, but because they may have needed extra money for one thing or another, mortgage reps talked people into getting equity out of their homes to pay for whatever extra expenses they may have had.

Because of this, now these people are unable to pay the higher mortgages on their homes mostly because they were talked into a 2 year arm mortgage. This meant that after two years, the interest on the loan will increase according to the market rates and the mortgage would increase drastically.

This all started the domino effect of the foreclosure boom.

Selling the Home

One way to stop foreclosure sale is to actually sell the home.  I was actually in this situation.

I purchased a home for someone who was losing it. I purchased it in April of 2005 with the intent that the previous owner would pay the current mortgage and repair her credit. After the year was up, she was supposed to buy the home back.

She paid the mortgage up until January of 2006 and then stopped making payments.  I then had to take her to court, evict her (done in March 2005) and then pay the mortgage myself because I could not find a tenant.

By June 2006, I was no longer able to make the mortgage payments for this house as well as my own. Meanwhile, the finance company had began the foreclosure proceedings.

I then put the home up for sale in October after getting my foreclosure notice. Luckily, because I’ve been in real estate for years prior to this, I had a list of clients willing to buy the property.

In November 2006 I had the property sold. Because of this, I was able to stop foreclosure sale and pay off the bank what was owed to them in full and walk away with $50,000 profit.

•    Newspaper – the local newspaper that covers your county and any nearby county has special days in which they list foreclosures.  In these listings they give you the county, property address, bank name, borrower’s name and amount owed.  It then gives you the time and date in which the sheriff’s sale will have the auction of the home.

The only issue with this is sometimes the owner of the property came up with ways to redeem the property. Maybe they sold it or they may have came up with the amount they owed the bank that started the foreclosure process in the first place. They could have even made some type of payment agreement with the bank.  Whatever the reason, the newspaper does not give you this information.

•    County Clerk’s Office – the county clerk’s office doesn’t technically give you free government foreclosure listings because you have to pay for each copy.  However, after you have gotten your feet wet and learned how to get connections, you can have your “connect” inside the office get you the list for free or damn near free.

I have connections with my local county clerk’s office where I pay them only $50 for a list of 3000 lis pendens. A lis penden is when the bank has just began its foreclosure process (pending lawsuit) and has filed it with the courts. Each copy usually costs from $5.00 to $40.00 depending on your county and how many pages.

•    Internet – the internet is probably the best place to find free government foreclosure listings, especially if you are going out of area.  This is because most sites keep their records updated and with just a click of a button, you can find out foreclosures in any area in America.

Foreclosure.com not only keeps their records updated, but they also email you a free list of foreclosures in your area.
To figure out which method is the best method for you, you should try them all. I would of course start with the newspaper then go to the internet. Familiarize yourself with the process first and then head to the clerk’s office.

Once you get a good understanding of it all, you will find yourself stacked with hundreds or thousands of free government foreclosure listings.