For example.

If a foreclosure is worth $200,000 after repairs, then the asking price can be no more than $130,000.  This is because hard money lenders will only allow you to borrow 65% of the ARV (after repair value).

$200,000 x .65 = $130,000

However, if you need construction costs to be included, then you need to deduct that amount from the $130,000 and that amount will be your offer.

So, if construction repairs is $20,000, then:

$130,000 – 20,000 = $110,000

You should only offer $110,000.

If you have repair money and do not need to borrow towards it, then $130,000 is a good enough offer.

I came across this article in ezinearticles dot com and thought that Bruce Swedel made some very important points on what you can do to avoid foreclosure in the first place.

It also shows you that there is a serious foreclosure epidemic in our country which is bad news for those loosing their homes, but good news to investors.

Check out the article below:

Avoid Foreclosures Today and Save Money

With today’s onset of globalization, there have been quick lifestyle pattern changes. In our hectic and busy schedules, we oftentimes overlook the huge need to make proper investments in order to save some money. However, such trivial issues could bring benefits in the long run. Simply restricting unnecessary spending will not be enough. A lot of research reports confirmed within significant amounts of foreclosure cases that lenders failed to respond to mortgage company’s calls.

Spreading money through different deposit products would also mean spreading several risks. Therefore, it would make sense to look out for opportunities to save money.

One out of five hundred households today are faced with a foreclosure problem. This dropping scenario of real estate clearly shows the need to really save money. Problems of bad loans, however, remain for first-time homebuyers out there.

Also, there is still the problem where brokers downplay how grave variable rates are to increase personal profit margins. Therefore, try not to get caught in the crazy frenzy of purchasing real estates. Instead, act with lots of precision to avoid the foreclosure problem. Not paying for monthly fees, with a mortgage, over a certain time period might cause serious problems such as foreclosure. This would mean that you would lose your property’s title and your overall credit report would be impacted.

To avoid a foreclosure and save some money at the same time, read on:

- Lots of untoward scenarios can be completely avoided through contacting your lender the minute you realize you will be making a late payment.
- Do not ignore your lender’s calls or letters. Ignoring this problem will not send it away. Instead, it will make your situational crisis worse. Try having candid discussions with your personal lender to get yourself out of this situation.
- Oftentimes, reinstatement is cited as a temporary solution in avoiding the foreclosure problem.
- Lastly, to avoid the foreclosure problem, go for consistent counseling programs.

Documentation tends to play an essential part when it comes to avoiding the foreclosure problem. Therefore, you have to have these financial details handy:

- Proper statements of your existing financial circumstances.
- Detailed statements regarding your existing status of income.
- Detailed lists of your overall household expenses.

Therefore, if you wish to avoid the foreclosure problem, begin by saving some money immediately.

Begin with a regular bank account to reap long-term rich harvests. Money does tend to bring about happiness, as well as ease everyday stresses to a huge extent. Along with properly designed investment and saving products to meet customer needs from different society segments, this will no longer be a hard task. Therefore, you should begin to help your money in making even more money – just for you.

What this basically tells you also is that there is a lot of money to be made.  Because of this problem, many homes which were once worth hundreds of thousands of dollars, you now can get for five figures, which was unheard of.

Hopefully those who actually live in their homes are able to get some type of help so they can stay in their homes, but for those homes that were investments only, we bottom feeders now have access to invest in ourselves.

First, you can ride around your local neighborhood and get the addresses of foreclosures (they are properties that are boarded up) that you are interested in.  You then take that information down to the county clerk or register’s office in the county the property is located.

Once there, you go to the books which are listed by address.  They are usually right in the lobby or you can go to someone who works in the office and ask if they can look the property up for you. If you have more than one, then you probably should look through the books. Then you can get the bank’s information and contact them and find out the following:

1) If they still own the property or did they sell it to another bank

Many times than not, the original lender sells the property to another bank which may not be recorded on the deed.

2) If they still have it, how much are they asking

If the bank still owns the property, they will give you their asking price. You can then negotiate directly with them if the price is not what you want to pay.  It is very easy to negotiate for a foreclosure because the bank wants to get rid of it as fast as possible.

3) If the owner actually owns the property free and clear

If this is the case, then you will not be able to negotiate any thing with the bank because a “free and clear” title means the borrower paid all of their mortgage payments and the bank released the home.

4) If the owner owns the property, you will then have to try to find the owner

There are many ways to try to find owners of foreclosures. You just have to do your due diligence. Once you find them, you can easily convince them that it would be in their best interest to sell you the property than to just have it sitting there unoccupied for the squatters to take it over.