Tips & Tools

Make A Realistic Offer On A Foreclosure Property

RE.com Tips & Tools — Wed, 04 Nov 2009 16:25:00 GMT

EDITOR'S NOTE: With foreclosure properties still dominating the housing landscape in the U.S., we've asked our friends at RealtyTrac® to guest author some articles to shed light on the foreclosure crisis. RealtyTrac is the most trusted source of foreclosure information in the country. We hope that the information provided here and in other articles will be beneficial to understanding, avoiding and even leveraging (as an opportunistic buyer) home foreclosures.

By Rick Sharga, Vice President of Marketing for RealtyTrac

It’s no wonder that the foreclosures market is gaining popularity among first-time buyers and real estate bargain hunters alike. Foreclosure properties can often be purchased at 10 to 30 percent less than their market value, making them an attractive investment in a time of soaring real estate prices. But despite what you may see on late-night cable TV, investing in foreclosure properties isn’t a sure fire "get rich quick" formula. Lenders aren’t likely to give properties away, particularly in a real estate market where prices continue to rise. And homeowners in financial distress still have some leverage to negotiate the purchase price, particularly early in the foreclosure process.

"You have to practice both diligence and patience when looking to buy a foreclosure property," explains Jim Saccacio, chief executive officer for RealtyTrac. "There really are some fantastic deals out there, but you have to be willing to wait for the right opportunity, then make a realistic offer so the seller will view you as a serious buyer."

With interest rates ticking upward, experts predict an increase in the number of foreclosure properties on the market. Web-based services such as RealtyTrac, give consumers access to foreclosure and pre-foreclosure information that was previously available only to professional real estate brokers and investors. Today, homebuyers can use these services to identify and research potential home purchases, as well as to find the tools and professional resources they need to help them close the deal. Sales in this marketplace can move rather quickly, so there’s no time to make uninformed or low-ball bids on properties in a half-hearted attempt to save a few bucks. Nothing turns a seller off faster than a low-ball offer on a fairly-priced property. In most cases, doing so may irritate the seller so much that no further negotiations will be entertained, meaning that you’ve essentially lost any opportunity to buy the property. Conversely, making an uninformed offer that is too high may get you the house you want – along with a never-ending monthly reminder that you overpaid!

Find out what the house is really worth
In order to make a realistic offer, you first need to know what the actual value of the property is. Look at the original purchase price and recent comparable property sales to determine the current value of the property. You can obtain information on recent sales in the area from your realtor or via RealtyTrac’s Comparable Sales Report. Ideally, you should look at sales in the area over the past six months. Then you can drive by each property on your list and note its condition, size, appeal and location. You should also look for properties that are currently listed for sale in the area and research the same information for them. This information, along with a thorough examination of the condition of the property, should give you good feel for what it is really worth.

Find out how much is owed
You should also find out the amount the seller is in default and the remaining loan balance. In order to determine a reasonable offer price, you’ll need to know – at a minimum – how much money it will take just to satisfy the debt to the lender (or lenders). Knowing this will help you determine whether the property is within your price range or unattainable considering your current finances.

The estimated loan amount and default amount are included in the foreclosure documents filed with public records, and RealtyTrac posts this information online for subscribers. Additionally you can order RealtyTrac’s Legal and Vesting Report or Transaction History Report to check for any other mortgage loans on the property. Ultimately, even if you’ve presented what you believe to be a fair offer, you’re likely to receive a counter offer from the seller. That’s to be expected as the negotiation process is a major part of real estate sales in general – even foreclosures. Remember, a successful negotiator in any situation must be informed, prepared and realistic. Again, you must practice patience and diligence in order to get the property you want for a price you are willing to pay.

Lastly, it’s important to remember that real estate purchases can be rather emotional, especially as you grow attached to the idea of owning a particular property. It’s important to know what you are willing to spend on a home, regardless of your emotional attachment to it, so you need to set a limit and stick to it.

Do Your Homework Before Buying A Foreclosure Property

RE.com Tips & Tools — Tue, 03 Nov 2009 16:18:00 GMT

By Rick Sharga, Vice President of Marketing for RealtyTrac

There are two words that give pause to the most motivated foreclosure buyer: due diligence.

Those words mean researching all the risks involved in a property purchase, which in the past meant extensive legwork and expense. But that’s no longer the case, thanks to exponential advances in information technology and the establishment of Web-based property data aggregators like RealtyTrac.

Don’t be fooled – buying a foreclosure property doesn’t equate to easy money by any means. A savvy player in this market is willing to do a bit of homework. But the tools and resources needed to do that homework are much more accessible now than ever before.

"While buying a foreclosure property is certainly not without risk, the right examination and due diligence on the part of buyers can significantly improve their ability to make a strong investment," explains James J. Saccacio, chief executive officer at RealtyTrac, the leading online foreclosure marketplace.

Web-based services like RealtyTrac can help investors and homebuyers tap into the previously hidden foreclosure market by providing access to property data formerly available only to professional real estate brokers and investors. Today, homebuyers can use these services to identify and research potential home purchases, as well as to find the tools and professional resources they need to help them close the deal.

It makes sense to give any foreclosure property under consideration a thorough examination – possibly even more thorough than for a traditional real estate property. There are three stages of foreclosure that require different research strategies: pre-foreclosure, auction and bank owned.

Before buying a pre-foreclosure property directly from the owner, run a preliminary title check for all debts secured by the property. You can research the title online using RealtyTrac’s Legal and Vesting Report or Transaction History Report. Subtract the total amount owed from the estimated market value to determine the potential bargain. After making contact with the owner, arrange a walk-through of the property to evaluate its condition. Factor estimated repair costs into your purchase offer. Before you close the deal, hire a professional home inspector to inspect the property and enlist a title company to run a final title check.

In most states, you don’t have a chance to inspect a property before buying at a public auction, which makes this type of purchase more risky. But if you’ve researched the title and determined the amount owed is far less than the market value, you’ll have some margin to cover unexpected repair costs. Before you go to the auction, set a maximum bid based on your research and stick to that bid at the auction.

Although you’ll be able to inspect the property if it’s bank owned, the bank typically knows little about the property and will sell it in “as is” condition. This means the bank will disclose all the needed repairs it knows about, but is not held responsible after the sale for any repairs it did not know about. Factor the known repairs into your purchase offer and have a professional inspection conducted before closing the deal. You should also have a title company run a final title check before closing, although most banks will make sure the title is clear before selling.

Here are eight steps for doing a professional-level property examination for all stages of foreclosure:

Identify desirable neighborhoods – Find specific neighborhoods where you would like to live or own a home. This will limit the search to a manageable size for you and your agent, and give you a sense of relative property values.

Cast a wide net – There are a number of Web-based services like RealtyTrac that can put hundreds of thousands of foreclosure properties at your fingertips. But remember, the best savings are often found in pre-foreclosure properties; therefore, it’s important to check the percentage of pre-foreclosure (vs. REO) properties in any database before subscribing.

Determine the property value – Look at the original purchase price and recent comparable property sales to determine the current value of the property. You can obtain information on recent sales in the area via Multiple Listing Service (MLS) comps from your realtor or by ordering a report such as RealtyTrac’s Comparable Sales Report. Ideally, you should look at comparables sales in the area over the past six months. Then you can drive by each property on the list of comparables and note its condition, size, appeal and location. You should also look for properties that are currently listed for sale in the area and research the same information for them. From this information, you can get a good idea of what the property you are interested in is worth.

Find out the amount in default and the remaining loan balance – In order to determine a reasonable offer price, you’ll need to know – at a minimum – how much money it will take just to satisfy the debt to the lender. This information is available on the foreclosure documents filed by the foreclosing lender and from online foreclosure-tracking websites like RealtyTrac.

Check for other liens – Before purchasing any foreclosure property, make sure it is free and clear of any bankruptcies, tax liens or other financial liabilities. A title search will examine records used to determine the legal ownership of the property and all liens and encumbrances on it. A title company or attorney can run a title search for you. You can also research the title online using RealtyTrac’s Legal and Vesting Report or Transaction History Report.

Assess the condition of the property – In addition to visiting the property yourself, hire a professional inspector to inspect the property to make sure that the property is in acceptable condition, or to determine how much of a rehab budget you’ll need to build into your deal. If you buy during pre-foreclosure or directly from the bank (REO), it’s usually possible to conduct a thorough inspection. But if you buy at the public auction, it may not be possible to view or inspect the property beforehand.

Build a positive relationship with the seller – Before purchasing a property, try to make sure that you’re entering into a win-win situation with the seller, so that they’ll be more willing to do what they can to make the process easy and leave the property in good condition for you.

Leverage your timing – Knowing when a property is going to be auctioned gives you an extra bargaining chip when negotiating with a seller or a lender. You can sometimes contact the seller just before the auction to see if a last-minute sale is possible. At the very least, knowing the intended date can help you organize time to research the property as much as possible, review comparable sales, calculate values and potential profits and ultimately determine a bid price so that you’re well prepared to compete with other investors on auction day.

It’s sometimes said that in real estate, selling is about business while buying is controlled by emotion. While this may generally be true, it’s important to keep your head about you and think through the process so that you can make the most informed decision possible. Remember, a little preparation before the sale can help you reap huge benefits. So, it’s worth your time and energy to do a little homework!

Tips for First Time Movers

RE.com Tips & Tools — Tue, 03 Nov 2009 14:48:00 GMT

By Gina Cappiello www.123Movers.com

Your first move is going to be a big deal. It will be the defining moment of your adulthood and the ultimate declaration of your independence to the world. Although it is an exciting occasion, it is probably going to be one of the most stressful, insane, and chaotic days of your life. Fear not! Here are some tips to point you in the right direction and help you keep your cool during your first moving experience:

Don’t be stubborn!
There is absolutely nothing wrong with asking for assistance. Family and great friends want to help you any way they can, so don’t be too proud to ask them for it. They will be flattered and more than willing to assist you for your first move and many more. No family or friends around to help? Schedule your move with a moving company and they can help you ever step of the way from planning to packing and reassembling furniture.

Don’t stress!
It is completely normal (and easy) to lose your mind during your move with everybody running around with your belongings. Take a step back from the situation and sit somewhere alone for a few minutes to gain some perspective on the situation. Remember that this is just one day of your life. Once it is over, you probably will not have to move for a good amount of time. Close your eyes, breathe deeply, and remind yourself that you can and will get through this.

Don’t starve!
With the chaos of moving day and anxious feelings about your new home, it is easy to forget to eat. Make sure to start off the day with a healthy (but not heavy) breakfast to get you energized for your move. Try to schedule at least a half hour lunch for yourself and your movers to ensure you are all running on a full tank of fuel instead of adrenaline and caffeine. Also, don’t forget to stay hydrated. Keep numerous bottles of water handy and be sure to drink plenty of them while you sweat and pack away.

Asking for help, staying calm, and keeping your body energized with healthy foods and water will definitely help make your first move the very best one. Good luck!

3 Moving Secrets

RE.com Tips & Tools — Thu, 29 Oct 2009 15:41:00 GMT

By Gina Cappiello www.123Movers.com

Pssst! Want to get in on some clever tips to help make your move a little easier? Read on to get the 411:

Pack an Overnight Bag
Treat your move as if you are spending the night at your friend’s house. Pack the essentials for a night away along with a set of moving clothes. This will save you tons of time and effort on moving day. Instead of searching through your boxes for a change of clothes during or after your move, just take a look through your backpack to find everything you need. You can also pack a couple of bottles of water and dry snacks to have on hand in case you get dehydrated or a little hungry while moving.

Bring Entertainment
On the first night in a new home, things can be pretty quiet and boring without cable, video games, and the Internet hooked up. Bring a small AM/FM radio, boombox, or MP3 player docking station (with your fully charged MP3 player) so you can listen to news, music, or talk radio while you relax in your new home. You can even play board games, cards, read, or do a few puzzles during your first night to pass the time. Chances are you will be way too exhausted to even want to do anything, but it is great to have some entertainment handy just in case you can’t sleep.

Cheat!
Who says moving has to be done in one day?! Save time by “cheating” a little! If you can, start bringing items to your new home as soon as it is available and empty. This is a great way to start getting set up with your new home, get an idea of where everything can go, and figure out what else you may need for your new home. It is also a nice way to help your moving company out a little bit on the actual day of your move.

Got all that? Good! Now go share these moving secrets with everyone so they can have an easier move.

Working with a Mover

RE.com Tips & Tools — Wed, 30 Sep 2009 13:20:00 GMT

By Gina Cappiello www.123Movers.com

When working with any moving company, you have to remember that communicating effectively is vital to a successful move. Here are some simple ways to communicate effectively with your movers:

Be clear
Write down every single item you will be moving and put asterisks by all of your items that are heavy, fragile, or important. Invite moving companies over to your home for an in-person estimate so they can see what needs to be moved. Explain to them what you need moved and how you want everything moved. This will guarantee that the movers will know exactly what needs to be taken care of for your move so they can prepare and quote you accordingly.

Listen up!
Respect your movers’ thoughts and opinions throughout the moving process. They only want what is best for you and your possessions. If they recommend that you pack your fragile items a certain way, hear them out and give it a go. Chances are their way is the best way.

Stay in touch
Check in with your movers once or twice before you move to be sure you are all on the same page. You’re not being a pest, you’re being proactive. Your movers will not only appreciate your concern, but will be the first ones to reassure you that everything will be fine.

Be respectful
The most important thing to be is respectful. Your movers may be working for you, but that does not mean you can treat them poorly. A little kindness (like providing cold beverages and snacks for your moving guys) will go a long way.

Working with a moving company does not have to be a complete nightmare. Be clear about your needs, listen, keep in touch, and be kind to your movers to guarantee a great working relationship and move.

Moving in the Winter

RE.com Tips & Tools — Tue, 29 Sep 2009 13:08:00 GMT

By Gina Cappiello www.123Movers.com

Don’t let the ice and snow of winter sabotage your next move! Stay warm, safe, and smiling during your winter move simply by following these helpful tips:

Bundle up!
It’s always great to have a few warm pieces of clothing on hand during your winter move. Have sweatshirts, socks, sweaters, blankets, coats, and boots remain in your home until you are ready to leave permanently. You never know if your heater will break the day of your move or if the wet weather will soak you to the bone.

Don’t slip
Shovel and salt walkways, steps, driveways, and anywhere movers will be walking. A slip and fall while moving is not only embarrassing, but extremely dangerous. Even with freshly shoveled walkways to guide you, walk slowly and carefully throughout your move in case you missed scraping up a slippery spot.

Stay warm
Be sure your heat will be on for moving day at your current and new home. If the heat is not yet on in your new home, bring along some space heaters to hook up before you begin moving your belongings inside. This way, you will have a toasty home to relax in after the move and won’t freeze during your first night in your new home.

Drink (and eat) up
Keep a kettle of warm water for tea or a pot of hot coffee on hand to warm your movers up with. If you want to go above and beyond for your movers, have some soups (Ramen noodles will suffice) and a loaf of crusty bakery bread ready for them to eat during a lunchtime break. They will thank you for the warm gesture during the chilly move!

EDITOR'S NOTE: Don't forget about our other seasonal moving story, Moving in the Summer.

Moving 2.0: How to Pack and Move Electronics

RE.com Tips & Tools — Tue, 22 Sep 2009 12:03:00 GMT

By Gina Cappiello www.123Movers.com

MP3 players, flat-screen televisions, surround sound speakers, and video game systems are pretty tough, but can get destroyed easily if they are not packed safely for a move. Follow these simple guidelines below to protect your prized (and pricy!) gadgets during your next move:

Packing
The best way to pack your pieces is back into their original boxes with their own pieces of packing foam. This guarantees that the item will safely fit into the box while being protected. If you no longer have the original box or packing foam, get creative. Cushioned packing blankets and durable tape are perfect tools to use to wrap large fragile items like flat-screen TVs and computer monitors up tight. If you do not feel that your items are protected enough by blankets, place them into a box filled with packing peanuts for extra protection.

Moving
If you can afford the extra expense, hire a separate moving company that specializes in moving fragile items. Be sure to choose the company you feel the most comfortable with and that has the most experience with moving high tech items. Do not choose a mover solely based on their estimate. You may be getting the best price on a mover, but you may end up with damaged goods because of it. If hiring a separate company is out of the question, do it yourself! Pack your items into the car in size order (big to small) and use extra blankets or pillows in between empty spaces to reduce wiggle room. If you are using a car that does not have collapsible backseats, don’t worry. Bigger items can be put onto the backseat and strapped in accordingly while smaller items can be placed on the floor or front seat of your car.

Unpacking
It is very important to be patient and work slowly when unpacking everything from your vehicle. Just like packing, unpacking gadgets can be extremely tedious. Before moving your sensitive items into your new home, make sure there are designated spots for them to be placed. Keep all of your items wrapped up until everything is moved into your home. To avoid accidents during the rest of your move, keep your electronics in an area of the house where there is the least amount of moving traffic. If setting up places for your gadgets is impossible to do during your move, keep your fragile items packed (and locked) away until everything else is safely moved in.

Moving is a high-stress activity. Don’t let your high-tech items get damaged during it. Follow the tips provided to guarantee a problem-free move for you and your electronics.

Top 5 Reasons to Love Your Next Move

RE.com Tips & Tools — Mon, 21 Sep 2009 12:15:00 GMT

By Gina Cappiello www.123Movers.com

Moving does not have to be a negative experience. In fact, a move may be most exciting and important step you take in your life. Take a look at 5 fantastic things to look forward to during your next move below:

New neighborhood
Moving to a new town, state, or city means new surroundings. Think about all of the amazing new restaurants, shops, and places to hang out at that you will soon be discovering. You will also have new neighbors to meet and a brand new living space to make your very own.

New friends
Finding a new group of friends can be daunting and scary, but it is also a very liberating experience. You will now have absolute freedom to choose who you want to be close to without any pressure from your existing core of friends. New friends also mean new perspectives and stories to learn from, which will help you flourish in your new town.

New opportunities
There may be a bevy of different businesses in your new town depending on where you move to. Your move could mean a brand new job in the future with a fascinating company. There will also be new organizations to volunteer for which may unlock a new found love for a cause you never knew was there before.

New you
You’re reinventing your life by moving, so why not reinvent yourself? With a move, you are free to adjust your personality, style, and beliefs to become a whole new person without worrying about your current friends and neighbors judging you.

New culture
New accents, languages, ideals, and traditions will most likely be found in your new surroundings. Embrace your new town’s unique culture and learn as much as you can from it. You will probably become part of it eventually, too!

Moving does not have to be the worst thing to ever happen to you. Focus on the positive aspects of your upcoming move and get excited for the future instead of thinking your move is the end of the world.

Unique Ways to Announce a Move

RE.com Tips & Tools — Fri, 18 Sep 2009 12:03:00 GMT

By Gina Cappiello www.123Movers.com

What is the first thing to do when you find out you are moving? Tell everyone! Regardless of it is a local or a long-distance move, announce it in a novel way with one of these ideas:

Throw a “Surprise Party”: Send out invites for a surprise party but don’t tell anyone who it is for or why it is being thrown. Ask everyone to bring a food or drink that is easy to “move,” like appetizers, pastries, or cookies. When it is time for the big “surprise,” tell everyone to hide. Say you are going to escort the guests of honor in. When you have been gone for a minute or two, come back into the house and surprise everyone with the news. It’s a fun twist to put on the party and a great way to share the exciting news with everyone.

Send eCards or Personalized Greeting Cards: There are numerous free eCard websites to use to create a fun moving announcement. Some moving companies even provide an eCard template for their clients to customize and send out. If you are feeling ambitious, pick up a pack of cards and personalize each one with a fun message about your move along with your new contact information.

Drop Hints on Social Networks: Everybody is connected through social networking sites online, so why not announce the news creatively there? Start tweaking your online profiles to see if anyone catches on. After revamping your profiles, start dropping little hints in your news feeds, like the name of your new street or referencing the town you are moving to. This will get everyone involved and curious. When you feel like everyone is at the edges of their virtual seats and cannot take the suspense any longer, give them the great news!

No Time Before Your Move?: You can always throw a “moved in” party at your new home. Invite friends, new neighbors, and family members over to mingle. Have a notebook out for your party goers to write well wishes and their contact information in. Be sure to take photos of everyone at the party and post them on a free photo sharing website for all to see. Send out thank you notes shortly after with a favorite photo of the party and your new contact information. A moved in party will not only help you feel more at home, but it will also help bridge the gap between your old and new friends.

Do not forget that the most important part about telling everyone you are moving is keeping in touch after the big move. The Internet and cell phones make it easy to say hello to anyone around the world, so be sure to stay connected and involved with all of your loved ones. No excuses!

Green Movin' Without Losin'

RE.com Tips & Tools — Thu, 17 Sep 2009 13:19:00 GMT

By Gina Cappiello www.123Movers.com

One task most of us face every few years can create loads of garbage and pollution. That task? Moving! Everyone is hopping on the hybrid green bandwagon lately, here are some ways to keep your move a little greener:

Don’t Trash Everything: Before packing up your belongings, take a few hours every day before you move to sort through it all. Pack away everything you want to keep and put aside everything you do not want. Take everything you do not want and get rid of it in a green way. Set up a moving day garage sale, sell your items online, or donate them to a charitable organization. Not only will you be greening up your life, but your “trash” could be someone’s favorite find.

Rent Reusable Boxes: Sturdier, stackable, and more reliable than their cardboard cousins, reusable boxes are a great way to green up your move. Not only are they delivered to you, but they are also picked up when you are all done unpacking them at your new home. This means no boxes cluttering up your new home or extra waste being thrown into our already overflowing landfills. Along with renting reusable boxes, utilize your suitcases and bags for packing. You’ll be surprised how many things a purse can hold!

Avoid using Non-Biodegradable Packing Materials: Styrofoam packing peanuts, bubble wrap, and foam are useful during a move, but not for the environment. If you’re looking to go green on your next move, try utilizing old newspapers to wrap fragile items, and then recycle the paper when you unpack. Wrap pieces of furniture and art with blankets to ensure they do not get damaged during your move instead of packing them in foam. If you must use non-biodegradable packing materials, ask around to see if anyone has any from a past move to give you. Reusing is always better than buying new for the environment and you wallet.

Use Eco-Friendly Movers: With the green movement in full swing, movers are getting in on the ground floor. New specialized green moving companies are springing up all over the USA to help end useless pollution from moving. Some provide eco-friendly packing services while others only use trucks fueled by BioDiesel that only drive where they must. Less air pollution and waste, here we come!

Offset Your Carbon Footprint: If you are unable to be green during your move or just want to contribute more to the cause, you can donate money to an environmental group to “offset” your carbon footprint. There are calculators you can use online to figure out what your footprint is and how much it would be to “cover” it up. Your donation goes towards protecting land, animals, or planting trees. It is an easy way to contribute even more to the green cause without moving.

Being green during a move does not have to be pricy or difficult. Follow the tips above to keep waste and toxins from polluting your moving day and the Earth.

Locating Lucrative Investment Property Requires Finding Motivated Sellers

RE.com Tips & Tools — Fri, 07 Aug 2009 14:50:00 GMT

By Rick Sharga, Vice President of Marketing for RealtyTrac

With real estate outperforming most other investment vehicles, it’s not surprising that an increasing number of buyers are pursuing investment properties. With the rapid appreciation in many real estate markets, investors can realize a quick profit in the short term by reselling a property. Even if a particular real estate market is not red-hot, investors can profit over the long term by initially using the property as a revenue generator—leasing the property while allowing equity to build. That doesn’t mean it’s always easy to find investment properties. But with the right strategy for pinpointing investment opportunities, investors can realize sizeable profits even in an overheated real estate market, according to T.J. Marrs, a real estate investment trainer and author based in Vancouver, Wash.

“In general, if you can trade a 20 to 30 percent spread between your costs and your resale price, you can be fairly safe that you’re going to make a profit no matter what, even in a bubble market,” he said, adding that costs include not just the purchase price but other fees and expenses involved in buying a property.

Locating investment properties
The ideal investment purchase involves a motivated seller who has built a solid amount of property equity but doesn’t have the time, money or other resources to sell the property at its full market value. “There are literally dozens of ways to find properties. But the key is to find a property where there is a motivated seller involved,” Marrs said, noting that one of the best ways to find motivated sellers is to search pre-foreclosure properties. Although the hidden market of foreclosures and pre-foreclosures has previously been available only to industry insiders willing to sift through public records at the local county courthouse, services like RealtyTrac have made this information easily available online. Visit www.realtytrac.com to search pre-foreclosure, auction and bank-owned properties nationwide. A property enters the foreclosure process when an owner defaults on monthly loan payments, and the property is scheduled for public auction. The owner can stop the auction during a pre-foreclosure period by paying off the amount in default or by selling the property for a price that covers the balance of the loan. Many real estate investors contact the owner during pre-foreclosure and offer to buy the property at a bargain price. If a deal is worked out, the owner avoids having a foreclosure on his or her credit history and usually walks away with some cash in his pocket.

“The reason they’re willing to sell is that they are very motivated sellers. And they’re going to lose the property if they don’t sell,” said Marrs. When contacting the owner, investors need to be aggressive marketers because they are often contacting the owner before the owner has made the final decision to sell the property. “With any kind of marketing campaign, you need to get a penetration beyond first impact,” Marrs said. “One letter is pretty much useless. Three letters is about five times more effective than one letter to the same lead.”

If the owner doesn’t sell or pay off the amount owed during pre-foreclosure, investors can bid for the property at the public auction. Auctions often represent great bargain-buying opportunities, but they also represent more risk and more competition from other bidders, according to Marrs, who usually buys before the auction. The foreclosing bank sometimes bids on the property at the public auction. If the bank is the winning bidder, it takes ownership of the property. Banks are usually motivated sellers since they consider foreclosed properties nonperforming assets and often want to unload them quickly. Many banks are willing to sell foreclosed property below market price as long as they break even.

Judging profit potential
A good investment property is bought below market price and appreciates in value after the purchase. This requires a motivated seller, but it also requires the numbers to work for both the buyer and the seller. A real estate investor should crunch the numbers on any potential investment property to determine if it meets the criteria of a good investment while still meeting the needs of the seller.

The total amount of any debts secured by the property should be significantly below the property’s market value. Investors can research all the debts owed at the county recorder’s office or online using RealtyTrac’s or Transaction History Report.

RealtyTrac provides estimated market value information for each pre-foreclosure and foreclosure property posted in its database, and investors can order a Comparable Sales Report for a detailed list of comparable sales. If the total amount of debts owed is 20-30 percent below the market value, the investor should continue to pursue the property. If not, the investor should probably move on to another property. The amount of bargain an investor is happy with can vary depending on the structuring of the purchase agreement. If he can take over the current loan on a property, Marrs is willing to buy it for up to 90 percent of its market value. But if he has to secure a new loan to buy the property, he wants his purchase costs to be at most 75 percent of the market value.

“If I can avoid using my credit or my money, then I’m gaining leverage. The more leverage I can use, the lower risk it is for me,” he said. In addition to evaluating the potential bargain, investors should consider how to generate a profit after buying the property. Investors should weigh whether reselling or leasing provides a better return on their investment. If interest rates are low and property values are increasing rapidly, it may be better to resell the property after making any needed repairs and improvements. The cash profit can then be re-invested in more real estate.

Leasing may be a better option if rental property is in high demand. Marrs uses lease options or installment land contracts to sell the property on an installment basis. This allows him to obtain a higher purchase for the property in the long run and maintain a monthly cash flow in the process. “I look at my exit strategy and entrance strategy at the same time to determine what makes up a good deal,” he said. “It’s not just about the price of the property. It’s about how I can structure financing to make the most amount of profit with the least amount of risk.”

Homeowners in Default: Contact with Care

RE.com Tips & Tools — Thu, 06 Aug 2009 13:38:00 GMT

By Jim Saccacio, RealtyTrac Chief Executive Officer

As home prices continue to escalate, more and more potential homebuyers find themselves on the outside looking in, unable to find a property in their price range that they’d be comfortable calling “home.” Partly because of this, interest in foreclosure properties — especially pre-foreclosure properties — is at an all-time high. These properties often represent an opportunity to purchase a property at significant savings. Pre-foreclosure properties can often be purchased for prices well below market value. These properties, which have entered the foreclosure process but have not yet been repossessed by the lender, fall into two general categories: notice of default and notice of sale. Property owners in default are usually in some type of financial distress and the closer it gets to the auction sale, the greater the risk the homeowner runs of being foreclosed on by the lender. (For a more detailed explanation of the Foreclosure Process, visit RealtyTrac’s Foreclosure Overview.) Timelines vary from state to state, but in most cases once a property owner has been put on notice, the house will be sold at an auction within 90 – 120 days unless the past due payments have been cleared up by the homeowner.

Since it involves dealing with someone who’s already under duress, communicating with owners in default can be mentally, physically and emotionally draining for many homebuyers and real estate investors. You endure the hassle of tracking down the owner’s contact information and then summoning the courage to actually make contact, only to have the door slammed in your face – figuratively and maybe literally. The prospect of contacting owners in default is enough to turn some people off buying pre-foreclosure properties, despite the deep discounts that can be found in this hidden real estate market. That’s unfortunate because much of the discomfort involved can be mitigated with the right approach and the right communications strategy.

The right approach includes viewing the purchase of a pre-foreclosure property as a win-win situation. While it’s true that the home buyer is hoping to purchase a home at a price below full market value, it’s also true that in the process, the distressed home owner will be able to avoid being foreclosed on, and will often walk away with a reasonable amount of cash. To be sure, buying pre-foreclosures isn’t for everyone. It takes careful preparation, aggressive marketing and dogged persistence to negotiate a purchase agreement with an owner in default. But the rewards you can reap from a successful pre-foreclosure purchase make it worth it. You can potentially save tens of thousands of dollars – sometimes much more – and walk away with feelings of satisfaction and accomplishment rather than frustration and failure.

Real estate investor and trainer T.J. Marrs has reaped the rewards from several successful pre-foreclosure purchases. He provided a recent example in which he had negotiated a purchase price of $240,000 with the owner of a pre-foreclosure property with a market value of $310,000. He credited the successful purchase to persistent marketing that targeted the owner’s built-in motivation to sell.

“The reason they’re willing to sell is that they are very motivated sellers. And they’re going to lose the property if they don’t sell,” Marrs said. The first step to contacting owners in default is to find pre-foreclosure properties with default notices filed against them. Those default notices are available at the local recorder’s office, or you can access the same information online with services like RealtyTrac, which maintains the nation’s largest database of pre-foreclosure properties, which are updated daily. Once you find some pre-foreclosure properties that interest you, the following tips should help you effectively contact and communicate with owners in default.

Preparation is Paramount
Before you contact the owner, take some time to get your ducks in a row so that you’re prepared to communicate intelligently. First call the trustee or attorney listed on the default notice to make sure that the loan is still in default. You don’t want to waste time contacting owners who are no longer in foreclosure. Research the property’s investment potential by subtracting all the debts encumbering the property from the estimated market value. Check the property for any outstanding tax liens, bankruptcy filings or other encumbrances. This research will become extremely important when negotiating a purchase agreement with the owner. If the outstanding debts add up to more than the property’s market value, it’s probably not worth contacting the owner in the first place. Similarly, if the owner has filed bankruptcy, there’s a good chance that the foreclosure process has been forestalled, and you may want to move on to another property.

RealtyTrac provides information on all of these criteria on hundreds of thousands of properties, but it can also be found at the county recorder’s office or by contracting with a local real estate agent or title company. Make sure you have financing in place and the proper real estate forms on hand if the owner agrees to sell the property. You can get financing options and contact a local real estate agent to help you with the necessary paperwork using RealtyTrac’s nationwide network of prescreened real estate professionals and lenders.

If you can show that you’ve done your research and have the pieces in place to buy quickly, owners in default will regard you as a competent buyer who is ready and able to help them out of a tough situation.

Marketing makes a difference
Your first communication with owners in default should be a letter or postcard focusing on what you can do for them. Let them know that you can help them benefit through a sale of the property and that you’re prepared to move quickly if needed. Include a phone number and e-mail where they can contact you. “Marketing should be about what you can do for that motivated seller, not about you,” Marrs said. Avoid any explicit mention of default or foreclosure because that could humiliate the owner if someone else reads your letter or postcard. Owners will already know if they’re in default and be motivated to get out of the situation. Your marketing should focus on how they will benefit from selling the property to you.

When owners contact you back, find out as much as you can about their situation so that you can work out a purchase agreement that will truly benefit them and still provide a good bargain for you. Owners will respond much more positively when they see that you truly care about their welfare and aren’t just taking advantage of their situation to make a quick buck. A word of warning: your job as an investor or buyer is not to solve all the owner’s problems. Your focus should be to provide the owner with a good alternative to losing his or her property to foreclosure. Try to avoid getting caught up in the owner’s other financial and personal problems. In an ideal transaction, you get a great deal on the property, and the owner walks away with cash to use for rent or for purchasing a less expensive property. In addition, the owner doesn’t have a foreclosure on his or her credit history that could hamper future efforts to purchase a home.

Persistence pays off
Most owners in default won’t respond to the first letter or postcard you send them, but you shouldn’t give up after just one attempt, according to Marrs. “One letter is pretty much useless,” he said. “Three letters is about five times more effective than one letter to the same lead.” Your letters will become increasingly effective the closer it gets to the date of the public foreclosure auction. If the property is sold at auction, a foreclosure is placed on the owner’s credit history, and the owner often doesn’t receive any of the auction proceeds. The auction occurs if the owner doesn’t sell the property or pay off the defaulted amount during the pre-foreclosure period, which can range from a month to more than a year depending on state foreclosure laws.

You could follow up your postcards with a phone call or personal visit to the house, but carefully consider these options as they are inherently more confrontational. Default notices don’t usually include the owner’s phone number, so you’ll need to track down the phone number by cross-referencing the name and address. If you knock on the door, be respectful and polite and realize that you may not always receive a friendly response. Most buyers and investors contact several owners in default before they find one willing to work with them. Even while you’re sending out multiple postcards to owners of pre-foreclosure properties that you’ve already located, you should continue to search for new properties every day so you can expand your pool of pre-foreclosure leads.

With good marketing and persistence, some of those pre-foreclosure leads will turn into meetings with owners in default. And if you’ve done the proper preparation, some of those meetings will turn into great bargain-buying opportunities.

Foreclosure Auctions: Minimize Messy Evictions

RE.com Tips & Tools — Wed, 05 Aug 2009 15:08:00 GMT

By Jim Saccacio, RealtyTrac Chief Executive Officer

Even if you’ve conducted thorough research on a foreclosure property and successfully placed the winning bid at the public auction, it doesn’t necessarily mean you can move into the property or start making needed repairs right away. In fact, there’s a chance the former owners of your newly purchased property may still be living there, making it a bit difficult to physically take possession. If you’re not prepared for that possibility, you could be in for an arduous and messy eviction process that makes you question why you bought the property in the first place. Properties arrive at public foreclosure auction at the end of a pre-foreclosure period that occurs after property owners default on their monthly mortgage payments.

A chaotic eviction process can often be avoided with some careful research and planning. Though regulations and procedures differ from state to state, the following guidelines can help you learn how the eviction process works and how to avoid a long and drawn-out eviction process so that you can take possession quickly when you buy a foreclosure property at public auction.

First things first – establishing ownership
At the time of the auction, make sure you are given all the necessary documents from the auctioneer to that you are the new owner of the property. At that time, you should speak with the auctioneer and a real estate attorney regarding any additional steps that must be taken before you can officially take possession of the property. In some states the sale will need to be confirmed by the court either immediately or within a period of up to a few months.

In states that honor a redemption period for owners, the previous owner of the property has an opportunity to buy the property back from you by providing the full amount paid at the auction in addition to any applicable fees. This redemption period can range from a month to a year, depending on individual state laws. You’ll want to know whether right of redemption applies in your state and the length of time that is allowed, as this may be a reason for the previous owner’s refusal to vacate the property.

Understanding the eviction process
Keeping in mind that state eviction laws vary, it is imperative that you contact a local real estate attorney or the country sheriff office to determine the proper procedure to follow in your area. That’s the only way you can be sure the eviction is handled legally, protecting the rights of everyone involved. That doesn’t mean you’ll always have to go through the entire eviction process. If the property is already vacant or the former owners voluntarily move out, no eviction is needed. Some investors only bid on vacant properties to avoid any chance of having to confront a former homeowner. On the other hand, many homeowners will move out voluntarily if you contact them and gently let them know that you purchased the property, providing the documents from the auction as evidence. Still, it’s best to check with a real estate attorney or the county sheriff to make sure that you do everything by the book. If the property isn’t already vacant or the former homeowners don’t voluntarily move out, you’ll need to initiate eviction through the court system, which can take months compared to days. That’s why it’s best to try to avoid this process by only purchasing vacant properties or by contacting the owner first. Once the court rules a final judgment in your favor, you can obtain a writ of possession and have the local sheriff evict the occupant. Eviction typically occurs 24 hours after the sheriff serves an eviction notice to the occupant, at which time the sheriff can have the occupant’s possessions physically removed from the property.

What about tenants if the property was a rental?
Rental properties that have been purchased at foreclosure auction create a sticky situation for new buyers as well as for tenants who very well may have been paying their rent on time to a landlord whose property ultimately fell into foreclosure. While the sale of non-foreclosure rental property requires the new owner to honor the leases of existing tenants, foreclosure sales typically allow the new owner to dissolve any existing leases. The new owner can usually evict the existing tenants once ownership has been established.

Keep in mind, however, that if you choose to collect rent at any time without a new lease in place, you essentially assume the role of the tenant’s new landlord under the terms of the existing lease until that lease expires. The obvious exception to this rule is if the tenant somehow violates the conditions of the existing lease, in which case you may have grounds to evict them immediately. While the process of eviction can be complicated and even emotional, it can be a necessary part of buying a foreclosure property at public auction. By accepting this, understanding the process clearly and working with professionals who know the system, you can assure that everyone’s rights are protected — especially your own.

Moving in the Summer

RE.com Tips & Tools — Tue, 04 Aug 2009 18:02:00 GMT

By Gina Cappiello, 123Movers.com

Summertime is all about the blazing hot sun, road trips, beaches, and ice cream. It is also a popular time for moving. According to the US Census Bureau, about 12% of Americans moved in 2008, and most chose to do this during the summer. If you are one of these summer movers, follow the following tips to make your summer move more enjoyable and safe:

Stay hydrated
Dehydration occurs when the body loses more water than it is taking in. Moving boxes all day in hot weather can make you more susceptible to dehydration. In order to beat the heat and stay energized throughout your move, keep a case of cold water in a cooler in a central location of your house. This way, the fridge will stay clean and you will stay refreshed.

Dress appropriately
Even though it is hot outside, moving day is not the best day for wearing many summer accessories. Forgo the flip flops for one day in favor of sneakers to protect your feet. Don’t wear accessories like long necklaces, bangles, and large rings during your move, either. These can get stuck on items in between boxes, causing injuries. Simple attire that you do not mind getting a little dirty or sweaty is best to wear during a move, like an old pair of shorts and a light cotton top.

Protect perishable foods
It is smart to clean out the fridge the night before or the morning of the move, but what do you do with these perishable items now? Pack a cooler or two with ice and your perishables so nothing goes bad. If your new home is not too far away, you can always bring your cold food items to the house early to ensure nothing goes bad.

Pack fans and A/C units last
Keep your current home cool throughout your move with fans and air conditioning. You do not want anyone to get overheated. Once you are all done packing up your truck, remove the fans and A/C units in your home and pack them into the truck. When you arrive at your new home, bring the fans and A/C units into the home, put them on, and cool the house down before moving everything inside.

Take your time
Accidents and injuries can happen if you rush. There is no need to run in and out of your home with a number of boxes in each trip to make things “quicker.” It may just end up slowing you down if you get injured or drop your boxes. Walk slowly up and down stairs with your items, watching where you place your foot upon each step to lower the risk of slips and falls. Also, take breaks in between lifting and packing to sit down, have water, and a snack. Moving takes time, so make sure to take yours to prevent injuries or sickness.

Along with all of these moving tips, it’s important to stay positive and calm. It can be frustrating moving your entire life from one location to another in the summer heat, but an upbeat attitude paired with a Zen-like calm throughout a summer move will definitely help make things go smoothly.

Foreclosure Auctions: Beware of Hidden Costs

RE.com Tips & Tools — Tue, 04 Aug 2009 14:44:00 GMT

By Jim Saccacio, RealtyTrac Chief Executive Officer

If you buy a property at a foreclosure auction, you may end up forking out more than just the winning bid amount to own the property free and clear. That’s because some debts attached to the property — called liens — survive the auction and carry over to the new owner. Foreclosure auctions provide some fantastic opportunities to purchase a property well below its market value as long as you’re familiar with the ground rules. One of those ground rules is to never bid on a property unless you’ve researched the title and are aware of any liens that you will have to pay off if you are the winning bidder. Although most liens are cleared by the auction, that’s not always the case, according to national real estate speaker and author T.J. Marrs.

“Although it may vary from state to state, for the most part all liens except property tax liens are cleared by the foreclosure process,” he said. “Other than the property tax lien, the first mortgage lender is likely to receive first funds produced from the auction. Any remaining funds would then go to the second lien holder, third lien holder, and so on. Even the IRS is secondary to existing senior lien holders.”

The order of the liens is determined by the date those liens were recorded. If a second lien holder forecloses on the property, the first lien will typically survive the auction and the winning bidder will need to pay off that first lien amount to own the house with a clear title. A clear title is needed to resell the property. Furthermore, the winning bidder could be foreclosed on if the first lien amount remains unpaid after the foreclosure auction.

Researching the Title
The majority of foreclosure auctions are conducted by the lien holder in the first mortgage position, but you need to check if that’s the case for any property that interests you. And you need to check if the property has any current property tax liens recorded against it since those also survive the auction. You can find any liens recorded against a property at the local recorder’s office, through a local real estate agent or online through property data aggregators like RealtyTrac, which compiles lien & loan history information for auction properties nationwide. This research will allow you to determine the current state of the title and the position of the lien that will be up for auction.

You should enlist the help of a local real estate agent or real estate attorney if you’re not comfortable researching and interpreting the title information yourself. You can also ask the trustee in charge of the auction if the lien being foreclosed is in the first position or if it is “subject to” other liens.

If you’re interested in an auction property with property tax liens or other liens that will survive the auction, either avoid the auction altogether by working out a deal with the owner in default or make sure you account for those other liens in your bidding. To determine your maximum bid, Marrs recommends subtracting the amount of any liens that will survive the auction from 70 percent of the property’s market value to come up with your maximum bid amount.

Here’s an example for a property with a market value of $200,000 and a property tax lien of $1,500:

$140,000 (70 percent of market value)
- $1,500 (property tax lien amount)
= $138,500 Maximum Bid

But if that same property had an additional lien of $50,000 not cleared by the foreclosure auction, your maximum bid would be a lot lower:

$140,000 (70 percent of market value)
- $1,500 (property tax lien amount)
- $50,000 (surviving lien amount)
= $88,500 Maximum Bid

You should be willing to invest the time and money it takes to assure once and for all that the property you are bidding on is worth what you think it is. Any investment you make in research is miniscule compared to the potential risk of assuming unknown liens on a foreclosure property.