Fancy Buying A Foreclosure
More rates and news from
Yahoo Finance and Realty Times
(The U.S. housing market is not fairing well, but on the opposite side of the spectrum, the foreclosure market is thriving.)
A variety of factors has contributed to the increasing in foreclosures including rising rates and the prevalence of homeowners getting into non-traditional mortgages they really couldn’t afford.
According to an article by Carleen Hawn of Business 2.0 magazine, “Cash in on foreclosures,” gives some interesting information on how to profit from another person’s loss.
“Two years of interest rate hikes and flattening home prices have put the squeeze on homeowners who gorged on debt during the boom. Now they're struggling to keep up with ballooning payments or, worse, losing their homes to creditors.”
“In September alone, more than 112,000 U.S. homes fell into foreclosure - a 63 percent jump from September 2005, according to RealtyTrac.”
With all of these homes being seized by the banks comes many savvy investors looking for a good deal.
“Ideal market conditions, in other words, for a niche group of real estate investors - foreclosure gurus who deliver panicked homeowners fast cash in return for property acquired at enviable discounts. They used to go door-to-door and staple ads to telephone poles.”
“Today, though, an array of new online services like PropertyShark.com and Foreclosures.com is making a once-shady business more respectable - and teaching a new class of investors how to turn hard times into sweet profits.”
If you are thinking of jumping in on the foreclosure game as part of a full-time career, or just as a hobby or side-job, there are a variety of things to consider.
The best way to start your journey into foreclosure-dom is to start poking around on the Internet.
“Many sites update foreclosure listings as soon as they're available, and often include the amount owed and the estimated value. Some even mention code violations or complaints against previous owners.”
One of the things that potential foreclosure “sharks” should not do is attend public foreclosure auctions, it is best to work directly with the homeowner in default.
“Small players get their best shot by scouting a property right after it goes into default, when there's a brief window to negotiate directly with the owner. ‘The whole idea is to get the property before it goes to the [auction] table,’ says Bill Rohlfing, who does about half his business acquiring ‘shell’ buildings in Harlem through foreclosure.”
“‘First I call the lawyer who represents the owner to ask if there is a way I can negotiate with the owner before it goes into auction,’ he says. The typical answer is a firm no, but Rohlfing takes that as his cue to try to do it anyway, preferably in person.”
The best way to come out on top in a foreclosure transaction is to try to get an “in” with the owner of the property.
“Currying favor with the owner is another way a small player can get the necessary leverage to strike a quick deal. John Cordero, a part-time foreclosure flipper, for instance, often promises to solve the owner's immediate problem by covering enough mortgage back payments to get the loan out of default.”
“Then, in exchange for the deed to the property, he provides the owner with an apartment, rent-free, while he refurbishes the house. When he sells the home, Cordero cuts the owner a check for a portion of the profit - usually 10 to 20 percent.”
