Banks as home loan lenders would like to sell off their inventory of bank owned foreclosures to mitigate losses they incurred due to unpaid mortgages. This desire to sell of properties as quickly as possible translates into possible discounts for would-be buyers.
First-time home owners and people in the real estate business, buying bank foreclosures have yielded great benefits in terms of discounts and savings made. If you are in the market for these types of properties there are some things that are worth considering.
Where to Find Bank Owned Foreclosures
Most bank owned foreclosures are released through a Multiple Listings Service managed by real estate agents. They can also be found at online foreclosure listings services. Banks would normally transact only with licensed real estate brokers or agents so it may be a good idea to enlist the help of one. There are some cases where the lender or the bank will be open to dealing directly with the buyer and this could mean a lower purchase price having removed the middle men from the equation.
Once you have spotted the one you like, drive through the property for a cursory look at the home and the neighborhood. You should also begin assessing values such as the point where the bank will break-even on their bank foreclosures, the value of homes in the vicinity, the estimated market value of the property. You should also start planning your finances along the lines of the loan you will take out, your monthly payments any repairs that you need to undertake.
It is now time to make your offer for the property. Bank owned foreclosures are can be bought directly from the bank or through the real estate broker they have appointed. Approach whoever is the contact for the property and ask to be able to inspect it before making an offer. If you like what you see you can immediately make an offer. The offer you make may either be denied outright or be met with a counter-offer from the bank. You can still make another offer based on the bank’s counter offer before the bank finally decides to decline or to sell.
Archive for the Category ◊ Foreclosures ◊
Learning how to flip foreclosures is every bit an on-the-job learning experience, if not more, than the education you would receive in a typical foreclosure boot camp training class.
People have this misconception that flipping foreclosures is easy money, and that you can make a million dollars overnight. While it is true that you can millions of real estate in a relatively short time span, it is definitely not as easy as the gurus make it sound.
Investing in real estate is a complex business. There are so many aspects to understanding just how to flip foreclosures. There is the legal aspect of it; you need to understand foreclosure law, mortgage law, bankruptcy law, real estate ownership and transfer laws, building codes, and the laws pertaining to renting. There is the financial aspect; you need to understand how mortgages work, you need to know how to negotiate with mortgage companies. There is the rehabbing aspect; you need to know how to estimate the costs of repairs to a house and you need to know how to renovate a house, whether or not you will be doing the work yourself or outsourcing it. You need to understand the real estate appraisal process. You need to know how to research foreclosures to find the ones worth investing in versus the ones that are not good deals. You also need to know how to negotiate with homeowners.
How to flip foreclosures is fundamentally a 5-step process:
1. Research foreclosure leads and weed out the good ones from the bad.
2. Contact the owner of the house or the mortgage holder, depending on whether you are buying the property during the preforeclosure stage or after the house has already been repossessed to negotiate a sale and get the house under contract.
3. Obtain funding for the deal by either obtaining your own financing or forming a partnership with a money partner, and then fund the deal.
4. Renovate the house.
5. Rent the property out or put it on the market to resell it either by owner or through a real estate agent.
Whether the housing market is experiencing a boom or a decline, there is money to be made. When real estate is hot, you can expect to flip properties fairly quickly and pocket a decent amount of cash, anywhere from $5,000 to $30,000 or even more per deal, depending on the specific deal and the market you are in. When the housing market is in a decline, you can put the property up for rent to cover your mortgage and possibly earn some positive cash flow, and then flip the property when the housing market picks up again and the house has gained sufficient equity.