How To Buy Foreclosure

What exactly is a real estate short sale?  Well if you’ve been diligently looking for property it’s probably a term you’ve heard a lot of lately.  The newspapers and real-estate site are filled with listings proclaiming they’re a real estate short sale, and if your’re trying to save money on your next house purchasing a home in this status may be an option that has been presented to you.  But what is it?

A real estate short sale is when then the bank holding the loan allows the loan to be sold for less than the mortgage amount owed on the property.  As the economy has shifted more and more banks have turned to this option, as most banks would rather sell the property for less than to have an reo sitting on their books. 

A real estate short sale has to be approved by your lender and they will not allow this simply because you are late on your loan payments.  There is tons of qualifying information a mortgagee has to submit in order to get approved.  Before approving a real estate short sale the bank basically has to ascertain that your house’s value is less than the mortgage it carries.  This means you have slim to none someone submitting an offer on your house to cover that of the mortgage.  They typically will have a real-estate agent and appraiser attest to the market value of the house via an comparable properties report and an appraisal.

Next you must genuinely be unable to make payments on the mortgage and need a way out in order to prevent foreclosure.  To prove these circumstances the bank will require paperwork to verify you income and your outgoing expenses. 

Real estate short sales have always been around however due to the continuing mortgage crisis they have become more common.  This becomes an excellent opportunity for you as an investor because homes that were purchased for outrageous prices several years ago are now being sold at deep discounts. 

A real estate short sale ends up being a win- win situation for all parties involved.  You are able to purchase a property at a deep discount.  The seller is able to get out of the home and avoid a huge hit on their credit by avoiding foreclosure.  Lastly, the lender is able to prevent having another property sitting on their books, after all the bank is in the market of lending money not selling houses

Finding a foreclosure to flip is not the first step of the house flip process nor is it the last.  How can you make sure that you can sell it, and sell it quickly?  That’s one of the most common questions amongst house flip investors.   Now that you’ve found you’re investment you need to address your finances to make sure that you can finance you new house flip.  Do you have the skills you need to make the repairs, or will you be hiring someone to do the work for your?  These are just some of the questions that you need to know before you even start looking for a home.

Make sure everything is in order before you start this process.  Plan for the worse hope for the best, your house flip will be no exception to the rule.  To help you in these plans it’s extremely important to stick with your budget, or you can lose expected profits.

Ensure that the minute you decide you want to invest in a house flip that you have your finances taken care of.  Make sure that your financial future is not riding on making a quick sale because though we hope and pray that all our flips will close quickly and with hassles, it might not happen in the time frame in which you expect it to.  If you can’t afford to make a single mortgage payment, then unfortunately you can’t afford the house flip.  Unfortunately all houses will not close when we expect them, it many cases they do especially if you’ve done your research up front, however don’t expose yourself to the risk.   You don’t want to be distracted with the concern of your finances falling apart when your main concern needs to be getting the home finished and sold quickly.

To touch further on the concept of planning ahead, while most house sell quickly, you should never enter into a house flip without having at least 6 months worth of mortgage payments available to you.  Having those reserves on hand is especially important in today’s economy when even the best properties are sitting on the market a little longer.  If you have the reserves you can hold the property with no stress without lowering your price (assuming it’s priced right from the start).

Pricing your house right from the beginning is what you want to do.  Over estimating the market value and then having to lower your price later will lead to a less successful flipping career, because you’ll will cut in to your future income in holding cost and at the lower sales price you will have less money to put into the next house.

Generally speaking nice well-kept houses in good neighborhoods at below-market prices sell relatively quickly.  For a successful house flip, though, it’s important to plan for every eventuality, and to stick to your original business plan and budget if you want things to work out the way you want in this business endeavor.

When you first start out flipping houses, you want to be sure to avoid costly mistakes that are common to beginners that can eat into your profits and make it harder for you to finance more deals. The biggest mistake is taking too much time to fix up the house. Houses meant for flipping need to be touched up quickly, on time, and on budget. Never spend more time or money on a house than you’ve planned on, or you’ll regret it later.

Before you start flipping houses for profit there are several costly mistakes that you want to avoid.  Many of these mistakes are common to beginners and they will eat into your profit and make it harder for you to finance more deals.  Our goal is to make you aware of these mistakes so that you know what to look for and can avoid them in the future.

The biggest mistake people make when flipping houses for profit is that they take to much time to fix up the property.  There may be houses that you hold and rent, and then there are houses that you flip.  Houses that you flip need to be touched up quickly, on time and on budget.  Set a budget and deadline ahead of time and stick to it, never spend more time then you’ve planned for, because you will pay for it fees and lost money in the long run. Read the rest of this entry »

Real Estate is an awesome investment stream. Making money flipping houses is one of those investments strategies that you can use in an up or down economy and still be successful.  All you have to do is stop thinking about it and get to work. The money you will need to invest in these flips is there you just have to know how to look for it.

There are several ways to go about building a fortune flipping houses. Here’s one easy approach that anyone can take:

You want to start off by buying a foreclosed hud home.  Details on how to purchase these homes for no money down are discussed in detail on other posts.   You want to make sure that this home is in need of only minor repairs.  Well be buying low and selling higher.  We these houses you should be able to afford to give a great deal to a buyer and still make a lot of money this will be a win-win situation for both you and the buyer.

You will be using a loan or outside financing to fund the first home, but once you’ve purchased and renovated the first home you will use your profit to invest in your second property.  The ideal situation will be to make enough to pay for the second house in cash.  Eventually, you should be making enough flipping houses to pay cash for all your future fixer-uppers and finance a pretty lavish lifestyle.  Best of all it’s not unheard of to reach this point in a matter of months when flipping houses.

The key to this flipping strategy is to only look for flips that need minor cosmetic repairs. Paying a fortune to fix up a house will defeat the your purpose and will eat in to your profit.  So any house that may need structural repairs is out. If you pick a house that requires only minor repairs then doing most of the work yourself, like painting, updating lighting fixtures, and putting in new carpet can save you tons of money.  These improvements should be sufficient to make your flip look presentable and make it easy to sell.

People have been flipping houses for years, and it’s one of the most trusted and tested ways to make a fortune in real estate. Don’t let anyone tell you that you can’t do it. Nearly anyone can, with a little ingenuity and hard work.  If you are ready to start living the lifestyle of your dreams? Flipping can make it happen.

If you read the earlier post then you should know whether or not your foreclosure will qualify for the first time homebuyer tax credit. But if not then here’s a short review, it has to be your first home which is your primary residence.  You have to make less than $75,000 if you’re single or up to $150,000 as a married couple.  You can’t purchase the home from a relative and you must be under a binding contract by April 30, 2010 and close by June 30, 2010. See, simple if your foreclosure meets these requirements then please read more.

Now that you know whether or not you qualify, you need to decide how you will use it. Many first time homebuyers are finding that the tax credit is just what is needed to get into the home of their dreams.  You don’t want to deplete your savings getting into your first home having the first time homebuyer credit will insure that you have funds in place after you close on your home. Read the rest of this entry »

The short answer is yes you can buy a foreclosure and take advantage of the $8000 First Time Homebuyer Tax Credit.  As long as you purchase this home as your primary residence.  The idea of the first time homebuyer tax credit is wonderful and almost unheard of.  The credit is all apart of Presidents Obama’s stimulus package that made headlines early 2009 right after he took office.  This first time homebuyer tax credit is meant to not only save homes from foreclosure but to stimulate the economy by allowing people to buy new homes with greater ease.

So, what does the $8000 first-time homebuyer tax credit do for you and how can you qualify for it if you purchase a foreclosure.

Well you won’t qualify for this credit if you already have a house as it’s only available to first-time homebuyers.  For this programs they define a first time homebuyer as someone buying a home for the VERY first time, or someone who hasn’t owned a home in over 3 years. Read the rest of this entry »

An REO stands for real-estate owned. This type of property has not only gone through the foreclosure process but it has also gone to auction and failed to secure a buyer. Once this happens the property is taken back by the bank and considered real estate owned or bank owned property. If you are considering buying REOs in this state it’s good to consider the advantages and disadvantage of this investment strategy before taking the plunge.

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There are few different ways to acquire a distressed property depending on what stage of the foreclosure process you obtain the property in.  The three basic stages are pre-foreclosure, foreclosure, post-foreclosure.

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If you’ve been following this foreclosure blog last week we discussed what scenarios have to occur before a house is considered foreclosed and before it’s available at foreclosure auctions.  Now we need to discuss how to locate these homes before they make it to auction.  Being prepared before the foreclosure auctions occur will allow you to know the homes that are going to be available.  Having this research done beforehand will  prove to be a valuable asset in your foreclosure investing career.

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Foreclosure Auction

This is part one of a five part series explaining everything you ever wanted to know about foreclosure auctions  and how to proceed with finding and purchasing one.

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You may have heard the term reo foreclosure but weren’t quite sure how it was different from any other type of foreclosure.  Well  REO stands for Real Estate Owned, or to be even clearer,  real estate owned by the bank.
Normally when a buyer fails to pay the mortgage on their home their home goes to a foreclosure auction or foreclosure sale.  During this auction attendees have the opportunity to bid on various available properties.   In this process some homes are sold as a foreclosure to the highest bidder, however If the minimum bid is not met then this would be considered a failed foreclosure auction.  This failed auction then goes back to lender as an Reo Foreclosure. Read the rest of this entry »

A rocky economy has definitely claimed its share of victims. The housing market was one of the first markets to see the spiraling down turn. First with the slowing of home sales then the eventual lost of homes leading to foreclosures all across the nation. Though hard times have fallen on millions of families fortunately it hasn’t affected everyone. If you are one of the fortunate few that it hasn’t affected and you are in the market for a home or looking to invest then you need to buy foreclosures! Read the rest of this entry »