how would i go about purchasing a foreclosure property, and what steps need to be taken.?

Question

how would i go about purchasing a foreclosure property, and what steps need to be taken.?

Answer 1

It's my understanding that in some sections of the US, when a property is sold, there is a charge for a tax stamp which is based on the sales price. This is not the case where I live, so I do not have a good understanding of this process. I think it is most common in the Northeast US. In my area (Austin, TX) there is no requirement to provide sold data info to the appraisal district, TX is a non-disclosure state. So, the appraisal district goes on last year appraisal and adds or subtracts based on the area activity and the subject property condition. I agree w/you that there may be a big shift in valuations with the economy in such upheaval. Since there is no state income tax, Texas is very dependent on property taxes. This probably makes it more difficult to get downward adjustments in property values. I'm not aware that a non-owner can make a case for lower property taxes before the purchase of a property. This is something that is typically done after ownership is established. Another issue is that many foreclosure properties are being purchased for final sales prices considerably below the tax valuations of neighboring properties. I have been told that the sales price of distressed properties is not a reason to lower valuations of all properties, rather the valuation of the distressed property is brought up to neighborhood standard. In order for a major shift, it may take owners of the neighboring properties protesting valuations that are markedly higher than recent sales prices, distressed properties or private owner properties. In fact, it may be the best argument of lowered values in a neighborhood that private owner sales reflect more the prices paid for distressed properties than the tax valuation in place. Unfortunately, this may lead to higher tax rates to make up for the shortfall of tax revenues in areas like mine that are property tax driven. Lose - Lose.

Answer 2

There are several things you need to know when buying foreclosures and flipping properties.



First of all you should go to the nearest book store, purchase several books on buying, fixing and flipping properties. There are several that you might be interested in.



You will also want to find out if your state is a non-judicial or judicial foreclosure state. This will assist you in making offers as well time frames in which you would have to work in when purchasing a foreclosed property.



Once, or, while you are doing this you should buy one of the TV guru's distressed property programs. These programs will give you some legal forms you might use when writing an offer to purchase a property. You will also find several scripts to use in taking to your potential clients. The also give you tips and a formula on how to figure if you have a property that you can make money from before buying.



If you are without funds to accomplish this business, you will have to find some investors that will assist you. You will have to make a deal with them about a certain percentage of the profits made from the sale of the property.



Normally this is 50/50 however it could be more or less depending on how your relationship is with the investor.



Now to purchase a foreclosed property depends on what phase the foreclosure is in.



#1 Pre-foreclosure- the owner is still in the home, he has been notified that he is in foreclosure. Now he has to come current or the foreclosure will continue.



You can make an offer to the owner at this point, give him something in his hand to purchase his equity. Now you will also want to see if there is any repairs that need to be done on the property. If there is you need to know the cost of this repair. You will need to know how many months he is behind in his mortgage payments as well as any fees that the lender has incurred in trying to collect the mortgage payment. Now add these together to include what you had to give the homeowner. Also you must include how much you will need to hold the property, I mean making the mortgage, paying the insurance and taxes while you repair the house for sale.



Now find out the balance of the mortgage add this to the above figure. Now you need a method of finding out the current value of the property. All this information will tell you if you have a deal or not.



#2 The other way to purchase a foreclosure is when the property goes to sale. At this point you must have all cash and you must be able to prove that you have whatever the minimum bid is in cash, cashier’s check or money orders. If you have no proof you will not be allowed to bid.



#3 One last way is after the sale. If no one bid and get the property at the foreclosure sale, you may find out what bank owns the property, write an offer as well as a check as a deposit not to be cashed until the offer has been accepted. You might also inform them as to how and when you plan to come up with the remainder of the sales price. I have know some lenders to accept offers this way before the property is turned over to a real estate broker to sell.



Now you have to determine how you are gonna market yourself.



#1 You can purchase a pre-foreclosure list from a list broker (Join the crowd most do this and mail letters to the person that is in foreclosure)



#2 You can advertise in your local paper that you are in the business of purchasing foreclosures.



#3 You can do a direct mail to people in your city stating that you are now in the foreclosure business.



#4 You can do the research at the county recorders office yourself (time consuming and tedious-but workable. You should get enough leads for a least one days work.)



#5 You can select an area of your city that you want to work and target your that area with your energy. You can walk the area pass out flyers that you are now in the business of buying property distressed, divorced and foreclosures as well as probate property.



Pass out these flyers for at least 2-3 months after which you should go to a newsletter of some sort while still explaining that you purchase properties.



After passing out the flyers for 2-3 months you should follow that up with a newsletter to the same area. Check with the post office and inquire about a bulk mailing stamp. This is a more economical way of mailing business matter.



You will want to form a professional team to assist you in your new career field, which should be composed of but not limited to an attorney, cpa, tax preparer, notary public, title rep, real estate agent and others that you feel will make you successful.



They should pass out your business card to their clients that need your services and you should pass out their cards to your clients that need their services



I hope this has been of some use to you, good luck



"FIGHT ON"

Answer 3

My advice would be to stay away from this type of investing. But if you really want to learn, then go get a r.e. finance degree and work for someone who makes a mil plus a year (this is what i did - so I am not just some idiot blowing smoke up your you know what). Then you will see firsthand how the game works and in a few years you can make some money at it.



But dont try to do it from some stupid $500 training dvd set or some silly thing like that. Get some real on the job training.



Good luck.

Answer 4

Vampires! Y'all suck! Nothing like taking advantage of someone when they're down.



"Hey, let's plan the best way to benefit by someone getting screwed by their bank (blood bank).!"



Here's an idea....buy the home and then personally finance the home back to the poor person foreclosed on at a reasonable rate.



Good Karma is worth millions boys.

Answer 5

If the property is listed you will make an offer with your REALTOR who will present it to the Listing REALTOR who will in turn present it to the bank. The bank will either except your offer, decline your offer or counter your offer.



Do not expect this to happen overnight - the arm of the bank that deals with the foreclosure is usually located somewhere else, maybe not in your town, and it takes time for whoever is dealing with this property to get the approval etc..



Remember - this is not the owner now that you are dealing with but an employee at the bank.



If the bank has authority to sell the property without court approval (which happens when the bank and the previous owner agree that the bank will not come after the previous owner because of any short-fall between the selling price and what is owed and visa versa that the owner is not expecting any money above what is owed to the bank) and if your offer is accepted you have a deal!



Most likely if your offer is accepted it is accepted "subject to court approval". This means that it still has to go to court - at which time anyone else can present an offer. What happens at this juncture is that it ends up being a sealed bid situation with everyone presenting their best offer above the offer that brought the sale to court in the first place.



That original offer is made public and everyone is able to put their best offer forward.



This is not a good situation if you are expecting to buy the house because the bank agreed to your offer and you are expecting to move in. Another offer might beat you out.



The court then opens all the offers and the best offer wins. Offers at this time are subject free and the best offer might not neccessarily be highest price but may have the largest deposit and quicker closing time.



That is the process in B.C. Canada



REALTOR for 15 years and experience in bank foreclosures

Answer 6

In most states the foreclosure process is regulated by strict laws. The process of foreclosure usually takes about 5 to 6 months, not including the time to actually evict the former owner or his tenants. During that period of time the owner of the property is allowed to cure his default. He can usually do so until about 5 business days prior to the sale. If he goes beyond that point he can only cure by paying off the entire balance.



In most foreclosures where the auction price is "below market" the owners will refinance, sell, or file for bankruptcy long before the date of the auction. What this means to you is that you will investigate a hundred foreclosures before finding one that actually goes to sale.



Bidding at a foreclosure sale can be VERY tricky. Remember - it is not always the first deed of trust that is being foreclosed. So if you see a foreclosure auction where the price seems very low, the chances are that the foreclosure is on a second or third mortgage or deed of trust. If you bid at such an auction, you will not be buying a first position, you will be buying a second or third position and will take the property "subject to" any prior liens, mortgages or deeds of trust. If you intend to bid at a foreclosure, you should ALWAYS get a preliminary title insurance policy or have your attorney check the title and tell you what you are bidding on.



Even if it is a first deed of trust, and even if it is a bargain, the property may be a toxic waste dump and as the purchaser at a foreclosure sale you would be required to clean it up. The property may contain a burned out structure that needs to be demolished, and you will have to pay to demolish it. If it is vacant land, the property may be an undersized lot or otherwise unbuildable. If it has a building on it, the building may have extensive dry rot, termites or other problems. Once you purchase it you will have to repair this damage. You don't get to inspect the home prior to bidding and you have to take it "as is". Obviously, if the home is occupied, you will have to evict the tenants. This can take two or three months and can cost you a couple of thousand dollars in attorneys fees and costs.



Last, but certainly not least, is the fact that you must pay all cash at most foreclosure sales. No bank will usually finance such a purchase.



I own a foreclosure company, and my advice to you is to contact the REO department of your local bank or Savings and Loan.

After a bank or S&L forecloses and takes back property, they evict the occupants and put the home up for sale. Federal law prohibits them from holding onto too much foreclosed property, and they are usually anxious to get rid of them. These properties are usually priced below market and you get to inspect the property and can usually finance the property through the bank that did the foreclosure.



Hope that helps!!