General Questions:

Preforeclosures:

• What is a preforeclosure?

A preforeclosure is a property whose owner has defaulted on the loan payments and whose lender has initiated the foreclosure procedure, usually starting with an official "Notice of Default" to the owner. A preforeclosure property exists during the first stage of the legal procedure, and therefore still belongs to the owner. The length of the preforeclosure period depends on type of foreclosure process mandated by state law and the applicable legal documents the borrower signed with the lender when the property was originally purchased. As mentioned earlier, either judicial or non-judicial procedures are required by law in different states.

• How do I find preforeclosures?

Once again, you are at the right place. There are several ways to find out about preforeclosures, including buying paper lists or online database subscriptions, constantly checking the local newspapers for Notices of Default, and contacting foreclosure attorneys directly. Does this sound difficult and/or expensive? It is. That's why z57.foreclosure.com has been developed to offer you the high-quality, updated, user-friendly information you need to succeed. z57.foreclosure.com was established and is maintained by experienced real estate investors, and we know the value of providing our subscribers with easy access to all types of properties in each stage of the foreclosure process.

• How do I buy preforeclosures?

You must submit a written contract directly to the owners in order to buy a preforeclosure, since the property still belongs to them during this stage. You can initiate contact with the owners by mail, by phone, or by visiting them, depending on your personal preference. When you make contact, find out all you can about the physical and financial details of the property in addition to the information you have from our database. For example, find out the condition of the property and its major systems (e.g., roof, plumbing, heating/air conditioning, appliances, and foundation). You are there as a problem-solver, and you MUST learn the full extent of the problems. Also find out the number of liens, type of liens, loan balances, and total amount of arrears. Ask to see any correspondence from the lender(s) that will fill in the details the owners may not be fully aware of or may not full understand. The sooner you can establish yourself as a true professional who needs the complete and honest cooperation of the owners, the sooner you can make a reasonable offer that will help them, and enable you to achieve a profit.

You will need all this physical and financial information to do your research and to determine whether the property represents a good deal, given what you (and your partners, if any) want to do with it. Once you have made the determination, you can then prepare a written contract and submit it to the owners. When you have successfully negotiated the purchase, you must then inform the foreclosure attorney to stop the foreclosure process during the time necessary to proceed to closing and settlement of the purchase transaction.

• How much cash do I need?

At first, you generally don't need much of an earnest money deposit when negotiating with property owners. Deposits can be $1,000 or less. Later, of course, you will need to obtain the funding to pay off the current debt on the property

• What should I be aware of?

There are two primary points to consider. The first is that all of the debt that encumbers the preforeclosure property remains against the property until it is sold at the foreclosure auction. This means that any "junior" or subordinate debt stays in place, including trusts, second and perhaps even third mortgages, tax liens, assessments, and judgments. Any of these debts incurred by the owner and secured by the real estate, which may exist against the property, must be paid off. Most of the time, there is only one trust deed or mortgage on a property; however, it is of vital importance that you find out about any other possible indebtedness before you spend too much time and money pursuing a purchase of the property.

The second issue is that only the individuals who are named on the title can sell the property. This seems obvious, but it can go overlooked and valuable time can be wasted. All of the owners of the property must agree to sell it to you before a legal sales transaction can be completed. Make sure that you know who ALL the owners are and that they are all interested in selling before you start negotiating a deal. Most homes are owned by individuals or couples, so finding them and negotiating with them should be straightforward. Owners who have co-signors or non-resident partners, and owners who have abandoned the property and may have moved out of the area will obviously take additional time and effort to locate, negotiate with, and get documents signed. Just remember that even one deal that nets you thousands of dollars will make your time well spent.

Real Estate Owned (REOs)

• What is an REO?

  An REO is "real estate owned" by the mortgagee, usually a property that was not sold at the foreclosure auction to a bidder and was therefore acquired or "taken back" by the lender. Since lenders are not in the business of managing real estate, they are willing to sell REOs quickly to interested homebuyers or investors. REOs are sometimes called "special" or "non-performing" assets to distinguish them from properties that are owned and actually used by the lenders, such as corporate facilities or branch offices.

• How do I find REOs?

  Many people find REOs by following the properties through the stages of the foreclosure process (i.e., preforeclosure to auction property to REO) or by contacting the lenders REO or Special Assets departments. Some lenders establish relationships with local Realtors® who manage and market the REOs for sale to the public. You may be directed by the lenders to contact these real estate brokers or agents to find out about available properties.

  Of course, we know there is a better way to find REOs! As a subscriber to z57.foreclosure.com, you benefit from the work of a nationally-connected company that "makes searching easier." For less than the cost of a tank of gasoline for most cars these days, you can see all the information you need 24/7 for a whole month. And it comes to you in the comfort of your own computer station at your home or office, along with helpful instruction and tips. You know the facts are up to date as part of the largest database of "opportunity-laden" bargain properties in the country. Today, more than ever, working smarter is much better than working harder.

• How do I buy REOs?

  You can buy an REO by submitting a written contract directly to the lender or through the lender's Realtor®. As in the case with preforeclosures, find out all you can about the REO and determine whether it is a good deal before you submit the offer.

• How much cash do I need?

  Lenders will generally request an earnest money deposit to be submitted with the offer. The deposit may be up to $5,000 or more, depending on the lender and the value of the property. Once you have successfully negotiated with the lender and have agreed to the terms and conditions of the deal, you then need to obtain your funding in order to close or "settle" the purchase of the property. Whether or not the lender will carry financing is an important consideration. Other key terms to negotiate include whether contingencies are allowed based upon professional inspections, the amount of time you have to close, and so on.

• What should I be aware of?

Some lenders will be interested in offering you a loan to buy their REO; others will not. Some will provide financing to investors; others will only provide financing to owner-occupants. You must communicate with each REO owner to determine its loan policies, along with its financing terms and conditions.

HUD Repossessions

VA Repossessions

Fannie Mae Repossessions

Auction Properties:

• What is an auction property?

  An auction property is one that is sold or about to be sold at a public auction, usually at the county courthouse. This means that the property owners could not payoff the arrears or sell the property before the date of the auction. The auction is open to all bidders, including investors and homebuyers, and it is sold to the highest bidder. An auction property is under the control of the foreclosure attorney who conducts the sale on behalf of the lender.

• How do I find auction properties?

  Our z57.foreclosure.com database enables you to know about the properties in your selected areas well in advance of the auction. Many foreclosure investors and bargain home buyers work with the original owners during preforeclosure, then if that process does not produce an acceptable deal, proceed to buy at the auction. It is important for you to be patient and diligent in using our database and maintaining your efforts to acquire the properties you find that offer opportunities. Nothing succeeds like persistence in this business!

• How do I buy properties at auction?

  Buying properties at the foreclosure auction or "at the courthouse" is an experience unlike any other in purchasing real estate. You will look for the attorney who represents the interests of the mortgagee and assure him or her that you are qualified to buy the property at or above the price set by the court in a judicial state, or by the trustee in a non-judicial state. That minimum bid price includes the full amount of the unpaid indebtedness owed to the foreclosing lender, plus legal costs. Other bidders will be investors like you and possibly junior lien holders whose interests are otherwise extinguished by the foreclosure action.

  The attorney will qualify bidders by asking to see their earnest money deposits. We suggest you contact him or her in advance. You will need a cashier's or certified check that is usually non-refundable if you win the bid. This secures your purchase of the property and is not contingent on financing or inspections. Observe closely when the attorney examines the deposits to identify the real bidders and thereby establish the extent of the competition. The winning bidder will have to be fully prepared to close within as little as 30 days after tendering the deposit to the attorney and signing the contract.

  The attorney starts the bidding at the specified minimum amount and continues to solicit bids from you and other interested parties until the winning bidder is determined. Don't picture the image of a fast-talking auctioneer with a gavel. Although, the bidding process can occur very quickly, often in as little as three minutes, it is more like a conversation among a few people, with the attorney in the center. Be vigilant in tracking the bids and watching your competition. You should always decide on your bidding strategy and your upper limit before you start bidding.

• How much cash do I need?

  It depends on the seller. Contact the foreclosing attorney in advance and don't be too surprised if the requirement is for an amount equal to 10% of the minimum bid price. In some jurisdictions, the required earnest money deposit amount is specified in the sale notice either as a percentage or a fixed amount. If you are the winning bidder, you must pay the deposit in the form of "good funds" such as a cashier's check immediately after the auction. This amount will be forfeited if you fail to close.

• What should I be aware of?

  There are three points to consider. The first point is that auctions start on time and are conducted very quickly, so make sure you arrive early and introduce yourself to the attorney to demonstrate that you brought the correct amount of earnest money deposit in the required form. Brief last minute questions may be asked and answered then. Secondly, you should expect to have some competition, even if it is minimal, so make sure you have your bidding strategy and the top price you will pay fixed in your mind in advance. The third point, as mentioned before, is that you must have cash or a cashier's check, and must be prepared to sign the seller's contract and settle the transaction shortly thereafter.