| |
| |
|
Real Estate Information |
|
|
|
A Possible Bargain: Foreclosed Properties
In the superheated San Francisco Bay Area property market, foreclosed properties are available at as much as 40% below market value, writes Srini Saripalli.The last few months of a calendar year are considered sluggish for transacting real estate, but Silicon Valley seems to be an exception to this. Properties are appreciating rapidly at this time of the year and this year has been one of the best years for selling real estate. Understanding the marketplace and rationalizing the escalating prices has become difficult for investors and homebuyers . At a time when real estate prices are soaring there are still many opportunities to buy properties that are 30 percent to 40 percent below market value. Foreclosures are one of the best ways to find great bargains. So what is a foreclosure? A foreclosure is a legal process that a lender initiates after the borrower fails to repay the loan as per the terms of the contract. The lender initiates the foreclosure process to reclaim the possession and ownership of the property. For example, let's say a borrower has a mortgage of $1 million on his property that is worth $1.5 million. Let's assume monthly payments on a $1million mortgage are about $9,000. If the borrower misses three consecutive monthly payments, then at the end of the 90th day or third month the lender will file a "Notice of Default" at the county recorder's office. This is the notice that indicates pending foreclosure proceedings. It also indicates the auction date. At this time the borrower will have the following options: Pay off all the back payments, penalties and legal fees if any and make the loan current As the borrower in the example has equity of $500,000 he can convert a part of that to cash by re-financing the property. Re-financing a property in foreclosure is usually difficult. Sell the property and payoff the mortgage, provided the proceeds from the sale equal or higher than the mortgage amount. The opportunity to buy a pre-foreclosure property opens the day the "Notice of Default" is filed. The opportunity ends on the day the property is sold at the auction. The time between these two events enables a buyer to work with the homeowner and the lender to negotiate and structure a deal that could be extremely profitable. This is the only time in the entire foreclosure process where the buyer can use conventional mortgage, hard moneylenders or creative financing techniques to buy the property. Once a "Notice of Default" is filed it becomes public information, and usually there is a lot of competition from other investors due to this filing. Hence to avoid competition experienced investors use various farming techniques to spot owners before the "Notice of Default" is filed. Properties can also be bought in auctions at bargain prices too, but one would need cash for the purchase. Bidding in an auction sale is extremely risky and one needs lot of experience and skill. What is the motivation of the seller? Once a borrower defaults on a loan his credit is at serious risk. A foreclosure stays on the credit report for a minimum of seven years. This is the prime reason why people who have defaulted their payments are extremely motivated to avoid a foreclosure proceeding. Borrowers in foreclosure are sometimes difficult to deal with, as they are confused and scared. Their self-esteem is low and they are in need of support from someone who understands the process. As a buyer your motive should always be to help them in their tough times. If any time during the transaction a seller perceives that you are taking advantage of his or her situation, he/she always walk away from the deal. Srini Saripalli is a real estate investor and business development consultant to Fortune 500 companies. He lives in San Jose, Calif. Srini can be reached at: http://www.srinisaripalli.com
MORE RESOURCES:
Real-Estate - Google News |
|
|
|
RELATED ARTICLES
Property Investment Strategy: Securing Properties with Little or No Deposit Property Investing often requires creative strategies to make it successful. Professional property investors often use the option contract as a tool to develop some useful investment strategies. Moving On: Powerful Tips For Selling Your Home Maybe you're moving to a larger home to accommodate a growing family, relocating for a new career opportunity, or purchasing a townhouse for retirement. Whatever the reason for the move, you'll need to take the necessary steps to sell your home for the best possible price, within a reasonable amount of time. How Real Estate Investors Use Mortgage Note To Purchase Properties Many of you may not be aware of the various ways notes can be used. The average person's understanding about notes is that people create them because they are desperate to sell a property. Understanding the Escrow (Closing) Process 1. What is an escrow?Escrow is defined as a process where parties deposit instructions and funds with a "disinterested" third party until conditions of the instructions are met. Rehab Your Way to Wealth: The Quick Way to Fixer-Upper Success Completely rebuilding a house is not necessary to make money in investment real estate. Most times, if you have bought smart, you won't have to make a huge improvements on your investment property. Home Loans - Identity Theft Protection Could Hurt Home Sales Identity theft has been a hot topic in the news during the last few years. Just a month or so ago, forty million credit card numbers were compromised due to a computer attack on a credit card processor. Lease Options or Rent to Own? Finding a rent-to-own house is one of the many ways someone with bad or no credit can buy a house. You will often find them called names like lease/options, lease with option to buy, lease purchase, lease 2 purchase, rent with option to buy, rent to own, or rent to buy homes. Home Equity or Debt Trap? Are you using the equity from your home to purchase everyday things? This is a dangerous trend growing more popular every month as millions of Americans tap into the value of their home to fund a lifestyle.How many times have you heard the saying "Your home is the best investment you'll ever make"? How many times have you also heard that your home will be the most valuable asset you will ever own?Both of these are as true, if not truer, today than at any time in the past. Real Estate Marketing, Do You Use Direct Mail? Prospecting for leads is by far the most difficult part of being a Realtor or small business professional. In fact, lead development is by far the most expensive and time consuming aspect of your job. Use Targeted Decorating To Get A Higher Price For Your House This article will show you how to sell your home quicker, get a higher price for it by using smart decorating techniques.The secret is to make your home feel like "my home", for the buyer. For Sale in Ridgefield Ridgefield Connecticut, located near the New York border, is a small, quiet town, and a great place to live. There are many types of homes that are for sale in Ridgefield, including luxury homes. Why Should Sellers Be Absent During Showings? If only there were a way to sell your home without letting all those people come through. Unfortunately, the reality is that homes must be shown in order to be sold. The Secret Jewel in the Mediterranean Crown Since the Northern Cypriots famously voted 'yes' to the UN backed Annan plan for the peaceful reunification of Cyprus in 2004 the world has awoken to the secret and hidden beauty of this untouched jewel in the Mediterranean crown. Those open-minded and individual thinkers seeking elegant living, unrivalled Mediterranean-region investment property opportunities or their own hideaway are today embracing Northern Cyprus. Understanding Opportunity Cost When Investing In Property While most investors have got involved in property investing because they understand the opportunities to make money through leverage and capital growth or high yields, I still see and hear of many who do not fully understand opportunity cost.Remember anyone that gets into property is usually in it to generate money or income - how many deals/properties you own is insignificant. 3 Tips to Help You Sell Your Timeshare - For More The values of timeshares are constantly changing. There are numerous timeshare-selling companies arriving every day. How to Prepare Yourself for Owning a Dual Purpose Second Home If you are thinking about buying a second home, you are not alone. A 1995 survey by the American Resort Development Association found that 60 percent of households surveyed feel they have a likely chance of purchasing a recreational property in the next ten years, a figure that rose 30% from the survey in 1990. Real Estate Season is Here Yes, it has finally arrived. This is the time of year when the MLS or Multiple Listing Services go up like crazy in all most every city, town and village. Investing in Real Estate Profitably: Eliminating the Need for Mortgage Insurance In an earlier article, we presented various options for ensuring that you have positive cash flow when holding rental houses, by minimizing loan payments. One problem which we now can address is to how to eliminate the need for paying mortgage insurance. Sell Your Home Without a Realtor and Save Thousand$$$ A typical real estate commission on a $234,000 home (national median price for all existing homes as of July 2005) is over $16,000. In many areas the cut a real estate broker gets is much higher. Hiring A Contractor - 10 Mistakes To Avoid A very smart attorney I know paid $7,000 for a roof repair, only to have the roof leak the next time it rained. The contractor stalled, made excuses, but never did a thing about it.
|
| home | site map |
| © 2006 |
