Wednesday, January 18, 2006

Competition Heavy For Foreclosures

Steve McLinden at has this advice. "Experts foresee a wave of loan defaults as easy credit standards come back to haunt buyers. For astute investors, though, opportunities will abound. Many economic experts are predicting that mortgage delinquencies will rise up to 15% in 2006 among homeowners with higher-cost or 'subprime' loans."

"About 19% of all U.S. home loans are now subprime, in contrast to just 5% 10 years ago, according to the folks at Fitch Ratings. A lot of those homeowners with adjustable-rate subprime loans will see their loans reset at higher interest rates in the coming months."

"Foreclosure buying is a very competitive game right now, with so many real estate gurus advocating the strategy in books and seminars, and on TV and the Internet. Just do a Web search under 'foreclosure opportunities' and you'll see what I mean. Obviously, more and more buyers, particularly investors, are looking for an advantage in the game."

"Buying a 'pre-foreclosure' from a defaulting or financially strapped owner might be the best way to go on the consumer end. The county clerk's office keeps lists of such pre-foreclosures. Seek out titles where a 'lis pendens' notice has been filed by the lender."

"Before contacting and engaging in negotiations with the owners of these properties, make sure you are pre-qualified for a loan. You'll probably want to enlist a buyer's agent to make sure your best interests are represented and that you make the right offer, which would ideally be at a below-market price. Finding an agent with foreclosure experience would also be a plus."

"The foreclosure-property auctions that you see advertised are usually the realm of more heavily bankrolled professional investors who stand ready to pay cash for a property. If you are brave and well capitalized, you might try your hand at it. You might want to attend one or two for observation before acting. Whichever approach you try, don't give up if your first few efforts don't pan out."


At 10:36 PM, Blogger NurseLiz said...

Ben, what about people like my brother-in-law who goes to someone in Tampa area, offers them some measly 3k or 4k and they "sign it over" to him or maybe he gets a bank loan? Can you be tapped out on the ability to buy more property - no matter how good your credit is? He tells us he's worth over a million - I clarify with my husband that is only what he "owns" in real estate, NOT equity built up! My b inlaw is a Robert Kyosaki follower - thinks he knows everything!!! Unfortunately, won't Tampa become one of those foreclosure havens?

At 1:43 PM, Blogger Arioch said...

One item on foreclosure that may make the cherry picking tougher is the balance on these notes.

Wouldn't the 105%, 125% financed, Neg-AM and 0% down properties be unappealing to grab? Especially in a depreciating market?

I'm not certain how that would work, but from a novice standpoint I view it as someone handing you an upside down building. You have a building not worth as much as the note you were just handed.

Wouldn't that be similar to being handed a financial "monkeys paw?".

Please correct me if I am wrong in my interpretation.


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