Foreclosures Database - The Most Important Tool Every Real Estate Investor Needs
A foreclosures database serves as an invaluable tool for every real estate investor. If you are an investor looking to buy foreclosed properties, these lists can serve as your pipeline for leads. Most online listings services are updated on a daily or weekly basis, so you will never have a shortage of leads to chase.
Foreclosure, for those who do not know, is a term that refers to the process a bank must go through to repossess a house when a homeowner becomes seriously delinquent on his or her mortgage payments. Foreclosure real estate investing, thus, refers to the buying of a property that is in foreclosure. If a homeowner does not pay the amount necessary to get caught up by a specified due date, then the house goes up for sale at a government-mediated auction to the highest bidder. Foreclosed homes can be bought at any one of three stages:
1) Before the auction takes place.
At this stage, an investor can contact the homeowner and negotiate a win/win deal whereby the homeowner walks away from the house and the homeowner takes possession of the property and stops the foreclosure action.
2) At a foreclosure auction.
Investors can attend an auction and bid on one or more properties that are up for sale. The highest bidder takes possession of the property for the full cash price of the winning bid amount.
3) From the bank.
If nobody buys a property at an auction, the bank automatically becomes the owner of the property, and investors can thus contact the bank directly to negotiate an offer.
There are advantages and disadvantages to buying at each of these 3 stages.
Before the auction:
- Pros: You will be helping the homeowner out of a difficult situation. You will have room to negotiate since you are dealing directly with the homeowner.
- Cons: Foreclosure is an emotionally tragic experience in people’s lives and many homeowners may not be willing to sell a house and handover the keys to some strange investor whom they perceive is merely looking to profit off of their problems.
At the auction:
- Pros: You don’t have to negotiate with anybody. You just show up with the cash and bid as high as you are willing to bid. You may get the deal or you may not get the deal.
- Cons: There is a lot of competition at auctions and a tendency for profits to be wiped out by overbidding. (Remember that foreclosure investing is all about buying low and selling high. If you bid too high at an auction, you are basically defeating that purpose.)
From the bank:
- Pros: No auctions, no dealing with homeowners. You simply negotiate offers with the bank and your offer may or may not be accepted.
- Cons: Some banks may refuse to negotiate. Some banks prefer to give priority to a list of preferred realtors or investors. Some banks may even take it upon themselves to rehab the property and sell it themselves.
Not every foreclosure property is automatically a deal worth investing in. You have to research all of the details about the property in order to make an informed decision about whether or not it would be a profitable buy: How much would you be buying the property for? How much would you need to spend on repairs:? How much would the property sell for after repairs?
A typical foreclosures database will contain information about all aspects of the property’s foreclosure history as well as the property’s characteristics, to help you make that decision. Some of the information contained therein includes:
1. Property address.
2. What type of property it is. (eg- single family home, condo, townhouse, multi-unit apartment building, etc.)
3. The year the property was built.
4. Configuration of the property (bedrooms, square footage, etc.)
5. Unpaid real estate property taxes levied against the property.
6. The balance due on the mortgage - this serves as the basis for the minimum amount the bank would be willing to sell the property for plus fees, otherwise known as the “judgment amount” or the “opening bid amount”.
7. When the house went into foreclosure. This is the date that the last auction took place at which nobody bought the property and thus the property ownership was transferred to the bank.
8. CMAs - Comparative market analysis - to give you an idea of how much the property might be worth.
9. Date last sold - When was the property bought by the current or most recent homeowner before it went into foreclosure.
10. The bank’s contact information.
Some listing services might even include pictures of the property.
For more information on investing in foreclosures and subscribing to a foreclosure database, visit http://www.ForeclosureCommando.com
Tags: flipping houses, foreclosure database, foreclosure listings, foreclosures, real estate investing
