Buying Foreclosures, REOs. Short Sales, FSBO, MLS and More

For real estate investors who have been chasing foreclosures since 2009 the competition has been fierce in recent years. Foreclosures are disappearing in rapidly in most U.S. markets. RealtyTrac has reported an overall decrease in foreclosure activity by 40.1% over the prior year based on the number of active foreclosure homes in the U.S. as a whole.

- Home foreclosures in the United States were down year-over-year for the 40th straight month in January, according to RealtyTrac, but foreclosures are peaking in states that have judicial foreclosure processes.

According to RealtyTrac's Foreclosure Report, there were a total of 124,419 foreclosure filings during January, rising 8% from December, but declining 18% from January 2013. The increase from December was typical, because of the usual holiday lull.

The year-over-year declines during January were the smallest since September 2012, since 15 states showed large year-over-year increases in foreclosure filings, because of the long delays caused by judicial foreclosure processes, including New York, New Jersey, Massachusetts, Pennsylvania and Maryland.

Those of you in the business know the type of shenanigans that goes on with foreclosures here in Florida. I cannot tell you how many times we have a title report come across that simply is a trap for your average investor. A typical "Lien Search" or "Pencil Search" will not find these ticking time-bombs, but we at EasyTitleSearch.com pride ourselves in going the extra mile even on a simple $35 O & E (Lien Search) report.

Case in point. We had a customer purchase a title report on a property coming up for county foreclosure auction. The property was foreclosed on by the bank and a private investor purchased the property at the Palm Beach County foreclosure auction a few years back.

I was researching foreclosures on the internet and ran across this article that discusses working and purchasing foreclosure properties, specifically pre-foreclosures and some of the benefits that come from doing them. Getting the right agent is going to be the key as we are working through these deals. I hope this article gives you some good ideas to work with.
The Upside of Foreclosure

By: Ask a Realtor from Realtor.com
The Upside of Foreclosure
Las Vegas Realtor® John Brassner recently shared a story of how one person’s misfortune can become another person’s dream come true for a young first time homebuyer.

As we’ve mentioned before, major metropolitan cities offer more foreclosures – and it’s hard to get more “major metropolitan” than The Big Apple.

Investing in a city as vast as New York can be a daunting task. The city is broken down into five boroughs the size of some US counties, each containing a plethora of neighborhoods and villages to choose from.

Luckily, we’ve got some information that can help you narrow down your decision.

Queens

The biggest borough had a lot of success in the market last year, seeing a 2% increase in median home prices over 2012.

Our last flip went perfect, a 70% LTV and we made a nice annualized return (tip #5). It was in a suburb just outside of a great rental area and before you get to the nicer suburbs. We categorize this as a high end blue collar area (tip #1) which are perfect for flips and/or rentals. REO sales are in the 30s with retail sale ranging from 80-130K which shows a huge discount for REOs (tip #2). The best part is there was only 1 for sale property in the neighborhood compared to 4 sold comps (tip #3) and there was definite pride of ownership with few rentals (tip #4).

5 Tips for Where to Flip:

The family down the street is selling their home. If you didn't attend the PTA meeting or go to the church with the family chances are you don’t know this seller. Unfortunately in today’s market we do know the seller. We can bet that the seller of that house is one of the following:

Bank of America
Countrywide
Freddie Mac
Fannie Mae
Wells Fargo
Chase
Washington Mutual (WaMu)

Today the Home Affordable e Foreclosure Alternatives (HAFA) program goes into effect and is supposed to streamline the process of short sales. In part the HAFA program will compensate both the lender and the borrower for resolving a short sale. In some cases investors are also incentives to help subordinate lien holders minimize their losses. This may reduce the shadow inventories currently on the market. Many investors have currently avoided short sales because of the red tape involved, while lenders have avoided it because it has been more efficient to foreclose.

When puting in multiple offers on reos, do I put my name or creat an llc or a land trust. What is the quick route to go about it smoothly if you are wholesaling?

I was wondering if anyone any any suggestions for how to deal with the earnest money part of making offers on REO properties that are listed on the MLS when you don't have the money yourself. I haven't done it in awhile but when I last did it it was you needed 1k, 2k or some people here said maybe even 10% of the purchase price. Are there any creative ways around this if you want to wholesale the property?

Thank you,
John