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

I have come across a few national lenders who maintain Web sites of bank-owned properties by state and county and wanted to share them with everyone.

Countrywide:
http://homebuying.about.com/gi/dynamic/offsite.htm?zi=1/XJ&sdn=homebuyin...

Bank of America:
http://homebuying.about.com/gi/dynamic/offsite.htm?zi=1/XJ&sdn=homebuyin...

Chase Mortgage:

Here are the 10 steps:

1. Research – Consists of identifying areas where tax sales exist and the specifics of each sale.
2. Outreach – Process of determining how to reach the county agencies that hold tax certificate sales in which you want to participate.
3. Contact – Process of contacting the county agencies that hold tax certificate sales.
4. Preliminary information – Consists of gathering data about the tax sale and properties ibn which you are interested.
5. Determining yield – Where you calculate the factors that will affect your return on investment.

Once you begin to acquire multiple tax certificates, you may hold on to them through the redemption period to receive your full return or you may sell them in the secondary market. You can sell your certificates to other investors, to brokers or through brokers. Your profit will be reduced by selling them on the secondary market, but if you need cash, you can liquidate your tax certificates.

In most states, a tax lien becomes a senior lien to any other liens that may be on the property, even if a lender recorded the judgment first. In other words, if you held the certificate on a property that was never redeemed and then foreclosed the right to redemption, your tax lien takes priority over a judgment placed by a lender. The exception to this would be an IRS lien or a Bankruptcy lien against the property usually placed before the county tax lien.

Redemption periods vary from state to state as do actual interest rates, yields and penalties. In some states the property owner has two years in which to redeem the certificate for the property. In other states, the property owner is not required to pay it off for a five to seven year redemption period. Using the redemption period to your advantage can significantly increase the yield you earn.

Yield simply means to produce a return for effort or investment. The yield on an investment can be figured either as simple interest or compounded interest. Simple interest is interest paid only on the original principal, not on the interest accrued. For example, if you bought a tax certificate for $2000 at 18 percent annual simple interest, you would earn $360 each year.

In most states, the first step in the process of obtaining a property is to notify the owner that the tax certificate is about to expire and that if the amount due is not paid in a specific amount of time, often 90 days from the date of the notice, a deed for the parcel will be requested from the county tax office. After expiration of the tax certificate redemption period, the county treasurer is obligated to make out a deed for each parcel sold and unredeemed, and deliver it to the purchaser upon return of the certificate.

Every state secures the tax lien with the property that it represents and in most states tax certificates are the senior liens against a property. If the property owner fails to repay the certificate, you are entitled to apply for a deed and ultimately foreclose on the property, regardless of any other liens or obligations on the property.

There are several methods for puchasing tax lien certificates and they vary from state to state and even county to county. Each method has its advantages and disadvantages. The methods used for selling certificates in most states are:

• Bidding down the interest rate
• Bidding a premium or bonus amount
• Bidding down on a percentage of ownership
• Bidding up the purchase price

Bidding Down the Interest Rate

Tax certificates are an excellent investment because they offer guaranteed higher yields and comfortable security. By guaranteed higher yields than those typically offered by CDs, 401-Ks, government bonds or IRAs, which each only offer about 4% or less annually. Although both are guaranteed, only tax certificates can yield interest at 15%, 20% or more.