How Home Foreclosure Auctions Work: An In-Depth Tutorial

ForeclosureBusinessNews.com: “Foreclosure News the Average Joe Can Use!” Find Trusted Vendors, eg, Foreclosure Lawyers, Mortgage Consultants, Cleaning Co’s, Etc.

When a home goes into foreclosure, it generally means the owner of the home is 90 days or more behind on his payments. At this time, the lender can start foreclosure proceedings. If the homeowner cannot stop the foreclosure, the property goes to auction.

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There are still plenty of foreclosure cleanup (and RE-related) jobs out there. Get your foreclosure cleanup “Business in a Box” and start this lucrative business right now for 40% Off!

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In the absolute auction format, the home is sold to the highest bidder, regardless of the price. In the auction with reservation format, the seller of the auctioned home may reject the sale for any reason. This isn’t normally used in foreclosure auctions, because the seller has no choice but to sell.

Read the rest of this article on how foreclosure auctions work.

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© 2014 Foreclosure Business News. Content may not be reprinted or reproduced in any manner without the express, written consent of the author.

Buying Cheap Foreclosures: 3 Things to Look for That May Not Occur to You If You’re a First-time Investor

ForeclosureBusinessNews.com: “Foreclosure News the Average Joe Can Use!” Find Trusted Vendors, eg, Foreclosure Lawyers, Mortgage Consultants, Cleaning Co’s, Etc.

There’s a ton of information about buying cheap foreclosures on the internet. Much of it is repeated over and over again on different sites. And, for good reason – a good journalist will always cover the essentials. In this post, you won’t find that though.

Following are three specific things to think about if you’re interested in investing in foreclosed property – especially cheap foreclosed property.

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Buying Cheap Foreclosures: Insight for New Real Estate Investors

I. Liens: Everyone investor knows to look for things like tax liens when researching a property But, you should also look for things like undisclosed hazards and property deficiencies. Most banks/lenders will reveal next to nothing about a property, so it’s up to you to do your due diligence before investing in a cheap foreclosure. 

What are some of the undisclosed property hazards you should be looking for? Three non-obvious ones come to mind, ie:

     Environmental (eg, chemical plant leak close by that caused decrease in property value);

    Criminal (eg, was house used by drug dealers to grow and sell marijuana or meth); and

    Extraordinary Situation (eg, did a murder take place, or is the house known for being “haunted).

Learn more about how to handle property hazards / home defects.

II. Purpose: Many – especially first-time investors – fail to think through what investing in a foreclosure will mean for their future. A property is like a baby – it has to have ongoing care. So before you invest one dime, think about WHY you want to invest. Is it to:

Shore up your retirement savings? Or

Live in as your primary residence? Or 

Flip for a profit?

Whatever your motivation, be sure to know what it is, what it’s going to mean to/for your finances and how it may/can change how you spend your free time (eg, will you mow the lawn and do repairs, or will you be able to afford to hire someone to do it for you).

III. Real Estate Professional: In this day and age – because there are so many cheap foreclosures on the market – working with a real estate professional who specializes in REO property may be in your best interest. 

These are unusual times in real estate; the foreclosure crisis has created situations that the industry has never experienced before. And every lender has their own set of rules and regulations. Hence, even some realtors (those who don’t specialize in REOs) don’t know how to navigate the “buying cheap foreclosure” waters.


Cheap Foreclosure: 3 Bed/1 Bath Home in Atlanta for $18,500

Buy Foreclosures Cheap: A Home for Under $20,000

It’s deals like the one listed here that have many newbies interested in buying cheap foreclosed property. But, you must know what you’re doing – or you could lose your shirt.

Good luck!

Related Posts

3 Places to Find Cheap Foreclosure Properties Online – For Free

Wall Street Big Shots Getting in the Foreclosure Rental Market: What This Means for the Average Joe

What to Expect When Buying Foreclosures! From Finding a Property, to Getting a Foreclosure Loan, to When to Make an Offer

Buying Foreclosures Cheap — for as Little as $500 — Is REALLY Possible! Here’s Proof

Buy Foreclosures Cheap: Private Equity Firms are Snapping Up Foreclosed Properties – What This Means for the Average Joe

Buy Foreclosure House: What You Need to Know about Purchasing Pre-Foreclosures

Buying Foreclosures Cheap: Teenager Shows It Can be Done — Buys Foreclosed Property for $13,000 and Clears $700/Month in Rent

Buying Foreclosed Homes and Renting Them Back to Previous Owners Is Illegal: Is It Time for the Right-to-Rent Act to be Passed?

Home Foreclosure News of the Day: Why Some Cities are Tearing Down Foreclosed Homes

Cleveland Foreclosures: City Giving Land Away — The Reality of Foreclosure and What It’s Going to Take to Stop the Crisis from Getting Worse

Because of Home Foreclosures, Buying a Home Is Cheaper than Renting in Almost 75% of Largest American Cities

Home Foreclosures Causing Hard Time for Home Builders

Home Foreclosures Lead to Sustained Bright Outlook for Some Builders: Here’s Why

P.S.: Get Foreclosure Clean Up (& Other Real-Estated Related) Job Leads: FYI, don’t forget to bookmark the site and come back for direct leads on foreclosure cleaning jobs, foreclosure cleaning contracts and foreclosure cleanup request for bids on jobs.

P.P.S.: Like this post? Tweet it and follow Foreclosure Business News on Twitter.

Copyright © 2012 Yuwanda Black for Foreclosure Business News. Legal Disclaimer: The information dispensed on this blog is not to be taken as legal advice; it is for general purposes only. Please consult a qualified professional (eg, attorney, accountant, real estate agent, etc.)  — in your jurisdiction — before taking any action based on the information listed here.

Use 401K to Buy a Home: Using Retirement Funds to Buy Foreclosures Replacing Investing in 401K as Retirement Plans for Many?

ForeclosureBusinessNews.com: “Foreclosure News the Average Joe Can Use!” Find Trusted Vendors, eg, Foreclosure Lawyers, Mortgage Consultants, Cleaning Co’s, Etc.

Many Americans have seen their 401K investments decimated over the last few years. Also, many have lost a ton of equity in their homes. These two factors have ted a perfect storm for many who are looking for ways to shore up their retirement plans. How?

Many Americans are Using Their 401K  to Buy a Home (a Foreclosure / Foreclosed Property)

Many regular, run-of-the-mill working Americans are choosing to take the monies they would have socked away in a 401K retirement account (or use funds they already have in a 401K) and invest in real estate – specifically buying foreclosed properties.

In the Bloomberg article, Foreclosures Drawing Cash as 401K Returns Sag: Mortgages, a couple explains why/how they’ve chosen this route to shore up their retirement income, stating:

“It’s an income stream for us, and when it’s time, we’ll sell it and make more money than we could from our 401K,” said Haisley, 49, who rents out the property for $900 a month for an annual return of more than 20 percent, excluding appreciation. “There’s nowhere for prices to go but up, so it seemed like a pretty safe bet.”

Can Your Borrow Against Your 401k to Buy a Home (Specifically, a Foreclosure)?

The short answer is yes, you can. One of the easiest ways to do it is to set up what’s called a self-directed IRA. This type of IRA has restrictions, some of which are outlined in the article, Buy Foreclosures With Your IRA, which features an investor in Reno, NV who bought a commercial property using this method.

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Some of the rules of using a self-directed IRA to invest in foreclosures (distressed properties) as described in the article are:

The property must be used purely as an investment, with all the income going directly back into the IRA. The owner may not occupy the home or even use it as a vacation property. The owner can manage the property, doing maintenance and supervising the renting, or can hire a rental management company which would be paid for out of the IRA. 

Rules for Using Your 401K to Buy a Home

So to recap, following are some of the main things you need to know if you want to use your 401K to invest in foreclosures.

Must be a 100% investment property – you can’t even use it as a vacation home. 

Set up a self-directed IRA to complete – and manage – the purchase.

Use the IRA to pay cash for the property. 

Find a property manager or become a property manager yourself to oversee the care/maintenance of the property.

Save cash for contingencies related to the property (eg, repairs, ongoing maintenance). 

All cash/profits generated by the property must be rolled over into the self-directed IRA.

You pay taxes on any profits WHEN you take it out – which could be years down the line when you retire (not before). 

Terminology Related to Using a 401k to Buy a Home

Some other terms you might want to research to get a full understanding of this topic include real estate IRA, checkbook IRA, and solo 401k.

Related Posts on Buying Foreclosures

3 Places to Find Cheap Foreclosure Properties Online – For Free

Buying Foreclosures Cheap Can Actually Cost You More: What Happened to This Buyer Can Happen to You

Wall Street Big Shots Getting in the Foreclosure Rental Market: What This Means for the Average Joe

What to Expect When Buying Foreclosures! From Finding a Property, to Getting a Foreclosure Loan, to When to Make an Offer

Buying Foreclosures Cheap — for as Little as $500 — Is REALLY Possible! Here’s Proof

Buy Foreclosures Cheap: Private Equity Firms are Snapping Up Foreclosed Properties – What This Means for the Average Joe

Buy Foreclosure House: What You Need to Know about Purchasing Pre-Foreclosures

Buying Foreclosures Cheap: Teenager Shows It Can be Done — Buys Foreclosed Property for $13,000 and Clears $700/Month in Rent

Buying Foreclosed Homes and Renting Them Back to Previous Owners Is Illegal: Is It Time for the Right-to-Rent Act to be Passed?

Home Foreclosure News of the Day: Why Some Cities are Tearing Down Foreclosed Homes

Cleveland Foreclosures: City Giving Land Away — The Reality of Foreclosure and What It’s Going to Take to Stop the Crisis from Getting Worse

Because of Home Foreclosures, Buying a Home Is Cheaper than Renting in Almost 75% of Largest American Cities

P.S.: Get Foreclosure Clean Up (& Other Real-Estated Related) Job Leads: FYI, don’t forget to bookmark the site and come back for direct leads on foreclosure cleaning jobs, foreclosure cleaning contracts and foreclosure cleanup request for bids on jobs.

P.P.S.: Like this post? Tweet it and follow Foreclosure Business News on Twitter.

Copyright © 2012 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author. Legal Disclaimer: The information dispensed on this blog is not to be taken as legal advice; it is for general purposes only. Please consult a qualified professional (eg, attorney, accountant, real estate agent, etc.)  — in your jurisdiction — before taking any action based on the information listed here. 

What to Expect When Buying Foreclosures! From Finding a Property, to Getting a Foreclosure Loan, to When to Make an Offer

ForeclosureBusinessNews.com: “Foreclosure News the Average Joe Can Use!” Find Trusted Vendors, eg, Foreclosure Lawyers, Mortgage Consultants, Cleaning Co’s, Etc.

Foreclosed homes are everywhere these days. Find out what steps you need to take to purchase foreclosures and leave the closing table with instant equity. This is a great time to buy your own home or investment property. Interest rates and home values are low, continue reading to learn how to make thousands of dollars buying foreclosures.

Below are the steps of buying foreclosures and some obstacles to expect when buying a foreclosure.

I. Money Sources: Be sure to have a money source identified before you begin looking at foreclosures. Know if you will be paying cash, borrowing money from a family member, or borrowing money from a bank. There are several reasons for this, primarily don’t waste your time looking at homes you cannot buy.

Cash: If you are paying cash, be prepared to have proof of funds available when you make an offer. Most of the time it is a letter from you bank stating that you have a predefined amount of money.

Family: If you are borrowing money from a family member, be sure they have a proof of funds letter.

Bank Loan: If you are planning on getting a loan from the bank, get a prequalification letter. There are several loan programs to look into when considering buying a foreclosure. Some of the more popular in my area are conventional loans, FHA loans, and rural development loans.

FHA Loan: The FHA loan requires the borrower to put down three and a half percent of the purchase price of the home.

Conventional Loans: Conventional loans require five percent and rural development loans do not require a down payment. Be sure to check with you local lender about the options available to you. There are several of them out there depending on your needs.

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II. Where to Find Foreclosure Listings. Following are some reliable ways to find foreclosed homes. 

Real Estate Agents: Be sure to find a good real estate agent and have them send you foreclosures as they come on to the market. There are several other ways to search if you prefer not to use a real estate agent.

Tax Records: Spend some time on state tax records. Every state should have a website that allows the public to search tax records. Find the areas you want, type in the streets and go down the list looking for banks listed as the owner. Once you find which bank it is, you can try to contact them to find out the price of the property. One more advantage to public tax records is the majority of the time you will be able to see what the bank paid for the home. This is a huge advantage when making an offer.

The World Wide Web: Another option for finding foreclosures is using the internet to find them. Find a local real estate website that offers a foreclosure option. Most local real estate offices offer foreclosure lists as well.

You can also use nationally recognized websites to find foreclosures. Check the resource box below to see where to view foreclosures. Many times national real foreclosure sites lag in the homes that are available and sometimes do not show accurate details. You can also try and search large asset management companies online. A couple of them are cityside corp, and homepath.com, there are several others available if you search online.

III. Inspecting Properties You Like. Once you have found a couple of properties that you like, do preliminary viewings. Be sure to do them quickly after you find the ones you like, good deals don’t last long.

Drive by the home, look in the windows, have a real estate agent open it up. On this first viewing, take in everything that is going on, bring a camera for pictures. Is the area nice? Are there other foreclosures in the area or on the same street? Does the home have and major red flags? Cracked foundation? Appearance of water drainage issues? Steep inclined driveway and all other driveways on street are flat?

Pay attention to everything that cannot be fixed or would be costly to fix on this first visit. If nothing looks too bad, start focusing on the other repairs. Try to take note of what will need to be fixed. Then later you will be able to check prices for repairs. Another advantage of taking notes of needed repairs is you can have a professional come out with you the next time if you are not knowledgeable about the repair.

IV. Have a Market Analysis Done: Once again, a good real estate agent will be useful for this. What you want is a complete list of the homes that have sold within six months and are in the same area as the one you are interested in. Most appraisers like to stay within a half mile if possible.

Be sure to get a complete list of the homes that have sold. This is the part where an honest and knowledgeable agent is important. You don’t have to make the call; you have a professional that will let you know if it is a good deal. Unless you trust who you are working with, get all of the homes that have sold and you be the judge. That puts the ball in your court. You will be able to view the sold homes and what features they have to see if they are comparable to the one you are interested in.

V. When to Make an Offer: Make an offer at teh home on the second showing. If the market analysis numbers show the home to be a good deal, visit the home again and have an agent bring a contract. If you are not using an agent, visit the home again before you make an offer. It is good to see it again to be sure of what you are doing and to be sure there was nothing you missed on the first showing.

Remember that the bank hardly ever does repairs. That is your responsibility when buying a foreclosure.

If you still want to make an offer, remember to check for what the bank paid for the home on tax records. Also, look to see how long they have owned the home. Foreclosures are considered bad assets to banks and the longer they have them the more they want to get rid of them. Make the offer twice as low as what you are willing to take. If the home is priced at 200K and you are fine with buying it at 180K, make your first offer 160K. You want to see where the bank is and if they are willing to negotiate.

VI. The Waiting Game: Prepare to wait. Once you have made your offer, the wait begins. Sometimes they will get back with you the next day and other times it may be a week or two.

Don’t be surprised if the counter offer they write is not on a state contract. Most of the banks have their own addendums for offers. They cut straight to the point. Normally a single sheet of paper that states exactly what they are willing to do. Be prepared to pay earnest money, most foreclosures required it. The initial counter offer will give you a good idea of where they want to be.

Sometimes they will come down further, but the majority of the time they tend to stick close to the counter offer. If they will not come down to a number that you feel comfortable with, wait a week or two and then write another offer. After enough time, they tend to be more willing to negotiate. Moving on to the next step, assuming you have reached an agreement on the purchase price.

VII. Inspection, then Appriasal: This is the part of the process where most deals fall through. Most banks will give you anywhere from 7-10 business days to do a home inspection.

Hiring a professional would be wise, but you can do it yourself if you feel comfortable. Be sure to check the attic, crawl space, septic system, and everything else. If you are doing it yourself, get online and find a home inspection checklist. This will give you an idea of what a home inspector would check when going through the home.

Any needed repairs from the inspection should wait until after closing.The appraisal is the part that can become tricky. You will have to pay your lender for the appraisal. Be sure to ask for a copy of it when they are done. If you don’t ask, they will not give it to you. Now the tricky part, different loans have different requirements that an appraiser will look for.

If you are going with a different type of loan you should be able to search online for the guidelines. Don’t be surprised if the home does not meet the guidelines. That is where the dilemma comes in.

What do you do if there are appraiser required repairs, but the seller will not do any repairs? First, get something in writing explaining which repairs are required. Then submit the list to the selling bank. If they still are not willing to do the repairs you have a couple of options. Try to switch to a loan that does not require the same repairs. Move on and begin to look for another home.

There is also the option of doing the repairs prior to closing. This is not recommended, especially if the repairs are costly, but sometimes you have to do what is needed. Remember, you are spending money fixing a home that is not yours yet. Recently many banks have left buyers no choice; banks will not do the repairs so the buyer has too.

VIII. Your Closing: If the repairs are taken care of and you want to proceed, the next step is closing. By the way, after appraiser required repairs are done expect to pay the appraiser a re-inspection fee. If you are bringing money to the table be sure to get a cashier’s check or money order. Some title companies allow personal checks, but most don’t.

The closer will call you to let you know how much to make the check out for. Be sure to have your real estate agent look at the HUD-1 statement before getting the check. Several closing statements have mistakes on them. Yet another good reason to try and find a good real estate agent that is knowledgeable about what they do.

IX. After the Closing (Post Closing): Once you have closed on the property, the world is your oyster. You can do repairs to live in the home, rent the home out, or try to sell it again. The first two in this real estate market seem to be the better options. Interest rates are low; you should be able to live in the home fairly cheap or rent it out and make some profit every month. If you do choose to resale the home, be aware of the HUD flipping guidelines.

Conclusion: Buying a Foreclosure Property

Hopefully this article has been informative to those considering buying a foreclosure. It was intended to give people an idea of what to expect when buying one. Different states have different processes, you should check with a local professional before pursuing a purchase. There can be several obstacles that come about along the way, remember to be patient and stay informed about what you are doing.

Related Posts

Buying Foreclosures Cheap — for as Little as $500 — Is REALLY Possible! Here’s Proof

Buy Foreclosures Cheap: Private Equity Firms are Snapping Up Foreclosed Properties – What This Means for the Average Joe

Buy Foreclosure House: What You Need to Know about Purchasing Pre-Foreclosures

Buying Foreclosures Cheap: Teenager Shows It Can be Done — Buys Foreclosed Property for $13,000 and Clears $700/Month in Rent

Buying Foreclosed Homes and Renting Them Back to Previous Owners Is Illegal: Is It Time for the Right-to-Rent Act to be Passed?

Home Foreclosure News of the Day: Why Some Cities are Tearing Down Foreclosed Homes

Cleveland Foreclosures: City Giving Land Away — The Reality of Foreclosure and What It’s Going to Take to Stop the Crisis from Getting Worse

Buying Foreclosures Cheap: Homes Under $20 and the Debt Ceiling Interest Rate

Foreclosure Auctions: Turf War Ensues Between Local Municipalities and Private Foreclosure Auction Firms (Opportunity Knocks for Foreclosure Business Owners)

Home Foreclosure Auctions: The Biggest Advantage and Disadvantage of Them

P.S.: Foreclosure Clean Up Job Leads: FYI, don’t forget to bookmark the site and come back for direct leads on foreclosure cleaning jobs, foreclosure cleaning contracts and foreclosure cleanup request for bids on jobs. Always look under the “Recent Posts” heading to find the latest job listings.

P.P.S.: Like this post? Tweet it and follow Foreclosure Business News on Twitter.

About the Author: Guest post by . Be sure to check out a free list of foreclosures at http://www.homesinlittlerock.net You can view a national list of foreclosures at http://www.realtytrac.com.

How to Get a Low-Interest Home Loan – Even with Bad Credit (Yes, It’s Possible!)

ForeclosureBusinessNews.com: “Foreclosure News the Average Joe Can Use!” Find Trusted Vendors, eg, Foreclosure Lawyers, Mortgage Consultants, Cleaning Co’s, Etc.

All this week here we will be discussing how to stop foreclosure with the help of NACA, The Neighborhood Assistance Corporation of America (“NACA”). In yesterday’s post, we discussed how to continue to work with NACA after the workshop to stop foreclosure.

Today, we’re going to discuss getting a home loan through NACA. If you’re thinking, “But this has nothing to do with stopping foreclosure, why are we going over this?” 

Well, it’s a backup plan. If you are, for whatever reason, unable to stop foreclosure using NACA’s help, it’s a good idea to have a Plan B. Even if you have to take some time to recoup financially, when you’re ready, it’s nice to know there’s an affordable home loan option out there. 

Following is an in-depth overview of the benefits of applying for a home loan via NACA.

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Getting a Home Loan via NACA: Even with Bad Credit, You Can Get a Home Loan – Here’s Proof

No Closing Costs: This may be the best part of getting a home loan via NACA, because it can save you thousands of dollars when purchasing a home.

Level Playing Field: When you get a home loan via NACA, you don’t have to worry about getting a higher interest rate because you have bad credit. Why? Because everyone who gets a home loan with them receives the same (low) interest rate, usually much lower than the going market rate. As of today’s date, 1/19/2012, it’s 3.75%.

No Exotic Loans: You don’t have to be worried about being pushed into loans like an ARM (adjustable rate mortgage), which means your mortgage payment will change (ie, go up) in a few years. Many argue that this is what got us into this mess anyway.

Home loans obtained via NACA are fixed rate, 30-year loans. So, no matter what happens, you’ll always know what your mortgage payment is – and you can plan for emergencies (eg, get 6 to 8 months of expenses in the bank).

Streamlined System: Much like when getting a home loan modification with them, NACA sets up a web file for each loan applicant. This way, you can log in at any time and see what’s happening with your home loan application, eg, do you need to submit more paperwork, has your loan been approved, who your lender is, etc.

Reasonable “PMI-Like” Fee: Once you get mortgage via NACA, you can pay fees for additional services, eg, a membership fee of $50/month. What is this fee for? Well, if you run into trouble paying your mortgage at any time, paying this fee allows you to get assistance that will help you figure out a solution until you can get back on your feet. 

This fee is significantly less than the PMI (private mortgage insurance) most lenders charge.

What Is PMI?

Private Mortgage Insurance is basically foreclosure insurance. In the event that you are foreclosed on, the insurance company pays off your home loan.

And, just how much do most lenders charge for PMI

Typically PMI ranges from .23% to .92% of the loan amount and is usually paid monthly along with other items such as your taxes and homeowners insurance. On a $100,000 loan, PMI would range from $20 to $77per month. The cost of PMI is determined by the type of loan (adjustable vs. fixed) , the term of the loan (30 year vs. 15 year) and the amount of down payment (0%. 3%, 5%, 10% or 15%).  The more down payment you have the lower the monthly PMI. [Source: KCHomeLoans.com]

Note: If you put down 20%, then you don’t have to pay PMI at all.

Financial Counseling: This is another great benefit of getting a home loan via NACA. You get to really learn what’s entailed in not only applying for one, but what it means – financially – to own a home.

For example, one of the things discussed is “payment shock,” eg, the difference between what you’re accustomed to paying in rent and your future mortgage payment. Most new homeowners are simply not prepared for the financial obligations of owning a home.

And, unlike renting, you can’t just walk away – you sign on for (usually) 30 years. So not only do you have to be prepared financially, you must be emotionally and mentally prepared for what it takes to own a home.

Find an Affordable Home: NACA has contacts with many lenders who have tons of repossessed/foreclosed-properties in their inventory. Banks want to unload these – and you want to buy.

It’s a “perfect storm” for you as a buyer because it means that you get homes at below-market rates. In fact, on its site NACA notes: 

They will help you find a house where you wish to live below the Maximum Purchase Price, and negotiate the purchase with the seller. He or she can also help you determine what renovations might be necessary, and whether and how the seller can most effectively assist, or whether the cost can be included in your mortgage.

Bad Credit, No Problem: This is because NACA will work with you as long as it takes to get you qualified to buy.

All you really need to prove is that you have a steady income, can afford your monthly payments and a stable payment history. Even if you’ve credit problems in the past, you’re allowed to explain them (eg, there was an illness that caused you to be laid off). This puts a “human face” on credit problems, which makes it easier for you to get a home loan – even with bad credit.

Learn everything you need to know to get a home loan via NACA.

The #1 Thing You Must Possess When Applying for a Home Loan with NACA

Just like getting a home loan modification, you must be patient throughout the process. It may take a while to get you approved, or to find a home that you can afford, but it’s worth it if you’re really want a home – with an affordable mortgage payment – that you won’t have to worry about losing to foreclosure because you can’t afford it.

Related Posts

Stop Foreclosure: How to Ready Your Home for a Fast (Short) Sale

Home Loan, Bad Credit and How to Qualify: Yes, It’s Still Possible, But . . .

Home Foreclosure: The New Credit Standards to Qualify for a Mortgage Brought on by the Crisis

Home Foreclosure News: Owning a Home Becoming a Lot Harder for Lots of Americans Because of the Foreclosure Crisis

Foreclosure & Credit: How Does Foreclosure Impact Your Credit Report?

First-Time Home Buying Advice: Is It Better to Buy a New Home than a Foreclosed Home?

Foreclosure Advice & Credit Card Debt: Can Credit Card Companies Put a Lien On Your Home?

Because of Home Foreclosures, Buying a Home Is Cheaper than Renting in Almost 75% of Largest American Cities

P.S.: Foreclosure Clean Up Job Leads: FYI, don’t forget to bookmark the site and come back for direct leads on foreclosure cleaning jobs, foreclosure cleaning contracts and foreclosure cleanup request for bids on jobs.

P.P.S.: Like this post? Follow Foreclosure Business News on Twitter.

Copyright © 2012 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

Buying Foreclosures Cheap: Homes Under $20 and the Debt Ceiling Interest Rate

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Buy a home for Only $16?

I recently wrote on a story about a man who managed to purchase an abandoned home for just $16 in Texas.

Texas Law on Claiming  Rights to a Foreclosed Home

The gist of the story is that in Texas there’s a law that allows a person to claim rights to a foreclosed home if they live in the home for three years and files the correct paperwork – which costs $16.

At the end of the three years, the person living in the home can petition the court for the official property title. There’s speculation that he won’t make it the three years, or the original owners will come back, but to even have a chance at a home for less than $20 is amazing – and a chance that most of us probably won’t get. 

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Interest rates and the credit rating downgrade

Still, buying a foreclosed home can be a much less expensive path to homeownership, and interest rates are currently near zero percent even on the heels of the debt ceiling debacle and the subsequent credit rating downgrade.

Recently, Standard & Poor’s downgraded the United State’s AAA rating to an AA+. Economists and investors alike were worried because a downgrade usually results in a higher interest rate getting passed on to investors.

Typically during a credit downgrade, it’s not uncommon to see higher mortgage rates as well as rate hikes for car loans, credit cars and more. However the Fed has announced that won’t be the case – at least for two years. They will be keeping the interest rate near zero percent for the next two years in an attempt to protect consumers and investors for potential consequences of the downgrade.

Lock in a near-zero mortgage interest rate

For this reason, if you’re looking to buy a foreclosed home, now may be a good time to lock in that low rate on a mortgage. Of course, buying a foreclosed home is different from buying a typical home for sale, so you’ll want to check with the seller or agent to see if there are any specific restrictions.

The first step, however, is to seek pre-approval – this is the case with most home loan situations but can be especially important when looking at a foreclosed home, as time can be of the essence. You’ll want to have all your financial documents together – W2 statements, tax returns, bank statements and so forth – and begin shopping around for mortgage pre-approval prior to shopping for a home.

Your bank is a good place to start, and they can tell you what they’ll need for pre-approval, but don’t feel like you have to stick with them. 

Related Posts

Can You Legally Take Ownership of a Foreclosure Property That Has Been Abandoned via Squatter’s Rights?

Foreclosure Cleanup Money: HUD Ponies Up Another $1 Billion to Help Clean Up, Clear Out and Rehab Foreclosed Properties

How Foreclosure Cleanup Companies Are Keeping Neighborhoods Safe

Home Foreclosures News: Squatters Taking Up Residence in Foreclosed Homes

Foreclosure in Texas: A Complete Overview (eg, Right of Redemption, Deficiency Judgments, the Auction Process & More)

Right of Redemption Laws: How to Get Your Home Back – Even After It’s Sold as a Foreclosure

P.S.: Foreclosure Clean Up Job Leads: FYI, don’t forget to bookmark the site and come back for direct leads on foreclosure cleaning jobs, foreclosure cleaning contracts and foreclosure cleanup request for bids on jobs.

P.P.S.: Like this post? Tweet it and follow Foreclosure Business News on Twitter.

About the Author: Brynn is a social media evangelist for her clients, covering all things real estate and personal finance for MortgageSum.com. She’s passionate about using real estate to move toward financial independence, and as both a home owner and renter, brings a unique variety of perspectives to the site. A journalist in her “former life,” Brynn brings her professional training to the industry.

The Short Sale Process: How to Find a Short Sale Buyer for Your “About to Be Foreclosed On” Home

ForeclosureBusinessNews.com: “Foreclosure News the Average Joe Can Use!” Find Trusted Vendors, eg, Foreclosure Lawyers, Mortgage Consultants, Cleaning Co’s, Etc

All this week, we are discussing short sales here on ForeclosureBusinessNews.com. In yesterday’s post, we took an in-depth look at the bank short sales process for sellerss. Today, we’re going to discuss finding a short sales buyer.

You’re Underwater, and/or About to be Foreclosed on and Need to do a Short Sale Quick!

If your home is about to be foreclosed on and you’re underwater (ie, owe more on it than it’s appraised at), one option your lender may offer you is to do a short sale. Once they agree to go this route, it’s then time to put your home on the market so you can find a short sale buyer.

One of the easiest ways to do this is to enlist the help of a short sales specialist.

What is a Short Sales Specialist?

These are realtors who specialize in handling short sale deals. They can help you price your home to sell quickly, and find qualified buyers.

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The Value of a Short Sale Specialist

These professionals are usually plugged in to their communities via professional organizations and real estate networking groups; also, they have a roster of past clients from which they get qualified leads and referrals. Hence, it’s much easier – and quicker – for them to find a short sale buyer than for you to do it.

Furthermore, as discussed in yesterday’s post here, the short sales process is very detailed. And, while a homeowner could ostensibly handle it him/herself, the process can be made so much smoother with an expert in your corner.

Type of Short Sales Specialist to Hire If You’re SELLING Your Home via This Method

You don’t need just any real estate agent, or even just any short sales specialist. If you’re trying to sell your home via the short sale route, you need to hire a short sales listing agent. Remember this term, and following is why.

Almost all realtors are eager for listings, but a short sale listing agent does much more than just enter your home into the MLS (Multiple Listing Service) database and put their sign in your front yard.

A short sale listing agent has specialized knowledge on how to deal with banks; how their processes work; the paperwork needed; the timeframes for getting everything in; how to ensure that paperwork is properly submitted; etc.

If an agent you hire has no experience dealing with “loss mitigation departments” and bank “short sale process negotiators,” it can kill your deal.

How to Find a Short Sales Listing Agent

The normal routes: eg, ask friends and family (especially those in the real estate industry); the internet; open houses; etc.

Finding the “Best” Short Sale Listing Agent Tip: Many real estate professionals blog. One of the best ways to locate a successful agent of this kind is to search for the blogs of those in your area.

One of the reasons successful agents are successful is because they’re good at marketing themselves. One of the ways they do this is staying up on technology – and using it to dispense valuable information on their blog (or video (eg, YouTube), or social media sites (eg, Facebook), etc.

What to Look for in Short Sale Buyers

Now that you know what to look for in a short sales specialist and how to find one, let’s turn our attention to short sales buyers. Note: If you hire the right listing agent, a lot of the following you won’t have to worry about.

Financing: Make sure the buyer has been prequalified and/or pre-approved for a loan (if they need one). Some investors may pay cash, so a loan won’t be a worry.

What’s the Difference between Being Pre-Qualified and Being Pre-Approved for a Home Loan?

FYI, you ideally want short sale buyers who are pre-approved as opposed to pre-qualified. What’s the difference? Primarily that the information has been verified.

If you’ve been pre-qualified for a home loan, you’ve just provided info to the loan officer. When you’ve been pre-approved, the information has been verified. Learn more about the difference between being pre-approved as opposed to being pre-qualified for a home loan.

Knowledgeable: Many home buyers (particularly first-time homebuyers) know very little about the home buying process in normal situations. There are exponentially fewer who understand the short sale process.

So, you want to work with short sale buyers who are knowledgeable about the process; preferably ones who are working with a short sale specialist (eg, realtor who specializes in short sales), or investors who know exactly what the process entails.

Patience: As discussed in yesterday’s post here on short sales, the process can be a hairy, sticky, long one. So, you want buyers who are long on patience. Every lender has their own processes, and some are faster than others.

Reasonable: Some short sale buyers expect to pay pennies on the dollar for your property. And indeed, if comparable values dictate that, then that’s as it should be.

But, serious buyers tend to know what a property is worth (because they’ve done their homework or employed someone who has) and will tender a “reasonable” offer; one that is likely to be accepted by the lender. Reasonable is in quotation marks because practically everything in real estate is negotiable. But, short sale statistics show that generally, short sale properties don’t sell for that steep of a discount.

Note: A RealtyTrac 2010 Foreclosure Sales Report showed that the average discount of a bank-owned (REO) home was 36%. For some, this is a good deal; others want a better deal, as this survey highlighted.

Another area of “reasonableness” you want to look for in a short sale buyer is one who doesn’t ask endless concessions. The lender probably won’t agree too many of them anyway, and you probably can’t afford it (which is why you’re doing a short sale).

Look for a buyer who WANTS a property inspection, that way they know exactly what they’re getting. While again, everything is negotiable, if a buyer is serious, they’ll ingest the facts and either move and not waste your time, or move forward with the deal.

One Chicago short sale expert spelled it out this way when talking about short sale buyer concessions:

I am all for them. If I can sweeten the deal for a buyer, great! There are limits though. 3% is about the maximum you can get. On FHA/VA short sales, HUD has reduced this to 1%, only if the buyer is using a government loan to finance the purchase. Whenever I get a contract that has a seller concession, I immediately call the buyer’s agent and ask if the buyers need the seller concession to close. If the answer is yes, immediately reject the contract because while we can ask for a seller concession, we cannot guarantee one.

FYI, There’s tons of other great info in this post as well.

Here’s hoping the info here helps you to find a short sale buyer, short sales specialist and other particulars you need to sell your home – so you can get on with your life.

P.S.: Foreclosure Clean Up Job Leads: FYI, don’t forget to bookmark the site and come back for direct leads on foreclosure cleaning jobs, foreclosure cleaning contracts and foreclosure cleanup request for bids on jobs.

P.P.S.: Bank Failures Can Mean Big Business for Foreclosure Cleaning Businesses! Learn which banks closed have closed recently. Then, learn how to use bank failures to grow your foreclosure cleaning business.

Like this post? Follow Foreclosure Business News on Twitter.

Copyright © 2011 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

What Is the Bank Short Sale Process for Sellers?

ForeclosureBusinessNews.com: “Foreclosure News the Average Joe Can Use!” Find Trusted Vendors, eg, Foreclosure Lawyers, Mortgage Consultants, Cleaning Co’s, Etc.

All this week, we will be discussing short sales here on ForeclosureBusinessNews.com. In yesterday’s post, we gave the definition of a short sale, in addition to info on why lenders do short sales, the credit implications for homeowners who go this route and even some tax implications of selling hour home via the short sales process.

Now that you have some foundational information on it, today we’re going to discuss the bank shorts sales process for sellers.

Short Sale Process for Sellers vs. the Short Sales Process for Buyers

Most of the info you’ll read on short sales discuss it from a buyer’s perspective. But, since his blog is primarily about dispensing information to help homeowners avoid/get through foreclosure (as opposed to investors), we’re going to talk about the short sales process from the seller’s perspective.

So, let’s get to it.

The Bank Short Sale Process

The first thing you should know about doing a bank short sale is that the process varies from lender to lender. With this in mind, following are the necessary steps to complete the short sale process if you’re a seller.

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Step I. Offer is submitted to lender, along with a completed short sale package from the seller.  

What is a short sales package? What’s in the short sale package?

A short sales package is simple a packet of documentation that is needed to start the short sales process. This package should be completed by the potential buyer, as well as the seller. Documents included in the package can include, but are not limited to:

Anything that can verify income: eg, pay stubs, bank statements (usually 2 months), investment statements, disability statements, child support statements, alimony statements, tax records (usually 2 years), W2s, 1099s, etc.

Realtor info: eg, a listing agent agreement.

Legal disclosure forms: eg, an authority to release information to necessary parties

Hardship Letter (from Seller): See sample short sale hardship letter for what to say, correct format, how to mail it off to your lender and more.

A Cover Letter: This is provided by the investor/buyer (not the seller), and basically tells the lender who they are as an investor, that they’re requesting a short sale and why it would be in the lender’s best interest to proceed with the short sale.

Documents that Support Your Hardship: Eg, medical records proving your disability, unemployment benefits because you lost your job, bankruptcy filing, creditor suits, HOA and other liens, etc.

Property Records: Any repairs necessary on the property, sales comps (eg, what surrounding properties have sold for recently), mortgage holder info (for all mortgages), HELOC loans, title reports, etc.

Note: If you have a VA or FHA loan, they may have their own stipulations of what they want you to provide in the way of records.

This list is by no means exhaustive. If you use a short sale specialist (eg, a realtor who specializes in handling these types of deals), they’ll be able to guide you as to what paperwork is needed each step of the way.

Step II. Lender Acknowledges Receipt of Your Short Sale Packet

This can be as little as a week or two, on up to one or two months. In the current real estate market, it’s taking many lenders much longer to even getting around to acknowledge receipt. That’s why sending the packet certified mail with a return receipt requested is the best way to go.

If you haven’t heard anything after a couple of weeks, start calling until you can verify that they have indeed received the package.

Step III. Lender Orders Appraisal

Since you’re doing a short sale, the lender will want to know the current value of the property in order to assess whether the offer you as a seller have on the table is a good one.

In a normal market, this would take one or two months. In this market, homeowners have waited 6 months or longer.

Yeah, it’s a crazy time folks.

Step IV. Short Sale Offer is Reviewed

Again, in a normal real estate market, this would only 30 to 60 days. Nowadays, months, or even a year or longer is not unheard of.

Step V. Short Sales Process Negotiator Is Assigned by Lender

After offer is reviewed, his can take anywhere from a month or two; but in this foreclosure-ridden market -– and I hate to sound like a broken record – it could be longer.

There can be a lot of back and forth in a bank short sales process because, obviously, the bank wants to get as much for the property as they can. And, this is a reason many short sale deals don’t close.

How Many Short Sales Actually Close?

Many buyers go in thinking they’re going to get a steal, eg, pay 50% or more less for a property than it’s worth. The truth is though, most short sales sell for about a 20% discount.

Find out more what happens during the negotiation phase of the short sales process in the post, How many of your short sales are closing? on the popular real estate site Trulia. It’s a trip what happens – on the buyer as well as the seller side. 

FYI, estimates of closing rates for short sales in this posting range from 25% to 100%, so it varies a lot.

Step VI. Short Sale is Approved or Rejected

At this point, you either rejoice because you’re finally free, or you cry because it didn’t go through and it means more of a headache (or you cry because you REALLY have lost your home).

So there you go, the bank short sale process from beginning to end.

The Stress of the Bank Short Sale Process for Sellers in Today’s Market

As the linked-to Trulia.com post above highlights, the short sale process can be draining. And today’s market makes it so much worse.

Many sellers facing foreclosure are stuck because the process moves so slow. And, some lenders can be unreasonable in how much they’ll accept for a property. When this is compounded by things like lenders/agents not returning calls, potential buyers moving on to other deals because they can’t get an answer about if/when their offer is accepted, it can be emotionally draining .

Just keep all of this in mind going in and hope for the best.

Short Sale Specialists: A Homeowner’s Best Friend During This Process

One of the pieces of advice that kept popping up over and over again in researching this article on the bank short sale process is to get a knowledgeable realtor, one who specializes in short sales to help you if you decide to go this route. And, when you discover what’s involved, it’s easy to see why they can be worth their weight in gold.

Related Posts

2 Foreclosure Options for Homeowners with Little or No Equity in Their Homes

Buying a Foreclosure? Here’s the Difference between a Regular Foreclosure and an REO Foreclosure

Stop Foreclosure: How to Ready Your Home for a Fast (Short) Sale

Foreclosed Properties Continue to Drag Down Construction of New Homes: What It Means for the Average Joe

P.S.: Foreclosure Clean Up Job Leads: FYI, don’t forget to bookmark the site and come back for direct leads on foreclosure cleaning jobs, foreclosure cleaning contracts and foreclosure cleanup request for bids on jobs.

P.P.S.: Bank Failures Can Mean Big Business for Foreclosure Cleaning Businesses! Learn which banks closed have closed recently. Then, learn how to use bank failures to grow your foreclosure cleaning business.

Like this post? Follow Foreclosure Business News on Twitter.

Copyright © 2011 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

Short Sale: Definition, Credit Implications, Tax Implications & More

ForeclosureBusinessNews.com: “Foreclosure News the Average Joe Can Use!” Find Trusted Vendors, eg, Foreclosure Lawyers, Mortgage Consultants, Cleaning Co’s, Etc.

All this week, we will be discussing short sales here on ForeclosureBusinessNews.com.

Today, so we’re all on the same page, we’re just going to link to an article that gives a detailed definition of a short sale, as well as some insight into why lenders agree to short sales, the credit implications of doing a short sale, and more info.

Find out the definition of a short sale and all of the info just above.

Following is what’s coming up the rest of the week.

Wednesday: What is the Short Sale Process?

Thursday: How to Find a Short Sale Buyer for “About to Be Foreclosed On” Home

Friday: Short Sale Tax: (What Sellers Need to Know) 

Foreclosure Clean Up Job Leads & More

FYI, don’t forget to bookmark the site and come back for direct leads on foreclosure cleaning jobs, foreclosure cleaning contracts and foreclosure cleanup request for bids on jobs.

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Related Posts

2 Foreclosure Options for Homeowners with Little or No Equity in Their Homes

Buying a Foreclosure? Here’s the Difference between a Regular Foreclosure and an REO Foreclosure

Stop Foreclosure: How to Ready Your Home for a Fast (Short) Sale

Foreclosed Properties Continue to Drag Down Construction of New Homes: What It Means for the Average Joe

P.S.: Bank Failures Can Mean Big Business for Foreclosure Cleaning Businesses! Learn which banks closed have closed recently. Then, learn how to use bank failures to grow your foreclosure cleaning business.

P.P.S.: Like this post? Follow Foreclosure Business News on Twitter.

Copyright © 2011 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author

Home Loan Help: What is the Difference Between Being Pre-Qualified and Pre-Approved?

ForeclosureBusinessNews.com: “Foreclosure News the Average Joe Can Use!” Find Trusted Vendors, eg, Foreclosure Lawyers, Mortgage Consultants, Cleaning Co’s, Etc.

Home Loan Help: What Does It Mean to Be Pre-Qualified?

Pre-qualified just means that there has been some form of communication with a loan officer regarding your job, income, and types of car payments, etc. In addition, pre-qualified status applies if your new house payment falls below a specific percentage of gross income and total debts (e.g. car, student loans, house, etc.) also happen to fall below a percentage of gross monthly income.

In the past, loan companies would then issue you a letter stating your status as being pre-qualified, meaning that you can afford your house payments. This is helpful when you want to figure out if a lender thinks you can afford a certain amount of debt.

When you’re in the process of buying a house, though, being pre-approved matters more.

Home Loan Help: What Does It Mean to Be Pre-Approved?

Pre-approved means that the information that you have supplied has been verified. When you have a credit report run, it checks whether or not your credit is able to meet the expectations/demands of a particular loan.

The income you told to the loan officer will be verified by a third party. This is done by reviewing paycheck stubs or a fairly recent W-2. In addition, the process of verifying your down payment and funds used for closing cost are reviewed by investment and/or bank statements that show whether or not the required funds are available for use.

Basically, a pre-approved status is a verified pre-qualification. The actual pre-approval process checks to see that you are able and willing to repay a mortgage, so that verifying income and assets for closing on a house, in addition to reviewing your credit report, are the processes you will undergo. Essentially, this is a “verify first, approve last” process.

For more information about related topics, visit http://www.bankapedia.com/.

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