subject: Foreclosure Secrets You Need To Know [print this page] Too many people know too little about the foreclosure market. Most people out there that are selling their 'secrets to success' only use one or two methods for buying foreclosures and tell people that there is no other way to go about it. The reality of the situation is that there is much more to know about foreclosures and many ways to invest in them as long as you're willing to take the time to learn. Considering that the foreclosure market has tripled in recent years, according to experts, it's going to be easier than ever to find deals and make big profits when you get into the foreclosure market.
You can work with sellers, if you want, but you don't have to. This is important, because not a lot of people realize that they can go directly through the finance company once the loan is in default. Plus, you can buy properties at auction or after auction when they become REO (real estate owned or bank owned) properties. How can you buy foreclosures? Here are some ideas:
-Short sales, whether you work with the seller or not. Don't buy homes with high mortgages and little equity. These ones are usually the hardest to discount, hardest to get rid of and stifle your profits. Most experts actually believe in buying the no equity properties for more than they're worth and trying to work something out, but it's not the best option.
-Loan modification, or taking over someone's loan. When you do a modification, the payments are made current by adding them to the loan, and you pay no money out of pocket.
-Buying the second mortgage for a discount and profiting when the property sells or is refinanced. When you buy a second mortgage, worth say $25,000, the owner now owes YOU that money, not the bank. If you only paid $5,000, that's a $20,000 profit.
-Auctions, where you will be required to have cash up front. However, you can often get better deals because this is the last stop before the bank is stuck with the property.
-REO or real estate owned. This is buying direct from the bank or lender after the auction has proven unsuccessful. Many homes in this category sell for 40 to 60 percent less than their value.
When you're ready to get involved in foreclosures, your first step will be to get a foreclosure list, which is FREE if you get it from your county records department or public library. Study the list, see what's out there, and start shopping for your first deal.
