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Lead the pack when hunting
foreclosures
Dear Steve:
Where is the best place to locate bank foreclosures or repossessions
and fixer-uppers? What can I do to put myself one step ahead of the
next person? It seems I'm always just a little bit late.
-- Day-Late Mary
Dear Day-Late:
First, you need to understand these opportunities come in many forms
and that there's no one central data bank for them.
Those fixer-upper pros that are beating you to the
punch simply have more experience in the game. While you can't manufacture
that, you can create your own comprehensive search process and start
establishing some relationships that can help land you on a more
level footing.
As you probably know, foreclosures and sale locations
are published in the local newspaper under "Legal Notices"
and on some Web sites, and the same postings are also placed on
the properties themselves. But awareness of this opportunity has
grown and competition for the best below-market foreclosure deals
is pretty darn stiff, as you've noted, especially in this hot real
estate climate.
There are other options, however. Auction properties,
which are usually available because the owner couldn't settle unpaid
bills or sell the place before the announced auction date, are another
avenue. High bidders win here. Subscriptions to online databases
or lists featuring auction locales are available. Check the papers,
but also do a thorough Web search for auction properties in your
geographic areas of interest. A busy foreclosure attorney, who controls
auction properties for one or several lenders, will often have a
list of these. (Look in the yellow pages for bankruptcy attorneys
and real estate attorneys and start calling.) Also, call larger
banks and ask for the names of attorneys they use.
Or you might try the REO property route. An REO home
has gone back to the lender, usually because it was not sold at
auction. A bank's special-asset manager is usually not a real estate
specialist and just wants to get these things off the books, so
your chance for a bargain here may be better. However, such managers
can be tough to reach, and when you do reach them, they'll probably
direct you to a real estate agent who specializes in disposing of
REOs for them or possibly an outsourcing firm they are using for
REO-inventory clearance. Contact that real estate agent or firm
and ask to be put on its mailing or e-mail list for all new REO
properties. You might also contact the last real estate agent that
you used (assuming it was recently) and ask for the REO contact
in her organization.
Then there are pre-foreclosures, which involve highly
motivated sellers attempting to exit their homes before the worst
happens. Pre-foreclosures are pretty tough to find. You almost have
to know someone in financial trouble or have other inside information
to get these. Some high-volume foreclosure attorneys may have a
few of these on the hook.
Not to be overlooked is the government pipeline, including
HUD, Fannie Mae and VA properties. These homes are usually listed
on their respective Web sites (check for updates frequently), and/or
in the paper, on the local Multiple Listing Service, or with property-management
companies. By government mandate, you are required to use a real
estate agent to buy these, unlike the others. Both HUD and VA use
a similar bidding process. But on a Fannie Mae property, you can
make an offer and the organization can accept it, reject it or make
a counter offer. At least you have some bargaining latitude here.
In any case, be ready to do some rehabbing. Unless
you're handy, the repairs can eat away at your profits by the time
the place is ready for resale or renting. Note that the opportunities
may increase the farther out you are willing to venture from your
metro area, Mary.
Think PAD -- for persistence, aggression, diligence
-- and pretty soon you'll be padding your bank account. Good luck.
-- Posted: May 8, 2004
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