Foreclosure Resources

Understanding and Navigating Your Way Through the Foreclosures Process
By Rick Sharga, RealtyTrac Vice President of Marketing

Foreclosure properties can be a terrific investment, or give home buyers a much more affordable option than traditional properties in this time of escalating prices. But, before you jump in assuming this is "real-estate for dummies" or the next get-rich-quick scheme, think again! You really need to know your stuff when it comes to navigating your way through the process and making sure you’re getting the most bang for your buck.

"For people willing to do some homework, the foreclosure market offers some of the best opportunities in real estate today," explains James J. Saccacio, chief executive officer at RealtyTrac, the leading online foreclosure marketplace.

Web-based services like RealtyTrac can help investors and homebuyers tap into this previously hidden market by providing access to foreclosure and pre-foreclosure information typically available only to professional real estate brokers and investors. Today, homebuyers can use these services to identify and research potential home purchases, as well as to find the tools and professional resources they need to help them close the deal.

When offering advice to buyers interested in taking advantage of the foreclosures market, Saccacio stresses the importance of educating oneself about the types of properties and the processes involved. Even seasoned real estate investors have something to learn when it comes to approaching this market. It’s important to go in with the appropriate knowledge.

Types of Properties Available at Various Stages of the Process
Serious buyers must first understand the difference between the varying types of foreclosure properties. It’s important to review the basic types of properties, each representing a different stage in the foreclosure process.

Pre-foreclosure Properties
A property enters pre-foreclosure after a default notice is filed by the foreclosing lender against the borrower who owns the property. The different notices that are filed during pre-foreclosure include Notice of Default (NOD), Lis Pendens (LIS), Notice of Trustee Sale (NTS) and Notice of Foreclosure Sale (NFS). For most consumers, buying a pre-foreclosure property from a private homeowner is the most favorable of options. This is a best-case scenario because the seller is able to get out from under a mortgage without destroying his or her credit rating, the lender is saved the time and expense of foreclosing on the property, and the buyer gets a below-market price on a home. In addition, buying at this stage of the process allows you, the buyer, a chance to fully evaluate the property before making an offer.

The disadvantages associated with purchasing a property during the pre-foreclosure stage are few, but worth mentioning. As with any major purchase, negotiations between the buyer and seller can be difficult, especially since the seller would typically prefer not to have to sell the property in the first place. Secondly, transactions are time-sensitive, since there is pressure to complete a sale before the property goes to auction.

Auction Sales
Foreclosure auction sales are typically the domain of the professional investor. These properties are formally in default, and sold to the highest bidder at an auction. Buyers are required to be physically present at the auction and must be prepared to pay 100 percent of the sale price in cash on the spot.

Though foreclosure auctions can offer significant savings as well as immediate property ownership, they are not for the faint of heart or the uninformed! Unless the buyer is already familiar with a particular property, there is usually little time to examine it. And, the buyer will be competing against professional investors—and sometimes even the lender—at the auction.

Real-Estate-Owned Properties
Once the lender officially reclaims a home, it is classified as Real Estate Owned by the lender (REO). While REO properties typically offer more time for evaluation and a more standard bank-managed transaction, their prices are usually very close to full retail market value. Therefore, they offer buyers the lowest potential savings.

It’s definitely possible to find great deals in the foreclosures market. You just need to know where to look and be able to differentiate exactly what you’re looking at. With an understanding of the pros and cons of buying at each stage of the process, you’ll be well on your way to a successful purchase you can be proud of.

Search Foreclosures FREE For 7-Days!

Free access for 7 days, try it out! No strings, no contracts, no hassles and you can cancel at any time. Hurry! Foreclosures sell fast. Visit RealtyTrac.com. With virtually every Bank, Government and Institutional property you’ll find your next home waiting for you


Become a member of RealtyTrac today and get exclusive access to all the information and resources you need to buy or sell your home or investment property.

  • The largest database of foreclosure properties in the U.S.
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View the full list of member benefits below and see why we’re #1. Join RealtyTrac today and start taking advantage of all that membership has to offer.

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Search Foreclosures FREE For 7-Days!

Free access for 7 days, try it out! No strings, no contracts, no hassles and you can cancel at any time. Hurry! Foreclosures sell fast. Visit RealtyTrac.com. With virtually every Bank, Government and Institutional property you’ll find your next home waiting for you



RealtyTrac, Inc., the leading online marketplace for foreclosure properties, provides all the resources that home seekers, investors and realtors need to locate, evaluate and buy properties at below market value. Founded in 1996, RealtyTrac sets a new standard for online real estate services by offering the largest database of pre-foreclosure and foreclosure properties, with more than 650,000 properties across the country, comprehensive property data, productivity tools and extensive professional resources. RealtyTrac hosts close to 2 million unique visitors monthly, and is the exclusive foreclosure data provider to AOL, Home Gain, MSN House and Home, The Wall Street Journal Real Estate Journal and Yahoo! Real Estate.



Buying a Foreclosure Property Below Market Value: Five Tips from the Pros


House hunting can be a very daunting experience, especially in today’s real estate market. Both investors and home buyers have been priced out of the market by escalating costs, and good real estate deals are increasingly difficult to find.



But there are bargains out there, for people who know where to look.




“For people willing to do some homework, the foreclosure market offers some of the best opportunities in real estate today,” explains James J. Saccacio, chief executive officer at RealtyTrac, the leading online foreclosure marketplace.



Web-based services such as RealtyTrac give consumers access to foreclosure and pre-foreclosure information that was previously available only to professional real estate brokers and investors. Today, homebuyers can use these services to assist them identify and research potential home purchases, as well as the tools and professional resources they need to help them close the deal.




With interest rates ticking up and ARMs adjusting upward, experts predict an increase in the number of foreclosure properties on the market. RealtyTrac, which provides all the foreclosure data for both MSN House and Home and Yahoo! Real Estate, has already compiled a list of over 550,000 foreclosure properties across the country.




“Foreclosure properties can be a terrific investment, or give home buyers a much more affordable option than traditional properties,” notes Saccacio. “But they’re not a way to get rich quick, and a foreclosure purchase needs to be approached in an educated, intelligent manner.”




Saccacio offers five tips to help you close a deal on a foreclosure property:




1. Learn about the different types of foreclosure properties, and the foreclosure process.



There are three basic types of foreclosure properties, representing different stages in the foreclosure process: notice-of-default (NOD) and notice of trustee sale (NTS), which are both pre-foreclosure properties; and real-estate-owned (REO), a foreclosure property which has been re-purchased by the bank.




For most consumers, buying a pre-foreclosure property from a private homeowner is the best option. It’s important that both the buyer and the seller see the situation as a win-win situation, in order to ensure a smooth process. In this case, the seller is able to get out from under a mortgage without destroying their credit rating, the lender is saved the time and expense of foreclosing on the property, and the buyer gets a below-market price on a home.



Foreclosure auction sales are typically the domain of the professional investor. These properties are formally in default, and sold to the highest bidder at an auction. Buyers are required to be physically present at the auction, and must pay 100% of the sale price in cash, on the spot. Though foreclosure auctions can offer significant savings, they are not for the feint of heart or the uninformed. Unless the buyer is already familiar with a particular property, there is usually little time to examine it. And the buyer will be competing against professional investors—and sometimes even the lender—at the auction.



Once the lender officially reclaims a home, it becomes a real-estate-owned property (REO). While REO properties typically offer more time for evaluation and a more standard bank-managed transaction, their prices are usually very close to full retail market value.




CHART: Stages of the foreclosure process
Stage
Positive
Negative

Pre-foreclosure:

Notice-of-Default,

Notice-of-Trustee Sale
– Highest potential savings

– Potential win/win scenario benefits all parties

– Chance to evaluate property
– Buyer / Seller negotiations can be difficult

– Time pressure to complete transaction before auction

Foreclosure:

Auction sale
– High potential savings

– Immediate property ownership
– 100% of the sale price required in cash

– No time to evaluate property

– Competing with professionals

Foreclosure:

Real Estate Owned (REO)
– Affords significant time to evaluate property

– Traditional bank financing

– Lender often rehabs property
– Lowest potential savings





2. Secure financing early



It’s important for a buyer to be pre-qualified before engaging in discussions with a seller. This ensures that the buyer is in a financial position to purchase the property, and is in the strongest possible position to negotiate. It’s best to work with a lender who understands the foreclosure process, and can guide the buyer through certain steps, such as ensuring that a property is FHA-compliant. Another reason to consider pre-qualification is that not all lenders finance foreclosure properties. Having approved financing in-hand makes negotiations with both the seller and the lender easier, and may even make it possible for the buyer to simply cure the default and take over the existing loan to reduce loan processing fees.



3. Engage a real estate agent as a “buyer’s representative”




Most people hire a real estate agent to sell their home. These “seller’s representatives” are charged with making the sale and negotiating the best deal for their clients. “Buyer’s representatives” have the home buyer’s interests at heart, and are charged with finding the right property and negotiating the best price for their clients. Picking the right real estate agent will make a buyer’s life much easier. There are agents who specialize in the foreclosure market, with specific experience in REO properties. Look for an agent with foreclosure transaction experience, as well as knowledge of local, regional and state laws. But it’s also important to consider the agent’s knowledge of the area; their ability to close a deal; and their access to other professionals (attorneys, lenders, mortgage and title professionals) to ensure that the buyer is in good hands.



4. Do your homework



Stocks offer higher potential returns for investors than traditional savings programs, but are also riskier. Similarly, purchasing foreclosure properties is somewhat more risky than buying traditional real estate properties, but offer much higher potential savings. With the right examination and due diligence, buyers can significantly reduce the risks. It makes sense to give any property under consideration a thorough examination. Here are eight steps for doing a professional-level exam.
CHART: Examination process steps




· Identify desirable neighborhoods – Identify specific neighborhoods where you’d like to live or own a home. This will limit your search to a manageable size for you and your real estate agent, and give your a sense of relative property values.



· Cast a wide net – There are a number of Web-based services that can put hundreds of thousands of foreclosure properties at your fingertips. Since the best savings are often found in pre-foreclosure properties, it’s important to check the percentage of pre-foreclosure (vs. REO) properties in any database before subscribing.



· Determine the property value –Look at the original purchase price, and recent comparable property sales to determine the current value of the property.



· Find out the amount in default and the remaining loan balance – In order to determine a reasonable offer price, you’ll need to know—at a minimum—how much money it will take just to satisfy the debt to the lender.

· Run a legal investing report – Before purchasing any foreclosure property, make sure it is free and clear of any bankruptcies, tax liens or other financial liabilities.

· Assess the condition of the property– If at all possible, visit the property, ask your realtor’s opinion, and review pest and structural reports to make sure that the property is in acceptable condition, or to determine how much of a rehab budget you’ll need to build in to your deal.

· Build a positive relationship with the seller – Before purchasing the property, try to make sure that you’re entering into a win-win situation with the seller, so that they’ll do what they can to make the process easier and leave the property in good condition

· Leverage your timing – Knowing when a property is going to be auctioned gives you an extra bargaining chip when negotiating with the seller or the lender.

5. Make a realistic offer

Despite what you may see on late-night cable TV, investing in foreclosure properties isn’t a sure fire “get rich quick” formula. Lenders aren’t likely to give properties away, particularly in a real estate market where prices continue to rise. And homeowners in financial distress may be difficult to deal with, particularly early in the foreclosure process. The keys to a successful foreclosure property purchase are diligence and patience.
As a rule of thumb, the best savings can be made at the pre-foreclosure stage, where home owners can avoid a foreclosure and lenders can save the time and cost involved in going through the process.

Another critical point in the process is immediately prior to the auction date, when all parties might be most open to a last-minute solution. It’s not unusual to save from 10-30% of the market value on a foreclosure property, and certain properties offer savings of 50% or even more. An educated buyer—one who knows how much is owed on the property and what its market value is—can usually come up with a realistic offer; one that offers significant savings, while meeting the requirements of the lender.

Now go out and familiarize yourself with the resources and tools available to take advantage of the opportunities offered by this formerly-hidden real estate market. With the experts pointing toward significant growth in available foreclosure properties, there’s never been a better time to line up your resources and get informed.




Before You Buy a Foreclosure Property, Do Your Homework!
Online tools allow you to evaluate potential purchases from the comfort of your home
By Rick Sharga, Vice President of Marketing for RealtyTrac

There are two words that give pause to the most motivated real estate buyer or investor, especially during the busy holiday season: property research.

In the past, property research equated to extensive legwork — often involving a trek down to the local recorder’s office — and expense that was spent evaluating a property’s market value and all the debt encumbering the property. But now a few clicks of the mouse on RealtyTrac will get you that same information for properties nationwide:

  • Comparable Sales: provides up to 15 recently sold properties in the neighborhood so you can pinpoint the property’s true market value.
  • Lien & Loan History: provides a list of all liens and loans (mortgages and trust deeds) against the property so you can calculate the total debt encumbering the property.

These reports are available for hundreds of thousands of properties found on RealtyTrac, the nation’s most comprehensive and convenient online marketplace for homebuyers, investors and real estate professionals, with more than 550,000 properties updated daily. You can also order individual property reports for any property nationwide.

Thorough research has always been crucial to determining a property’s investment potential. But the tools and resources needed to do that research are much more accessible now than ever before.

“When buying a property, the right examination and due diligence on the part of buyers can significantly improve their ability to make a strong investment,” explains James J. Saccacio, chief executive officer at RealtyTrac, which also maintains the nation’s largest database of pre-foreclosure, auction and bank-owned properties.  

RealtyTrac can help investors and homebuyers tap into the previously hidden foreclosure market by providing access to property data formerly available only to professional real estate brokers and investors. Today, homebuyers can use these services to identify and research potential home purchases, as well as to find the tools and professional resources they need to help them close the deal.

It makes sense to give any property under consideration — foreclosure or otherwise —an in-depth examination. First, check the Lien & Loan History for all debts secured by the property. Subtract the total amount owed from the estimated market value, based on the Comparable Sales, to determine the potential bargain. After making contact with the owner or real estate agent, arrange a walk-through of the property to evaluate its condition. Factor estimated repair costs into your purchase offer. Before you close the deal, hire a professional home inspector to inspect the property and enlist a title company to run a final title check.

If you purchase a property at a public foreclosure auction, you won’t have a chance to inspect a property before buying, which makes this type of purchase more risky. But if you’ve researched the title and determined the amount owed is far less than the market value, you’ll have some margin to cover unexpected repair costs. Before you go to the auction, set a maximum bid based on your research and stick to that bid at the auction.

Although you’ll be able to inspect the property if it’s bank-owned, the bank typically knows little about the property and will sell it in “as is” condition. This means the bank will disclose all the needed repairs it knows about, but is not held responsible after the sale for any repairs it did not know about. Factor the known repairs into your purchase offer and have a professional inspection conducted before closing the deal. You should also have a title company run a final title check before closing, although most banks will make sure the title is clear before selling.

No matter what type of property you’re planning to buy, good property research will help you recognize which properties represent smart investments and which do not. And that research is now much more convenient thanks to the extensive property research tools available online through RealtyTrac. Remember, a little preparation before the sale can help you reap huge benefits. So, it’s worth your time and energy to do a little homework!




Foreclosures • Government Owned Homes
 
 
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