CRR Blog

Short Sales to the Rescue!!!

Recent articles are showing that the current market values are about 15% below the top of the market that was reached just before the foreclosure crisis set in and the economy slipped some six years ago.  Another recent article has confirmed that in California a lender cannot collect on the unpaid balance of a purchase loan after the completion of a short sale.  These two facts together mean that you can be making short sale offers and helping borrowers who are slightly underwater to get out from under their purchase loans.  But there is more.  They should be moving on NOW.




Interest rates are not going to stay low.  And if these people have adjustable rate loans they will be in trouble soon.  The market has been good to them, in that they really have a very small amount of money to write off to make a short sale work today.    Now is the time for them to transition to something they can afford while the getting is good.  So get out there and let them know that they should act immediately and breathe easier tomorrow. 

Upside Down is Just Right at the Trustee's Sales

How many people shy away from the Foreclosure Auctions because the properties seem to be under water or "upside down"?  Lots.  But this is only a temporary condition for these properties.  Lenders don't want to pay more than a property is worth, and neither should you.  Take advantage of the fact that the lenders are willing to discount properties to below market price for their own benefit, but they have to let you bid at the auction too.  So when they drop the price, be there. 


Here are a couple of tomorrow's deals: 


3BR/2BA pretty pool home on triple lot on Raymer St in Northridge.  Est Value: $482,247 Opens at $370,000  The bank is owed much more, but will pay less than market if they can.  So can you.


3BR/2BA corner home on Naoma Ln in Cerritos opens at $380,000 Est Value: $500,596 Another discount brought to you by the foreclosure trustee.  You can't take advantage of these discounts unless you take them seriously and have bids prepared.  Nothing is upside down forever....


 

Housing Prices up 25% in inland SoCal....

If you have been investing this year, it should come as no surprise to you that the median range price for houses has gone up a whopping 25% year over year as reported by DataQuick.  That means if you got a good deal a year ago, it has become a great deal over time.  This feels like things are getting back to normal, with housing prices approaching 2007 levels.  This is a perfect time to make offers to homeowners and to bid at auction.  




Your investments from before are paying off, but there are still many opportunities to come.  Watch as those who did not plan ahead find themselves unable to make payments on properties that are no longer upside-down.  They will be selling or going into default.  It is up to you to make contact and aquire that property one way or another.  Just think how good you will feel when it goes up another 25%.

What if people in foreclosure were running out of options?

It looks like that is what is happening.  Lenders like Wells Fargo are trimming their workforce in the departments that handle home loan refinancing, due to a drop-off in applications.  With the interest rate bottom past us and the prospect of a rate surge on the horizon, that spells bad fortune for folks who were not able to restructure their loans while the getting was good.  Those that have tried to get modifications and failed are likely to wind up saying goodbye to their properties at the courthouse steps.  Those that have gotten modifications but remain on adjustable plans are still left struggling in an economy that is not getting better any time soon, and they won't get another chance to hit the restart button.  If interest rates do go up they will be in default not long after.  Many already are, and rates are still lower than they should be.




It is not surprizing that the good old bankruptcy method of extending the foreclosure process is back in vogue.  These days it is likely to buy borrowers time as the courts are overwhelmed and the large lenders are more than willing to let the foreclosure drag out.  In California, the lender is likely to cancel the auction, and wait to republish the foreclosure sale notice after the bankruptcy case has been settled.  The lender is like the HOUSE in Las Vegas.  If they just wait, they know that eventually everybody plays and they usually win.  Eventually the bankruptcy card falls out of the deck.




The key for us as investors is in knowing that the lenders are playing this game to win, and that we have the opportunity to play strategically and be winners as well.  No matter what the media tells you, the foreclosures are a long ways from over.  You can't see what they don't want you to see, and that is the inventory that is not on the MLS or being actively foreclosed upon.  This is the potential inventory that will become visible only when the decision is made to lift the veil.  It will be done carefully to protect market prices, but it will defintely increase the number of properties at auction and we will see lower opening bids again.  

Souring Dow got You Down?

If you are watching the market lately, then you know that the Dow has been heading south.  You also know that the Bears are not just talking about stocks.  Bonds are not looking so great either, now that we are staring into potentially rising interest rates for a long time to come.  So where does that leave us?   Property.


If you like multi-unit rental property you can create a secure future by investing in 4-Plexes and similar properties right now.  You can pull your cash out of less stable vehicles and build yourself a rental unit portfolio to carry you through the next few years without worrying about a big drop in income.  You can flip too, as many of our clients do, and grow your capital base as you aquire and sell houses.  Call and  ask Kurt about his investments in multi-unit properties for monthly cash flow.  It has been his model for over 30 years. 


While some folks have become rich quickly, only to wind up broke again with the next market drop, Kurt has taught investors how to build a portfolio with the strength to hold up in good times and bad.  We are here each week day to answer questions and help you develop your plan for success based upon proven methods.  You will be glad you asked questions when you get the answers you are looking for.

examples

Here are two examples of low opening bids at auction you can take advantage of:  A Cerritos Home valued at $566,232 opens at $250,177 A Marina Del Rey Condo valued at $1,087,624 opens at $719,915.


You will find these discounts each and every day if you look for them....

The equity is coming... the equity is coming....

Today I was speaking with a subscriber and he asked me what to do if you see a property going to foreclosure sale at a price that is much less than the value of the property.  He had an example and a house in a nice area was going to open at half its value.  Of course, there is the potential for the bidding to go up from there at the auction. Your first step is to go by the house and see if they are willing to look at an offer BEFORE the auction.  If they are interested, be ready to hand them an offer immediately.  If the sale price at auction will obviously be less than the value of the home, it is best for the borrower and the lenders involved to consider a traditional sale, whether it is a short sale or not.  


I then ran a report on our website and there were a a good number of properties in similar circumstances scheduled for sale in the next week.  Each of these properties were not "Under Water".  You will recalll that we reached a point not too long ago where the challenge was finding any propety where the loans were not greater than the value of the property.  Increases in market value have had a distinct effect on the equity position of these properties.  As a result I see properties EVERY WEEK that are worth making an offer on that is NOT a short sale.  That means Equity for You.


The lesson to learn from this is that you can be making offers or get ready and buy at auction.  You have opportunities because the properties are now close to where they were in terms of value years ago.  The Clock has been turned back and there is the equity there to make these deals possible.  Do your research, and get out there and make some money.  You have nothing to fear but a lack of motivation.

What is their Secret?

Most people who begin looking into foreclosure properties for investment for the first time are like kids in a candy shop.  They look from one property to another, and they are fascinated but also at a loss as to what to do next.  Just like kids going from the gum drops to the jelly beans, and to the jaw breakers and back again.  What do I want? What do I want?


The question that we are always asked by these new subscribers is... How do I find a great deal?  Of course they are all aglow with the newness of the idea, and they are not yet accustomed to deciding between the options they have.  That is because there are so many options to choose from.  There are the different ways to buy a property, and it is not always clear which way you should choose to buy a given property.  That is a learn-by-doing lesson that you will pick up with practice.  Which property to go after?  Well that is a matter of research, using the data we provide.


I was looking for properties going to auction tomorrow and I saw a 2 Bed/2Bath house in a neighborhood I was familiar with in Paramount, California.  I opened the profile and looked at the birds-eye picture and there was new construction on the property that I remembered seeing sometime back.  The owner had upgraded the original house and added rental units onto an extra large lot and the property is now a multi-unit income creator with fresh buildings.  Now if you look at the property description it has not caught up with the actual facts.  So now if the property goes to sale and the lender drops the bid, what a great opportunity and a great win for someone who might pay for one house and get three in the bargain.  So...  You look at what is going to sale and you identify the under-valued properties.  It is like being that kid in the candy store, and spotting a bag of licorice that has been marked down and is now a fantastic deal.  Suddenly the other options fade into the background in favor of the great deal.  That is how folks that have been doing this zero in on the bargain they want to grab up.  Once they know it is under-valued, they focus on that and are ready to get it any way they can.

A Jump in Defaults is a Sign of the Times

The prevailing belief amongst those who don't know and don't want to know is thatthe recent increase in defaults is some sort of glitch in an otherwise consistent recovery.  Nothing could be more wrong.  The slowdown in foreclosures caused by government intervention was the glitch.  Watch the numbers grow as the real economy breaks through the charade and we really see the next wave start to form up over our heads.  When that happens, be ready to dive in and come up with your arms full of treasure.  Because there will be a fresh market for foreclosures and if you are ready you will do well. 

Think Outside the Box...

I was reading a recent article from July 10, 2013 that indicated a large number of senior homes that are in one stage or another of foreclosure.  Obviously, the epidemic of irresponsible borrowing is not limited to single family homes.  But to see that one senior had already moved three times in one year, only to discover that he had once again landed in a defaulting property was sobering.  But what does it mean to you?   It means that there are senior homes throughout the state that are in foreclosure.  That means rental income properties that will support themselves are there for the investor who can see the opportunity to grab them up.


The same applies to every multi-family that you see in the foreclosure process.  The fact that rents for all types of residential properties are going up on a regular basis means that you should consider more than flipping to make your money.  Consider the benefits of having ongoing income from renters to supplement your profits from flipping.  Also consider the wisdom of having long term tenants who will keep your cash flow coming rain or shine no matter what else is happening in the economy.  If interest rates climb and you have new buyers unable to qualify, then rentals will be a life-saver.  Always keep your options open.  This is a market with many variables.  The more options you have, the better you can react and profit no matter what. 


 

Foreclosures are like Golf... You just have to relax and let the market work for you....

Periodically people express their frustration that things don't go exactly the way they want when shopping foreclosures.  Well, you have to appreciate the many variables that make up this dynamic market and not assume that one method is the only one to get you where you need to be.   If life was that easy, golfers would carry one club and a short supply of balls.  Trust me on this one.  I have seen more balls disappear in a puff of dust than I have seen land on the green.  But I can hit a putt pretty darn well.  Years of tilting at windmills, I suppose.  But I know my short game is good and my long game leaves much to be desired.  So I don't play long-shot holes.  I play the short ones and I am satisfied with my day.


More importantly, the dynamics of the foreclosure market are themselves a weather-vane that helps us decide if we should reach for Big Bertha or just pull out a sand wedge.  At this time, there are more properties going into foreclosure where there is an equity position at the auction. There are also more properties with equity, period, and the borrowers are having a hard time trying to get refinanced.  So you can be making offers, or bidding at auction.  But don't rely on two methods alone.   Our founder has bought notes as his last two equity-rich purchases.  He just bought the notes and became the lender. He owns one of the properties already and the other will go to auction soon.  If you need a bit more encouragement...


Just look at some properties going to sale on Monday, 8-5-2013.


     






































































Address


City


Lot


Sq Ft


BD-BA


Est Value


Est Bid

Est Equity
PAMPAS RICAS BLVD PACIFIC PALISADES 15026 2713 3-3 $1,998,371 $1,521,731 $476,640
DULCINEA CT WOODLAND HILLS 13336 3756 4-4 $1,092,495 $809,415 $283,080
BROCKWAY ST EL MONTE 5118 1246 3-1 $407,375 $189,150 $218,225
BROADMOOR AVE LA PUENTE 6061 1204 4-2 $308,800 $99,521 $209,279
DON ALVARADO ST ARCADIA 11863 3015 5-3 $1,088,541 $885,654 $202,887

                 


 


 

Are you following us on Twitter?

We are posting daily updates on Twitter with examples of sales that are happening.  This is to give you clear examples of potential bargains as they happen.  We post these daily to give you an idea of what we look at when we are screening properties.  The more you look at, the better you become at screening properties for yourself.


The best way to search foreclosures is to make general searches and look for the properties that interest you.  I like to look at the loans vs the value, and determine which is my best path to ownership.  If it makes no sense to wait for the auction, then don't wait.  Make an offer to buy the property or perhaps buy a note.  Sometimes any one of these methods will do, in which case you can try all 3 and see which seems most likely or the best bargain.  You could fall flat on each of these approaches and wind up buying the property as an REO.  You just don't know until you try.


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