Found Foreclosures, Now What???
I have obtained the list of foreclosures from my local sheriff's office and i am wondering what i need to research before bidding? As you can tell i am new at this and in desperate need of assistance. Any reply will be taken as much appreciated help. Thank you in advance... Dave.
Spend some time reading and educating yourself on foreclosures if thats what you want to do. The foreclosure forum is a good start.
Go to your assessors offfice find out if the taxes have been paid. Go to the recorders office and search the legal and property owners names. See if there are any other mortgages or liens on the property. That should get you started. Hope that helps. Good luck!
Ok - First thing get comps on the area. You should already have your "Power Team" in place which includes real estate agents, brokers, investors, hard money lenders, etc. Get one of your real estate agents to pull comps. You look at the most recent sales of properties that are the most similar in type and square footage (stay within 25% of heated SF). Take the 3 highest sales to determine average sales for the area. The average will determine (approx.) the ARV (After rehab value).
Next, you should do a discount worksheet on the property to determine if the property warrants a drive by.
The worksheet consists of aquisition cost, repair expenses (use 10-15% of ARV), holding expenses (utilities, lawn/pool service, insurance, and taxes if borrowing from a hard money lender). Hedge expense - OOPS I missed that - 10% of rehab, sales expense, realtor fees, and payment on loan, 3-4 months, while property is being rehabed. All this will determine the maximum price to pay for property BEFORE profit. Then deduct wholesale/assignment profit (that would be your fee if your just going to flip the property) min. 5K, and retail profit (fix & flip), min 8-10K. The resulting fiqure would be the max. amount you would pay for the property. If you get for less - <IMG SRC="images/forum/smilies/icon_razz.gif"> !
If the numbers shake out it's time to physically inspect the property and go from there. If not, pass and go to the next. The worksheet applies to all potential properties, I.E., foreclosures, REO, MLS, etc.
Hope this has been helpful!
Sax1359[ Edited by sax1359 on Date 08/05/2003 ]
Can anyone bid on the Trustee Sales? Do you need to pay in cash, or can you finance?
I'm in the CA bay area where single family homes are well over 400K, but on this NOD list my friend gave me I see the bid amounts are really low like under 50K. Do the homes really sell that low?
It depends on what state you are in. Be sure and understand the laws, special forms, etc. especially in California.
You may want to attend a class, seminar, buy some books and visit a a few web sites with discussion forums.
Thank you HouseHunters
That was a great post. You speak in my language. I would like to follow up with some questions.
Is the Mortgage Authorization for Release given to the seller to sign and mail to their mortgage company on subject to deals?
Does it state that you are now managing the property and that all further coresponance should be sent to you?