Foreclosure Investing - 5 Pitfalls To Avoid

By Mike Shackelford

Despite the huge money that can be made from investing in pre-foreclosure properties, there are also a number of pitfalls for the unwary. Here are five pitfalls to avoid:

1. Spotting a great opportunity, too late.

When a bank issues a notice of default to a home owner who has fallen behind in their payments, this notice goes onto the public record. Not only is it filed with the county recorder's office in the relevant county, but it gets included on various foreclosure listing sites on the Internet. If you're not actively monitoring these lists, and then finally come across a great opportunity, it could be too late. Some other pre-foreclosure property investor may have already negotiated to buy the home by the time you've decided to contact the owner!

2. Failing to gain the trust of the home owner.

Right now, pre-foreclosure and foreclosure property investing is one of the biggest games in town. So you can bet that distressed home owners are being harassed by investors promising them the world. Unfortunately, this includes various scam artists and wannabes who can't fulfill their big promises. That leaves home owners more skeptical than ever, so if you don't do all you can to prove that you're legitimate, you may lose the deal before you've even stepped in the home owner's door.

3. Incorrectly valuing the property.

Your ability to profit from a pre-foreclosure deal largely rests on achieving a big enough margin between the market value of the property, and the price you can get it for. While you can hire an appraiser to get an appraisal of the value, it really rests on you to get this right. You need to consider the market values of similar properties in the area, as well as the condition of the home. You also need to take into account any liens (unpaid property taxes, utility bills, etc) that may attach to the property. If you misread the value, you could get yourself in trouble. As a rule of thumb, you want to make sure that you're getting such a good discount that you could sell the home now OR in the future, and still make a profit.

4. Making an offer that's too low, or too high.

Make an offer that's too low, and the home owner will simply reject it. Remember, they want to get some equity or at least settle their debts with the price you offer. On the other hand, if you offer to buy the property for too much, you could erode your own ability to profit.

5. Failing to properly finance the deal.

You also need to finance the deal. The last thing you want to do is to get yourself into financial difficulty by taking on a loan that YOU can't sustain!

These pitfalls may seem basic, but it's often the basic things that get missed when you're eager to find the next best deal. By all means stay enthusiastic, but also be aware of the foregoing pitfalls. That way you'll be in good shape to find profitable pre-foreclosure properties to invest in.

Mike Shackelford has been working from home and successfully Investing in Real Estate since 2003. For more Real Estate Investing information, photos and Free Downloads visit: http://www.MikeShack.com - Free Foreclosure Investing Mini Course "7 Foreclosure Secrets".

Benefits of Doing a Property Short Sale

by eshortsale

The threat of facing foreclosure lingering upon your home is worse than any nightmare! You lay each brick to your dream home, get into all sorts of debts, are forced to compromise on the little things in life because you have to repay your mortgage and what not! And what is the resultant of all these? The bank or your mortgage lending company takes complete control of your home if you miss or default regarding a repayment installment. However, there is an assured way out of this apparently no-exit situation only if you know how to deal with this crisis.

Short sale of your property is the way out! Short sale refers to a practice where your lender institute or your mortgage company agrees to accept a less than the loan balance which you actually owe them. Obviously, they are benefited out of this practice and that is why they encourage property short sale. By a property short sale, the mortgage company indices apparently less profit, which is less than what you owe them, but they can save a lot of hassle and money which a foreclosure sale might have otherwise induced. Post judicious calculation, a short sale seems more viable to them than a property foreclosure sale. However, it is not jut the mortgage company or the bank profiting from the short sale. You, as a homeowner and as a seller too profit from this highly keeping the authority over your property to yourself!

Traditionally, you have to contact a company specializing in short sale and they will help you to sell your property in no time at all, thereby relieving you out of the debt fix which otherwise would have been really nerve cracking. You as the seller win by being able to avoid foreclosure and selling your home before the actual foreclosure sale, even when the property value is less than what the mortgage balance is. The otherwise viable option is to sell the property via a realtor, which would take long and on which you have virtually no control. You do not even know what value you will get for your property. Moreover, this is not an option for you at all when your property is under real estate foreclosure.

However, you can ease this a little by opting for short sale which will readily provide you with all the information you need regarding your property, including its sale value. What’s more – you are able to sell your property virtually overnight! You can get the best deals available by opting for a short sale of your property and eventually save some real cash for your future by paying off the due mortgage balance to the lender institution. But before you take any decision, regarding a property short sale, it is important to let your mortgage company about your intention and get from them in writing their approval.

You apparently get 111 days’ notice of default before your property will be put up for public auction. Do not let this period go waste and take advantage of short sale as soon as possible or you may find yourself regretting at some later point in time!


www.eShortSale.com