Archive for the ‘Foreclosure Auction’ Category

Why Foreclosures Sell for Less Than Market Value:

In real estate, you hear the term "market value" quite a bit when discussing properties.  Everyone seems to know what market value means,  Most would say "it is the price that a given asset or property would fetch in the marketplace." and they would be correct. 

But you cannot stop there.. 

Market Value is the price that a given asset or property would fetch in the marketplace, subject tot the following conditions:

1. Prospective buyers and sellers are reasonably knowledgeable about the asset; they are behaving in their own best interests and are free of undue pressure to trade.
2. A reasonable time period is given for the transaction to be completed.

Given these conditions, an asset’s fair market value should represent an accurate valuation or assessment of its worth.

The foreclosure process and resulting auction do not come close to meeting the above criteria of a market value transaction. In fact, they are structured in a way as to virtually guarantee the lowest possible sale price. The following table will help illustrate my point:

Market Value Sale	Foreclosure Auction
No seller or buyer duress	Forced Sale
Buyer & seller well informed	Information difficult to locate
30-120 day marketing period	5 minutes or less selling time
Financing on typical terms	Cash on the spot
Owners agree to move	Owners or tenants may have to be evicted
Marketable Title	No Title Guarantees
Warranty Deed	Trustees Deed
Seller Disclosures	No seller disclosures
Property Inspection	No inspection
Yard Sign	Never a sign
"Homes for Sale" ads	Notice of Sale filed with county recorder

Many investors would look at that and say "no thanks". "Too risky, and where would I come up with all that cash anyway." It is that attitude which explains why there are so many deals to be had at the auction. 

But what about the risks?

Granted, there are risks associated with purchasing property at the auction. But you can overcome the risks of bidding!  At Real Estate Investment Firm we have worked tirelessly to help open up the foreclosure market to the average investor. By providing our clients with detailed property status tracking, property research, title analysis and insurance, value assessment, auction bid calculator, access to foreclosure financing and much more we have helped our clients minimize the risks while maximizing their profit.

 

Foreclosures,market value,auction,foreclosure auction

Last Friday’s (11-09-2007) auction featured several fantastic deals. I had selected 11 properties last Thursday for my weekly “hot sheet”. Here is a re-cap of what happened to those 11 properties. 

7 properties were postponed. Five were postponed to a date in December and two were postponed to dates later this month.

1 property reverted to the lender. 

3 properties were sold to a third party.  Below are pictures of those houses and how much they sold for.

Picture	Sold For	Market Value

If you are interested in purchasing properties at the foreclosure auction then visit Real Estate Investment Firm and click the link for investor register.

Foreclosure auction

The third quarter of 2007 saw a dramatic jump in the number of foreclosure filings when compared to the same quarter last year.  According to RealtyTrac, the number of properties entering foreclosure spiked almost 100% during the last quarter and increased 30% from last quarter.

All indications point to a continuation of this trend as well.  In March 2008, the highest level ever of sub prime ARM mortgages are scheduled to re-set which will increase mortgage payments for hundreds of thousands of homeowners.  Many can expect to see there payments increase as much as 25%.  If the homeowner cannot refinance to a more conventional loan product, many will not be able to make the new, higher payment and thus continue the cycle of foreclosure.

Foreclosure,mortgage default

If your a real estate investor or property flipper and are wondering how you can still make a substantial profit in today’s softening real estate market you should consider purchasing your next property at the foreclosure auction.  The dramatic rise in defaults and foreclosures nationwide and the general downturn in the real estate market have created a “perfect storm” for real estate investors to make substantial profits by purchasing distressed homes at the foreclosure auction.  Every week a small group of savvy investors throughout King, Pierce and Snohomish Counties are routinely buying these properties for 25-40% off market value. 

For most investors, however, the foreclosure process can prove daunting. Excellent buys are available, but they require research, preparation, patience and persistence.  Without the right experience and specialized local knowledge the process of finding and evaluating properties, bidding at auction and funding the purchase can be intimidating and costly.  There is an awful lot of information to know in order to avoid the potential problems and pitfalls one can run into when buying foreclosures.  It is extremely important for an investor to get up-to-date auction information and act on it as quickly as possible.  A solid tracking system must also be in place since the chances are an investor will be evaluating and pursuing several properties at once often over a period of several months.

 Some of the important items every investor needs to consider when evaluating properties are 

1.  What is the market value?  What can I turn around and sell the home for?
2. What is the condition of title?  Are there unpaid liens and judgments you may become responsible for paying?
3. What is the condition of the property?
4. What should my maximum bid price be?

With the proper knowledge and the right team and resources on their side an investor can greatly reduce the risk inherent in purchasing foreclosed homes at the auction and reap the rewards time and time again.