Foreclosure is not the same as bargain

If you ask a few people who have actually purchased foreclosured properties, you’ll discover it’s not as easy as you’ve been led to believe.

The Foreclosure Article describes a typical scene.

Foreclosures often take cash and effort to be restored.

Foreclosures are not always a steal (regardless of what your friends and relatives who have never purchased a foreclosed property tell you).

The statistics  tell the story better than me.  The final sale prices are a higher percentage of list price than in a “normal” market.

Getting caught in the hype and listening to people who don’t have a clue got us into this mess in the first place.  Don’t let it happen again.

REO Asset Manager Lists For Sale

Consumers and agents BEWARE!

There are individuals and organizations out there selling lists of their asset manager contacts.  Exercise extreme caution when considering buying one of these lists.  Many times, they are nothing more than a collection of phone numbers to a bunch of banks across the country.  You can get the same information by visiting the websites of the banks themselves.

The lists are marketed to both consumers and real estate professionals.  Consumers can use the lists to contact lenders to identify properties to purchase.  Real estate professionals can use the lists to generate foreclosure listings.

The lists can cost hundreds or thousands of dollars.  There are real estate professionals who do lots of foreclosure business who will sell their lists of asset managers and their contact information, so it’s up to you whether or not it is worth the cost.  Some say yes, some say no.  If you are planning to buy a list, do some research and make sure the source either is selling or has sold foreclosures and used that list to generate business.  If you cannot verify, you probably want to keep searching.

I do not sell lists, but I can point you in the right direction if this is something that interests you.  Email info@mangledmortgage.com or simply post your questions below.  I have coached dozens of people through this process, so you can learn from our collective mistakes.

Yours in success,

Jon

Foreclosure myths

There are many common myths about foreclosures.  Some of them come from late-night infomercials and some of them come from people who are interested in selling advertising space instead of providing facts.  The myths are outlined in my book, and here are some of the common myths:

Myth:

All foreclosures are a steal.

Truth:

Lenders and their investors have a good idea of what a property is worth.  Granted, some of them are interested in selling property at a steep discount so they can meet their liquidity needs, but the discount is often built into the list price you see by the time it hits the market.  You will often find better deals by looking in an area with lots of foreclosures, but not necessarily with a bank-owned property.

Myth:

All foreclosures are damaged and need work.

Truth:

Not all foreclosures are damaged.  Many former owners cooperate with the lender when they realize they cannot keep their home and leave the place in good condition.  Lenders will usually try to negotiate “cash for keys” if the owner will leave the property in good condition.

Myth:

Making money investing in foreclosures is easy.

Truth:

It’s not as easy as it says on the TV commercial.  Yes, there are many people who have successfully made big money investing in foreclosures.  The question I always ask is, “If this person made so much money investing in foreclosures, why are they putting so much effort into selling an information product for three easy payments of $29.95?”

The best investors I know are spending their money on pre-foreclosures and short sales right now.  Check back periodically for updates on those investment strategies.   You can direct specific questions to info@mangledmortgage.com for a quick response.

Order a copy of Mangled Mortgage today!

For a copy of Mangled Mortgage:  Everything you need to know about foreclosures, short sales, and loan modifications, the only place to buy it is right here.

Send a message to info@mangledmortgage.com with BOOK in the subject line and I’ll send you a choice of payment options.

This site is designed as an informational place and those order forms are so cheesy looking.  Don’t get me wrong…I still want you to buy the book.  I just want to flirt with you before we get married, so to speak.

-Jon

Foreclosure Moratorium

The country’s largest banks have put a moratorium on new foreclosures…for the next few weeks.

Wow.  A few weeks.  That should stop the flood for sure.

Wells Fargo, Chase, Bank of America (including Countrywide Home Loans), and Citigroup are all waiting to see what the Obama administration will do before they move forward with any more foreclosure filings.

Much like the loan modification efforts, industry professionals and economists believe this is just delaying the inevitable flood of foreclosures.  The programs unveiled so far as a result of the stimulus package are too complex, too little, and too late.

Short Sales

I recently saw a short sale listing being advertised and there was an exterior photo of the house.  Parked in the driveway was a BIG speedboat.  The seller had refinanced the mortgage several times, had no equity (spent on a boat, perhaps?), and needed to sell.

Many people are not even being subtle about abandoning their obligations these days because it is commonplace to do so.  As long as borrowers are allowed to shrug and walk away, there will continue to be major challenges in the housing industry.

There are also people with legitimate hardships.  Those people did not necessarily do anything wrong; they are victims of the situation.  Because of the irresponsible actions of others, these borrowers are feeling the financial pain.  It is a basic economic law:  As supply increases, demand decreases.

As the number of homes on the market increases, the demand for all the homes on the market decreases.  As the demand decreases, prices adjust downward.  With the glut of foreclosures on the market from the over-leveraged homeowners and the “shrug and walk away” people, those who made responsible financing decisions are at risk of suffering the consequences of too much inventory and decreasing home values.

For more information on foreclosures, short sales, and loan modifications, or to order a copy of Mangled Mortgage, send a message to info@mangledmortgage.com.