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Cashing
Out Of Real Estate Preforeclosures - Exit Strategies
for Maximum Profit
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by:
Richard Odessey
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One
of the quickest ways to real estate profits is through preforeclosures.
What is a preforeclosure, exactly? A preforeclosure takes place from
the time the bank gives notice of default to the time the house sells
at auction. Typically, this is around the time of 90 days into default,
depending on state law.
The key to preforeclosure investing is equity - the difference between
what a house will sell for and what is owed on the house.
Preforeclosures allow you to buy a house for less than fair market
value, creating immediate equity for yourself.
Preforeclosures are your opportunity to buy low and sell high,
maximizing your profit quickly. How can you cash in on preforeclosures
and exit with the maximum profit?
Here's how to do it.
Step 1. Find and Secure the Preforeclosure
You must submit a written contract directly to the owners in order to
buy a preforeclosure, since the property still belongs to them during
this stage. Ads in newspapers and subscriptions to preforeclosure
listings will help you locate the properties. (See more about this in
article 1.) Once you've located a property, you'll need to do the
following to screen them and prequalify your homeowners:
·Find out all you can about the physical and financial details of the
property. (Are there liens? Loan balances? Major repairs needed?)
·Gather correspondence from the lender(s) that will fill in the details
the owners may not be fully aware of or may not full understand.
·Meet with the homeowner at their property and have them sign the
documents that place you complete control of the house.* Make sure that
you know who ALL the owners are, and that are serious about selling
before you start negotiating a deal.
* Note: Do this quickly once you have decided you are interested in the
property as a solid real estate investment. This will help you turn
around your equity quickly!
Once you establish that you are there to help the homeowners, you can
make a reasonable offer that will that will help you achieve the profit
you're looking for.
Step 2: Begin Your Pre-Sale Marketing
One of the most important steps in securing your preforeclosure is to
begin marketing as soon as you have your paperwork in order. It's time
to cash in on your equity.
Here's how to get started:
Stake your claim - literally.
You're going to need a heavy supply of signs. Once your paperwork is in
order, take a picture of the front of the property. You'll want to keep
some “For Sale by Owner” signs in the back of your car and have them
ready once you have finished your meeting with the owner. You may want
to put out a “Rent to Own,” sign as well. Play real estate agent - put
signs around the neighborhood with arrows leading to the property for
sale.
Place your ads -- begin prospecting.
Place ads similar to the signs in local newspapers. Expect a good
influx of phone calls. When the phone rings, find out if the
prospective buyer is an investor or a prospective occupant. Collect the
caller's email address, phone number, and fax number.
You'll begin your own list of investors this way, and you can notify
them of properties you're selling in the future as well. Real estate
agents will also call in based on your newspaper ads.
Step 3: Screen your buyers - and make the sale.
Be carefully when you screen potential buyers for your preforeclosure.
Let them know that they'll need to be flexible, patient, and, of
course, financially qualified! Make certain they know the home is being
sold as-is condition. Once the paperwork has been approved, they'll
have to close quickly, usually within 30 days.
If you haven't received an offer that meets your standards, it's time
to move forward with the auction.
Many preforeclosures reenter the market through auctions. You can hold
the auction yourself or use a professional company to auction the
property for you. It's best when starting out to get the advice of two
different auction companies. They'll be happy to give you advice on
whether the property would be a good property to auction off or not,
based on the asking price.
The main advantage of professional auctions is the fact that they will
do all of the marketing and auction announcements. You can let them
handle the auction details, including screening of the buyers. If you
don't get the reserve price you're seeking, you simply pay a fee to
them to help cover their cost.
If your property doesn't sell on the first try, you can retry the
auction again at a later time while you work on unloading other
properties.
Just remember to keep your prospect list growing as you advertise other
properties, and soon enough, you'll have a healthy list of prospects
vying for your investments. Once you've sold enough preforeclosures,
investors will begin to contact you based on past sales and word of
mouth. All of your hard work can help you increase your investments and
quickly cash in on your newfound wealth - equity!
About the Author
Go to www.InvestorWealth.com for these Real Estate
Profit Secrets:
* Super Success Short Sale Secrets (*Best Course)
* Deal Evaluation Tool
* Free Teleseminars on the latest and most effective real estate profit
techniques
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