Author Archive
Trustee Sales & Bid Tips
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How Soon Should The Bid Price Be Available?
Things are happening at the trustees’ sales these days. The most interesting change is the greater number of interested people who attend. It makes you wonder what attracts them now. Why are more and more people now bidding at the trustees’ sales–while the number of properties going to the foreclosing lender also is increasing? What attracts them? There is no question that the number of properties offered for sale is increasing almost weekly. It seems obvious then that more and more people are unable to keep their properties in spite of the effort by the government to alleviate the financial burdens that have plagued so many for so long. But yet, the sheer volume of available properties can’t be the magnet that draws those who attend the sales. Each buyer there is seeking available properties at a discount–that is a property available at a price significantly under the market price when the property is offered by the foreclosing lender at price at or near the amount due on the loan. As you know, the non-judicial foreclosure process in California starts with the recording of the Notice of Default which alerts the delinquent owner that the lender has not been paid as promised on the Promissory Note and will take action unless a specified amount is paid within a certain date, This is followed by the recording and publishing of the Notice of Trustee’s Sale which informs the defaulted owner that the property will be sold at a public auction on a specified date unless further action is taken by that owner to stop the foreclosure. The trustee, who handles the foreclosure for the foreclosing lender, follows a procedure outlined in California Civil Code 2924. This requires the trustee to record and publish the amount due the lender at the trustee’s sale. Those who bid successfully at the sale in cash or cashier’s checks must exceed the amount shown on the Notice of Trustee’s Sale and will ultimately received title to the property. So far, there is nothing different here than has not been happening at such sales for many years–but wait, there’s more! Unpaid lenders have to evaluate their options carefully when borrowers become unable or unwilling to continue making payments on the loan as agreed on the signed Promissory Note and Deed of Trust. First of all, let’s agree that the lender will take those steps that are in the best long-term interests of that lender. If the lender is convinced that initiating the non-judicial foreclosure process is the next logical step, the trustee will begin the steps outlined above. We know that the lender is permitted to foreclose on the amount due on the foreclosing loan–including unpaid principal, interest, late charges, penalties, and trustee’s fees and costs. The lender cannot require the delinquent owner to pay more than the amount due, however that lender has the option to offer the property at the trustee’s sale for less than the amount. Once again, the lender can be expected to do what is best in that lender’s interest. Most institutional lenders have concluded that simply foreclosing on the delinquent borrower can be a risky process for the lender even under the best of circumstances. As a matter of fact, such lenders usually have a “Loss Mitigator” in their REO department whose job it is to minimize the costs of foreclosure for the lender if and when such a step becomes necessary. I have heard that lending institutions estimate that the total costs of foreclosure to the lender approach $45,000 to $65,000 from the acquisition of the property when no third party bid is received at the trustee’s sale to the ultimate completed sale of the property to a qualified buyer. (Is this an urban legend?) If that is a true figure, it is easy to see why such lenders do not warmly welcome the addition of another foreclosed property to their swelling inventory of REO properties. One obvious way for the lender to sidestep such costs is to lower the amount due that lender to an amount that becomes attractive to the third party bidders who attend the trustees’ sales. When the local residential market of available properties escalates and more properties are dumped into that market, almost no one becomes the winner at a foreclosure. Yet, it is possible to see that getting the property off its books has to be a realistic goal for many lenders. It is obvious that some lenders have come to that decision and are deciding to take that catastrophic step with an unhappy shrug. Each bidder at the trustees’ sales will periodically check with the trustee of the foreclosing property to see what changes have been made in the interim that will affect the buyer’s interest in the purchase of the property. In order to minimize the volume of interrogations received by the trustee on any one sale, the final bid amount at which the property will be offered by the trustee on behalf of the lender normally is not given until 24 hours prior to the sale–and sometimes at a time even closer to the actual published or postponed sale date and time. It is obvious that a larger number of potential bidders will attend the sale of the property if the sales price is substantially lowered at as early a time before the sale as possible–and not just a day or an hour before the actual auction of the property. This being true, it makes good sense to conclude that the foreclosing lender (and therefore the defaulted owner) benefits from the early disclosure of a substantially discounted offering price at the trustee’s sale–thus giving time for the potential bidders to gather sufficient funds with which to bid most competitively. If the final opening bid chosen by the lender is to be substantially less than the amount due that lender, an early release of that bid amount will encourage more bidders to participate, and a higher property bid will be realized by the lender. Isn’t it time to require lenders to make that critical decision at least 24 hours or more before the actual sale–and to make that minimum bid amount available to the public as quickly as possible? By Warren Racine
Warren will be presenting at FEC
on March 25- come out to network,
meet Warren and learn more.
Personal Representative: Probate
Posted by: | CommentsOne of the hardest things for new Probate investors to do is to make the follow up phone call to the Personal Representative after the letter has been sent. Here are some easy steps to follow.
First of all, just think of it as a call to a soon to be friend. Just a little conversation between two folks who have something in common. They have a house they need to sell and you may have an interest in buying it. The word “may,” was used because after talking with some of the PR’s, you may NOT have any interest.
This is the beauty of this business. You get to pick and choose who you work with. People who show a lot of attitude, aggression, stubbornness and just downright negativity don’t make the cut. Sorry, bub, I don’t go there! Next!
So don’t look at the call as a “do or die” business call – just a friendly little chat. All you are calling for is to see if they received your letter. Remember?
“Hi Mr. Personal Representative. This is Sue Chandler calling and I just wanted to make sure you received the letter I mailed to you last week.”
Nine times out of ten the response will be “What letter?”
“Oh, the letter about the house over on 125 River Road.” ”Oh right! Yea, I got it. How much are you going to give me for the house?”
“Well, Mr. Personal Representative, I can’t really tell you until I can take a look at the inside of the house. Would you have some time later this week that I could take a look it or would next week be better?”
That’s it folks – end of story. You now have the complete script for the follow up call.
If the PR asks more questions, nine out of ten answers are, “Well, I really can’t say very much until I look at the inside of the house. Would this week be OK, or what time would fit your schedule better?”
Remember, you are telling the exact truth. You really cannot tell the PR much of anything as you have not inspected the house, right? So don’t make it any more complicated than that.
Now, one last comment.
Notice the opening sentence is about the letter. Not about the death of a loved one – not about a house – not about an offer – just about the letter. By focusing on the question, “Did you receive my letter?” you sidestep a ton of emotion. No need to offer condolences or to even discuss the death. That’s it.
By following these suggestions, you can get your appointment without a lot of grief.
Just keep it simple.
Ron Mead has been a Real Estate Investor for the past 30 years. He has specialized in Probate for the last 13 years and currently has the #1 rated probate real estate course on the internet. “31 Days to Profits in Probate Real Estate” is the most comprehensive system of its kind. Ron’s new DVD series, just released in September 2008, takes the instruction to another realm. No other real estate investment system takes you this deep into a real estate transaction. For your own blueprint on how to get your own probate real estate business up and running with little or no money, and to get a free report titled,
“Probate Real Estate: The Untapped Market,”
please visit http://BuyProbateProperty.com
Lucrative REI Niche
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Probate can be one of the most lucrative segments of the Real Estate investing market. There are many reasons for this and here are some of them.
1. MOTIVATED SELLERS.
Persons who have inherited Probate property want and need to sell them quickly. Many times money is needed to pay off existing debt, such as back taxes, so the heirs will be very interested in making a quick discounted sale. Also when there are multiple heirs involved, they need the money from the sale of the house so they can split it among themselves.
2. UNLIMITED INVENTORY
The inventory for Probate is HUGE. Many say its larger than foreclosures and it probably is. But whatever the number is, it’s almost unlimited and it replenishes itself everyday. You will never run out of potential leads.
3. NO COMPETITION
Very few folks know about Probate Real Estate, so there is almost no competition. While other investing strategies come and go, Probate has remained the same for the last 20 years. But because it involves a legal term, Probate, many potential investors have stayed away thinking it is too involved and complicated. That is simply not true. Once you discover how to do it, you will wonder why more are not using this easy to learn strategy.
4. HIDDEN TREASURES
Most houses are sold “AS IS,” meaning you get to keep the personal property that’s in the house, and sometimes the garage. So you can find little gems like furniture, appliances, artwork, cars, collections etc. This can be a great second source of income.
5. GROWING MARKET
As the baby boomers begin to pass on, the market of Probate homes will just continue to grow. This means the opportunity for making money in Probate will just get bigger and bigger over the next twenty years.
6. SIMPLE SYSTEM
Once you learn how to purchase Probate properties, you can use your system over and over again. Unlike other markets like foreclosure, you do not need to adapt to the procedures to each new deal. Just learn once and reuse forever.
Ron Mead, The Probate Guy, has been specializing in Probate Real Estate for the past 13 years. His #1 rated Probate Real Estate course, “31 Days to Profit in Probate Real Estate,” shows you how to tap into this lucrative and little known real estate market filled with “motivated sellers.” Subscribe to Ron’s free report, “Probate Real Estate: The Untapped Market” at http://www.BuyProbateProperty.com.
Trustee Sales Tips
Posted by: | CommentsExamining All Debt is Critical
Buying residential properties at the trustee’s sale continues to be the major goal of many successful foreclosure buyers today and in the recent past. Probably the most attractive reason for this continuing interest is the fact that properties can be sold by the lender through the trustee at the trustee’s sale solely for the amount of the unpaid debt due that lender with a minimum bid unrelated to the fair market value of the property. In addition, debt recorded after the date of recording of the foreclosing loan secured by the property is eliminated after the sale.
Any debt recorded between the date of recording of the grant deed and the date of recording of the foreclosing loan remains with the property when purchased at the trustee’s sale. Any debt recorded after the date of recording of the foreclosing loan is wiped out. The wipe-out of junior debt can add significant equity to the property purchased at the sale.
Our goal continues to be to purchase a property at the trustee’s sale with as much equity as possible. The equity we seek is defined by the current fair market value of the property minus the debt securing that property and costs of repair and resale of the property. Uncovering actual fair market value is not difficult to obtain through the tools available to us today. On the other hand, uncovering debt is a more complex process. This means that our chosen property must be examined carefully for the debt securing that property before purchase.
As discussed earlier, we already made a major step forward at this point because the deed for the property owned by the defaulted owner was identified at the county recorder’s office to be a full-valued grant deed. We found that the documentary transfer tax on the grant deed from the seller to the defaulted owner showed that the county had taxed on the “full value of the interest of the property conveyed”. That means any debt in the seller’s name securing the property before the date of recording of that grant deed is eliminated, and all debt from the recording date of that grant deed to today’s date must be in the name of the defaulted owner. Piece of cake! The county recorder’s office organizes all recorded documents chronologically under the name of the owner and indexes each document with a document number and recording date for easy access. Our next job, then, is to examine the images of those documents and report pertinent data sequentially for title changes and debt acquisition and release.
In some cases, the number of documents recorded under the defaulted owner’s name can appear overwhelming, so we are going to limit our search to those documents that only affect title and clearly define debt. Unless the property appears to have a huge amount of equity, we prefer to choose a property owned by a defaulted owner with an uncommon name (we want less confusion of title and debt among people with identical names) and a person without an unusual number of liens, loans, and judgments recorded against that owner (we want to minimize the number of documents to research). On that basis, we probably can research title and equity on one property at the county recorder’s office in less than thirty minutes.
There are literally hundreds of kinds of documents recorded in the names of owners of real estate in this state, but we are going to limit our examination and reporting to those documents affecting the transfer of properties between owners and those documents that tell us who can and cannot add debt as title holders on the chosen property. Of course, the primary goal is to examine all documents that affect debt securing that property.
It is probably best to group the documents to be examined. There are recorded documents that hold our immediate attention and are always examined carefully. Certainly documents affecting and changing ownership rights and obligations will be examined like grant deeds and inter-spousal transfers of title. We will examine all documents that apply debt to the property such as deeds of trust, mechanics liens, abstracts of judgment, state income tax liens, federal income tax liens, notices of assessment, etc., and documents affecting that debt like notices of default, notices of trustees’ sales, and rescissions of notices of default. Some documents which don’t directly add debt but affect how debt is handled like reconveyance deeds (which show evidence that trust deeds have been paid) and subordination agreements (which interchange priority of one loan and another loan) also must be carefully noted.
Each of the documents which affect the accumulation of debt is important. Some of these recorded documents, however, can introduce uncertainty to the actual amount of debt securing the property and therefore would not be acceptable if recorded against our chosen property. A good example would be the abstract of support judgment which does not show the amount due on that judgment. Another is the lis pendens. “In current practice, a lis pendens is a written notice that a lawsuit has been filed concerning real estate, involving either the title to the property or a claimed ownership interest in it. The notice is usually filed in the county land records office. Recording a lis pendens against a piece of property alerts a potential purchaser or lender that the property’s title is in question, which makes the property less attractive to a buyer or lender. After the notice is filed, anyone who nevertheless purchases the land or property described in the notice takes subject to the ultimate decision of the lawsuit.” (Wikipedia)
Happily, a number of other documents commonly found in the documentation under a property owner’s name are of little interest to us and do not have to be recorded. These include the assignment of a deed of trust, request for notice of default, and substitution of trustee. These ubiquitous documents do not affect the amount of the debt secured by the property, and therefore are not added to our accumulated reporting of title and debt on the chosen property.
Interestingly, not all debt information is accessible at the county recorder’s office. We must also check with the county tax collector to uncover real property taxes for the current and prior tax years and add such taxes to our accumulation of debt. Such unpaid taxes can have a heavy effect upon the equity anticipated in the purchase of properties at the trustee’s sale.
In order to facilitate the gathering and reporting of accumulated debt, we usually use a unique form that lists data easily obtainable from the Notice of Trustee’s Sale at the top and then add the available data line by line below from the county sources which emphasize a) the title of the document, b) the grantor, c) the grantee, d) the document number, e) the date of recording of the document, and f) the amount of debt unique to that document.
Our goal, of course, is to summarize all recorded debt which would accompany the property if bought at the trustee’s sale. From the previously uncovered fair market value of the property (with related costs of purchase and resale) and our accumulated estimate of debt, we are able to determine with some accuracy the residual equity prior to the purchase.
By Warren Racine
Warren will be at FEC on March 25th-
come out to ask questions, to network
and to have some fun.
REO Secrets: Find ‘em, Fix ‘em, Flip ‘em or Keep ‘em
Posted by: | CommentsBecome a matchmaker and collect a generous bounty ($25,000, $50,000 or more).
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If you’re new to the idea of investing in REO property, as is likely to be the case if you’re reading this article, you may still be wondering exactly what these properties you’ve heard so much about are and how exactly they’re a good value for the property investor. You might also want to know if this is a type of property investment which is suitable for novice investors. If these are the questions on your mind, then this article is for you. We’ll cover what a REO property is, how to invest in these properties in bulk and hopefully by the time we’ve finished, you’ll have a good idea of whether these investments are right for you.
So without any further delay, let’s get to the first question.
What Is REO Property?
In case you’re not familiar with the term, REO stands for Real Estate Owned. This is property which has reverted into the hands of a lender; this is almost invariably a bank, credit union or other financial institution following an unsuccessful attempt to sell the property at a foreclosure auction. The banks or lenders then attempt to sell these properties as quickly as possible, since as far as their ledgers are concerned, foreclosed property is a liability, not an asset. Of course, banks aren’t in the real estate business in the first place, so it’s in their best interests to rid themselves of this property.
OK, So What’s Bulk REO Property?
Larger financial institutions especially are often left with a large number of REO properties on their hands, especially now in the wake of the credit crunch and the waves of foreclosures which preceded it. Banks are eager to pass on these properties to buyers, often selling them for greatly discounted prices. Where the idea of bulk property comes into the picture is when real estate brokers and investors will make offers to these institutions to purchase several properties at once for an even lower price.
Why Is Bulk REO Property A Good Investment?
Since the banks need to get rid of these bad investments to get them off of their books and since the housing market is still somewhat soft, there are some excellent values to be had for the forward looking investor or investors who are interested in making a rental income off of these bulk REO properties. Of course, given the very low prices at which these properties can be purchased in bulk, investors can still make a tidy sum by selling these homes even as-is; many REO properties tend to be in need of a little fixing up, but at their price they’re still most often a great bargain.
Are Bulk REOs Something Which Newcomers To Property Investment Should Involve Themselves With?
The answer I usually give to this question (which I’m asked quite a bit) is no – unless these investors are looking to make money. Bulk REOs represent an incredible investment opportunity and there are quite a few novice real estate investors who are already making a substantial amount of money from these investments; and others who are holding on to these properties, waiting for market conditions to improve before selling for even larger profits. Whether you’re an old hand at real estate or you’ve never purchased an investment property before, bulk REOs are something which you should at least consider investing in.
So How Do I Find These Bulk REO Properties For Sale?
That’s often the most challenging question, especially for people who aren’t experienced in the real estate market. There are several ways to go about it, most involving a lot of research. The important thing to remember about real estate investment, whether we’re talking about newly built commercial property or bulk REOs is this – it’s a numbers game. If there was one thing I want people to take away from this article it’s that.
You need to make lots of offers and deal with lots of different banks and other lenders, brokers or asset management personnel and do some investigating to identify properties which interest you. Especially if you’re new to property investments, you may be better off dealing with a reputable broker who has contacts with lender asset managers and is experienced in handling bulk REO purchases.
Just do a little research ahead of time to make sure you’re doing business with someone who’s going to make sure that you’re treated fairly in this transaction – other than that, I hope I’ve answered some of your questions about bulk REO investments and I wish you the best of luck and profitable investing!
More info click below
>>>Bulk REO Secrets
Secrets to collecting cash when you buy
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Proposed House and Senate Bill to CRUSH Seller Financing
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HR Bill 1728
Proposed House and Senate Bill to CRUSH Seller Financing
Have you heard about HR 1728, it’s a heinous infringement on private property rights that is likely to shut down the creative selling and financing of properties market.
IT HAS ALREADY PASSED THE HOUSE AND IS UNDER CONSIDERATION BY THE SENATE NOW.
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The U.S. Senate is considering a bill that would severely limit the way you do business as a creative investor and, more importantly, is an inexcusable infringement of the property rights of all Americans.
HR 1728, which you can view in its entirety here:
http://m1e.net/c?40134443-w82.v5BbOQpik%404322480-njpRVarb4R7As“>http://m1e.net/c?40134443-w82.v5BbOQpik%404322480-njpRVarb4R7As
Deals with a plethora of mortgage-related issues, mostly around limited terms and fees on residential loans. But the heinous piece of the legislation is in section 101(3)(e), which defines the affected principals as:
(E) does not include, with respect to a residential mortgage loan, a person, estate, or trust that provides mortgage financing for the sale of 1 property in any 36-month period, provided that such loan-
(i) is fully amortizing;
(ii) is with respect to a sale for which the seller determines in good faith and documents that the buyer has a reasonable ability to repay the loan;
(iii) has a fixed rate or an adjustable rate that is adjustable after 5 or more years, subject to reasonable annual and lifetime limitations on interest rate increases; and
iv) meets any other criteria the Federal banking agencies may prescribe; and…..
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Yeah, I know, confusing. But here’s what it says: you are NOT subject to the law as long as you DON’T sell more than 1 property with owner financing terms every 3 years! Or, to put it another way, you ARE subject to the limitations of the law if you DO sell more than one property every 3 years via a land contract, owner-held mortgage or wrap-around mortgage-and who knows if they’ll define lease/options as owner financing, too?
So what does it mean to be “subject to the law”? Well, at the very least, it means that you will have to comply with a long, confusing, and penalty-filled piece of national legislation. Here are the types of transactions that you would be restricted from doing more than once every 36 months:
o Selling YOUR OWN HOME using a land contract or owner-held mortgage or Trust Deed so that you can get a quicker sale, higher sale price, or better rate of interest than is available in other investments
oCarrying back owner-held second mortgages on investment properties that you sell
oDoing any kind of installment sale on residential properties including homes, condos, mobile homes, and even raw land that is zoned residential
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Yes, there will undoubtedly by ways to “get around it”-some have suggested that getting a mortgage broker’s license and then learning and following the vast new set of regulations would circumvent the “problem”. But bottom line is, this law has to be stopped and it has to be stopped NOW. Here’s why:
1.Congress is trying to regulate the wrong thing. The deals where seller financing is involved and we make are not “loans”-they don’t involve the transfer of money, or points or closing costs or adjustable rates or any of the other things that caused the mortgage crisis to begin with. They are INSTALLMENT SALES. We don’t give money to the “borrower” and wait for it to be paid back: we give a property to the borrower and wait for it to be paid off. Regulating this will have no effect on the foreclosure crisis
2.It is a completely unacceptable infringement on private property rights. When you own a piece of property and find a ready, willing, and able purchaser, you should be able to control the sale of that property within the existing laws of my state, which already regulate the interest rate that you can charge and some of the terms of the sale. The government does not have the right to tell us that we need special licensing to sell our own properties; nor do they have the right to further regulate the terms under which we can sell or burden small investors with a new set of rules that we can’t comply with.
Not only will this new law, if passed as written, effectively choke off owner financing as an exit strategy for you, it will also take away housing choices for your buyers. The millions of Americans who’ve been through foreclosure in the last 3 years can’t buy a house in any way OTHER THAN to negotiate owner financing with a seller-and HR 1728 would greatly reduce the number of properties available in this way. Millions of potential home owners who would otherwise be able to re-start the process of paying off a home, and get the tax advantages of ownership, will be reduced to renting until they are able to qualify for traditional bank financing.
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What to Do Right Now
This bill has already passed the house and is waiting for Senate approval. Please contact your senator via email and snail mail to let him know that this law MUST NOT PASS in its current form.
You can get your senator’s contact information here:
http://m1e.net/c?40134443-bY0zPa.ZtWFhs%404322481-CJlir6IvDB1OQ“>http://m1e.net/c?40134443-bY0zPa.ZtWFhs%404322481-CJlir6IvDB1OQ
As always in cases like this, you have an automatic handicap to overcome-the fact that you are a real estate investor and are therefore viewed as part of the problem. So when you write, don’t emphasize the nature of your business, just that you and your buyers would be greatly aversely affected by the new law.
We need THOUSANDS of these communications to go out in the next few days to have a CHANCE of stopping this in its tracks. So whether you’re a new or experienced investor, PLEASE take the time right now to write your elected representative!
