Buying Foreclosures Can Be A Win-Win

Sales in the Real estate market have been booming for years, but now the majority of home sales have slowed down. We are in what is considered a 'slow market'. Homes are not appraising for what they once did, so the selling prices have dropped. You can no longer get the price you once wanted. There is a large inventory of homes for sale. The mortgage meltdown, where there are no longer hundreds of subprime lenders have an impact on the market.
The resets of adjustable mortgages have home owners scrambling to pay their mortgage each month, which is causing foreclosures to reach an all time high.

It can still be a good time to purchase property. Many first time buyers and real estate investors buy more real estate in slow markets because they are able to purchase properties at lower prices than previously possible. Now is a great time for sellers to offer Owner Financing, which would allow more buyers the opportunity to obtain home ownership. If the seller markets the 'deal' and not the house, more interested buyers will come your way.

If you are looking to purchase property in today's market, one might consider buying a foreclosure property. First-time home buyers are looking into foreclosures because this is an excellent opportunity to buy a house at a lower than market-value price.

If you approach a homeowner facing foreclosure, you can offer less than it's current market value, but still offer more than what they owe the bank. This can be a win-win situation for both parties. Take into consideration the state of mind the homeowner is in if facing foreclosure. This will not be a happy experience. Actually a very stressful time for them, but if they can sell their property before the actual foreclosure takes place, this may enable them to walk away with money in their pocket.

ex: A Home is currently appraised at $400,000. They owe to the bank approximately, 200,000.00 A buyer offers them $300,000.00. This home owner could actually walk away with $100,000.00. If their home went to foreclosure auction, they probably would not receive appraised value or receive extra money to keep in their pocket. They may only receive what they owe to the bank. If they tried to sell their home on the market, they may run out of time.

When a home owner is in the pre-foreclosure stage, potential buyers and/or investors will be able to do the most good for the homeowner and for themselves. Pre-foreclosure is where further damage to the home owner's credit rating can cease and the home may be sold before getting the lender involved. The best potential leads to locate a property at this stage is from a foreclosure database.

Browse The Country’s Largest, Most Comprehensive Foreclosure Database Free Today at RealtyTrac.com!

According to RealtyTrac, foreclosure filings — default notices, auction sale notices and bank repossessions were reported on 223,651 properties nationwide during the month of February 2008, a 4 percent decrease from the previous month, but still a nearly 60 percent increase from February 2007. The report also shows one in every 557 U.S. households received a foreclosure filing during the month.

RealtyTrac offers information on the buying and selling of foreclosed properties. They provide Coaching and learning services, which includes an education section, questions and answers, MLS listings, search by state and pre-foreclosure information.

A 7 day free trial offer can be found on their site enabling you to search over 650,00 properties. Once a member of this free trial, you can search the properties in the state you wish and receive all the property details.

Ask AC Associates

And, the answer is:

Nicole wrote asking:

The selling price is $479K...I owe $385K and I would
like to sell the house outright, but the market is
very bad right now and no one is buying...so how can
your system work for me and how does the bank not
call the loan due if they learn that I'm owner financing?

Hello Nicole,
I understand your question and the confusion you must be feeling.

Offering owner financing works wonders with sellers who own their property outright, but it can also work in a situation such as yours.

With a SIMULTANEOUS CLOSING, you would be able to obtain a buyer for your home using Owner Financing and a note buyer would purchase the newly created note at the same time.

The deal would work as owner financing, but you would not be the one holding the note in the end, a note buyer would.
At the closing, your mortgage would be paid off and you would be out of the situation. The money left after your mortgage was paid off, would be yours.

The new owner would then make the payments to the note purchaser.

Read more information by going to my website at:
http://acassociatesusa.com/simultaneousclosing.html

I hope I was able to answer your question. If you need more information or guidance, please feel free to reply to this post, email me or call my office.

Owner Financing: Selling a Home Without a Down Payment

I have been asked many questions with regard to selling a home and offering Owner Financing. As previously indicated, I will answer the questions I receive in posts as a way to help other home owners.

Answering John's Question:

Selling a home without a Down Payment

John asks...."I am selling my home and offering Owner Financing, but having trouble finding a good candidate with a good down payment. Should I take a chance and allow a buyer to put no money down?"

My advice to John is that it is never a good idea to sell a home without a down payment. You want the buyer to invest some of their own money into the home. If they have their own money involved they are more likely to take care of the home, keep up with maintenance, pay the bills associated with home ownership.You want the potential buyer to show some commitment to the home.

How many times have you come across a rental property only to see it run down? That renter had no equity in the home, they weren't loosing any of their own money, therefore might not care about the property. What are they loosing? They can walk away and find another place to live....

If you intend on selling this mortgage note down the road, you want the buyer to have some equity in the home from the start. The more equity your buyer has, a contract buyer is more likely to purchase the note.

Example:
A home is selling for $100,000 and the potential buyer can put down $20,000. This buyer is already starting with a 20% equity position. A contract buyer likes to see that.

You might also suggest that a potential buyer secure a personal loan for the down payment. Do they have a credit union or can they borrow against their 401 ? In some cases, you can receive a hardship withdrawal for the down payment towards home purchase and not have to pay the sum withdrawn back. Maybe they can be approved for a lesser amount from the bank or receive a loan from a relative. They then give you the money for the down payment. This option gives you the cash down payment, the buyer has the commitment to the home and a contract buyer will see equity.

Before making any final decisions, please make sure you have a good real estate lawyer to help you. Protect yourself.