April showers are not only bringing May flowers, but also lots of good news for our clients in the foreclosure market! We are seeing declining home inventories in Detroit, Phoenix and San Diego, and tax credit checks are going to start being funded on May 1st. Wherever you are in the country, you have the opportunity to use your additional income to give your marketing campaign a jumpstart with the extra money. With the real estate market beginning to turn, now is the time to buy low and sell high.
Not only can you help the country and the real estate market this month, but you can also improve the foreclosure market by writing your elected officials to encourage them to pass the S. 2636, the Foreclosure Prevention Act of 2008. This would allow for a tax credit of $7,000, allow the FHA to insure loans up to $550,000, and it would really put some momentum behind the real estate downturn.
What does this all mean? Now is the time to get into the real estate market! Put your tax refund to good use, make your voice heard about the Foreclosure Prevention Act of 2008 and the sky is the limit.
What to do if you are facing foreclosure?
With the media using the word foreclosure day after day, it is easy for people to become desensitized to the deep impact a foreclosure can have on a person's life. But, the worst possible thing a homeowner can do is ignore the situation because this will make the problem much worse and leave fewer options. While a foreclosure can be very difficult on homeowners, this burden can be diminished by accepting the situation and searching for solutions early.
From my experience as the founder of Default Research, I can't stress this enough—get started early! We have seen so many foreclosure stories end well when families who are 30 days overdue begin to assess their financial situation and find solutions to their growing problem. In my opinion, the best method to determine if a family can afford to stay in their home is to calculate their loan payments using the prime interest rate. If this payment is still too high, then the family has one option—to get out of the home. The family should consider listing their home with a realtor immediately who could advise them on a price that will allow the home to sell quickly. Another option is to consider selling the home to a real estate investor which will help the seller avoid paying the six or seven percent commission to the broker. Finally, a seller can always look in the newspaper classifieds for people interested in buying homes.
If the person in trouble believes they are just in a short term income "slump" or can afford payments at a lower interest rate, then they will most likely be able to remain in their home. Once they make that determination, their first job is to examine their monthly income and expenses. Then they need to call a lender and ask for their loss-mitigation department. The owner must honestly inform the lender of their situation and the lender should be willing to negotiate by waving penalties, renegotiating rates, etc.
Worst case scenario is when an owner owes more on their home than it is worth. This is known as being upside down on your mortgage. This is where the short sale comes into play. Essentially, the owner will negotiate with the lender to sell the home for less than the loan balance. There are various ways of handling this. Contact the bank directly and tell them that this is what you are interested in doing, work with a realtor who specializes in short sales, or work with a reputable company that specializes in short sales.
Those are all possible solutions to the growing foreclosure problem in our country. Here are some unfortunate trends we have seen with homeowners in foreclosure.
(1) Statistically, over 50 percent of homeowners in foreclosure are either in denial or ignore that fact that their home is in foreclosure. This is a major problem because, if the homeowner does not accept that fact that their home is being foreclosed upon, there is no way to help them. The faster a homeowner can accept the idea that they are facing foreclosure, the more options are available to them. Waiting a week before the auction and then trying to cure the foreclosure leaves you with very few, if any, options.
(2) We have found that approximately 20 percent of homeowners just pack up and leave their homes. This option is not a good one either. By doing this, you may be missing out on the equity that has been built up in your home, face a foreclosure on your credit report, and opening up the possibility of the lender suing you for the balance of the loan (deficiency.)
(3) Some homeowners have purchased homes that they just couldn't afford. In these cases, the homeowners must accept the unfortunate fact that they will not be able to remain in their property. This is a hard pill for some to swallow, but the fact is that if you can't afford to make the monthly payments along with the taxes at the prime interest rate, you can't afford to remain in the home.
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Not All Bad Foreclosure News
We have already established that every time we turn on the news there is bad news about the foreclosures all across the country. I am going to be the bearer of more good news: the outlook in Seattle is relatively good.
Our research showed that foreclosures in the Seattle area declined five percent last month and that area continues to avoid major foreclosure crisis. Foreclosures in King, Pierce and Snohomish counties declined by five percent last month and the total number of Notice of Trustee Sales recorded in March totaled 379 in King, 380 in Pierce, and 215 in Snohomish. If you want more information on one of the safest real estate markets in the country, go to our foreclosure blog—blog.defaultresearch.com
Pre-foreclosures: How Fortunes Are Made
--By Jeffrey Ringold
All rights reserved.
What is pre-foreclosure? Pre-foreclosure is the time period from which the bank gives notice of default, once the homeowner is approximately 90 days late in payments, to the time the house sells at auction. Pre-foreclosure is also the most crucial time in the foreclosure process. It is during this period that you as an investor stand to make the largest profits and can literally make thousands of dollars in months, weeks, days, or even hours!
The key to pre-foreclosure houses is equity. Simply put, equity is the difference between what a house will sell for (fair market value) and what is owed on the house. The whole concept to making money with pre-foreclosures is to buy a house for less than fair market valuing, thus immediately creating equity for yourself.
Here is an example of how this can work. Let's say someone owns a house with a fair market value of $200,000. Now let's assume that this homeowner has lived in the house for several years. If you consider that the property has most likely increased in value over time, while at the same time the homeowner has been paying down the mortgage on a monthly basis, it is fair to assume they owe less than $200,000 on the property.
For this example let's assume that the homeowner owes $160,000. This means there is $40,000 in equity in the house. As an investor, you would want to buy the house for $160,000 or slightly higher. If you can do this, you have a shot at making $40,000.
I know what you are thinking. Why would they sell the house for $40,000 under the market value? Right? Here is one reason why. If they sell the house to you, you can promise them a quick closing, thus stopping the foreclosure (losing the house at auction).
This will prevent a foreclosure from going on the homeowner's credit record. A foreclosure can stay on someone's credit for seven to ten years making it next to impossible to get another mortgage in the future. This is just one of many reasons.
So let's say they sell the house to you for $160,000. You can turn around and put the house back on the market for the $200,000 that it is worth. Once the home sells, you could put a whopping $40,000 in your pocket. Sounds pretty nice, huh? The best thing is there are ways to make similar deals with little or no money! And that is an example of how you can make money with pre-foreclosure houses.
In order to buy pre-foreclosure houses you first need pre-foreclosure leads. This is how you are going to get your leads. You are going to implement a powerful direct marketing campaign soliciting those who are in pre-foreclosure. How do you learn where to start looking?
One of the most valuable sources for pre-foreclosure leads is mortgage brokers. Almost everyone knows a mortgage broker. Maybe your brother is a mortgage broker. Maybe a good friend is a mortgage broker.
If you don't know anyone in the mortgage business, network a little bit. I am confident you will be introduced to someone in the mortgage field that can help you.
If not, that is OK too! You will just have to do a little more legwork. Go through the yellow pages and look for mortgage companies. Start calling around and introducing yourself. See if you can talk to the manager. If not ask to speak to a loan officer.
Ask them if they have someone in particular that handles foreclosure financing. They may or may not. Often times in mortgage companies, they will receive large volumes of calls from distressed homeowners.
These are homeowners who are trying everything to stop foreclosure. Most of the time, it is too late for the mortgage company to help the homeowner because their credit is already shot. At this point the mortgage company may refer them to what is sometimes call a hard money lender. A hard money lender is a lender that specializes in high risk loans. Often times, they are private investors.
This is where you come in. These leads are invaluable. They are homeowners that are exhausting their last options to save their home. What you do is have the mortgage company start to refer these deals to you. If you can get the names and phone numbers of these homeowners, you can contact them directly. More importantly, you can contact them when they are open to listening and expecting your call. If the mortgage representative that can't help them gives a high recommendation of you to the homeowner, they will be excited to hear from you.
About The Author:
Jeffrey Ringold is the author of 'How To Build A Massive Fortune Through Real Estate Foreclosures'. He is a licensed real estate agent and investor who has bought or sold over $12 million in real estate over his 7 year career. He is consulted by leading real estate developers and investors almost daily.
Order the freshest leads from any Default Research county for six or more months and receive a free copy of, "The Pre-Foreclosure Real Estate Handbook: Insider Secrets to Locating and Purchasing Pre-Foreclosed Properties in Any Market.
Be sure to check out the forward in the free book written by Default Research President/CEO Serdar Bankaci. Again, to get your free copy, order any county for six months. To order please call 888-211-8396
What is the MOST IMPORTANT MOMENT in a real estate investor's life? It is the 30 to 60 minutes you are with a potential seller trying to get them to sell at a 20% to 50% discount to their homes value!
"Imagine Being Able to Consistently Get Seller's To Sell At A 20% to 50% Discount!"
Wonder if this is possible? It is if you are totally prepared and have a well- done professional presentation during that critical moment.
We use the list as a start-up for us and the information is not dated and not picked over like some of the other Detroit area lists. Some companies will make you wait for their leads while they work the leads all week themselves. All we get are their leftovers! Default Research gives the leads out earlier than any other company and we can get the mail pieces or calls out the same day — that equals success and success equals money.
Plus, Default Research gives the leads out early enough and people can get those mail pieces out the same day! Some companies will give the leads out on Saturday, but the mail does not move on that day — Default Research does not do that. The fresh and fast leads mean we are the first to approach the homeowners and therefore the first to try and make a deal.
I feel like if we get 500 people off the list we are able to help about 25-30 a month stay in their houses. We are able to do a good deed and also make several thousand dollars per deal. That is good business!
David Hieb
Wayne County, MI
I did tons of free trials on foreclosure web sites trying to find the company with the best foreclosure information. Not until I came across Default Research did I find the sophisticated data sorting criteria and ability to save information in different formats. Finally I had found the most accurate and quick information! I can even check out the foreclosure trends going one year back. Now, I am looking forward to years of working with Default Research!
Sang (Individual Investor) AZ
Maricopa County, AZ
I have heard from other foreclosure lead companies that their leads are the freshest, however the lists from Default Research are really the absolute freshest. Most other company's lists are 25-30 days old when they are e-mailed to you. By that time the homeowner has been contacted 20 times by competitors. Getting to a homeowner that late in the game there is no way you can make money!
I knew I wanted to go with Default Research because I wanted to be the first approach homeowners in distress. I wanted to get to them early and within one week of signing up with Default Research, I got my first sale from the list and started making money. I have found in a short time that persistency and consistency of using Default Research will determine your success in the pre-foreclosure market.
Here is some advice: for those individuals who mail out one letter to each potential client and give up and say it doesn't work, they are RIGHT. It won't work unless you work the program — remember persistency and consistency and — profits and cash.
Greg Talbot
Pima County, AZ
I'm just getting started and want to learn "everything" — there is so much! I do like the idea of helping people which was a nice thing about your list — there was that possibility.
Jackie Norvell
Wayne County, MI
The earlier I was able to get the leads was well worth the money because it meant more money for me in the long run. Some of the records I got from Default Research did not hit other sites for a week or week and a half. I was able to get to them earlier so the chance to work with them and help them was a lot greater.
Chris Brooks
San Diego County, CA
I was actually able to talk directly to the people with the leads that Default Research provided. Great to hear that your company is growing and providing investors with research that can truly save a homeowners property or help them find a way to get out.
Adam Chiasson
Wayne County, MI
I have tried several different foreclosure lists and Default Research is by far the freshest and most accurate. I switched over to Default Research two months now and I've been able to close two lucrative short sale deals netting me over $50,000. Before Default Research it would take me months to turn that much profit, now I expect it at least once a month.
Mike (Short Sales)
San Diego County, CA
I can't tell you how many times I used to call numbers of homes in foreclosure only to find out that the number was turned off. I can tell you how many times that has happened since I started using Default Research. The answer is none! Those homeowner phone numbers pay for the lists on their own. As a mortgage broker these leads are excellent and much better than those provided for free.
Lauren (Mortgage Broker)
Los Angeles County, CA
After being in the foreclosure business for over a decade now, I have seen almost every lead company. Every company claims to provide the freshest lists — Default Research does! Not only fresh, but accurate! The homeowner mailing lists allow me to find homeowners that have moved out of their houses. And, over 20 percent of my marketing mail came back to me as undeliverable. So far less than 1 percent of our mail has come back when using the Default Research information.
James (Real Estate Investor)
King County, WA
Talk about being the first to approach a homeowner in distress. How about actually notifying a homeowner over the phone that they were in foreclosure! It happened with the Default Research homeowner phone numbers. The phone numbers are crucial in getting to the homeowner quickly. Keep up the great work!