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9780071412384

Buying Real Estate Foreclosures

by
  • ISBN13:

    9780071412384

  • ISBN10:

    0071412387

  • Edition: Revised
  • Format: Paperback
  • Copyright: 2003-06-23
  • Publisher: McGraw-Hill
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Supplemental Materials

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Summary

"... want to buy a house or other real estate below market value? If so, read this book."--Robert J. Bruss, syndicated real estate columnist Home foreclosures are at a ten-year high, and this new edition of Melissa Kollen-Rice's bestselling guide fills readers in on everything they need to know to find and finance real estate bargains from banks, S&Ls, public auctions, government agencies, and other sources. Packed with worksheets, checklists, and contact directories, Buying Real Estate Foreclosures is the resource for novices and pros alike. This fully revised and updated edition features: Guidance on pitfalls, hidden costs, sources of foreclosure lists, and creative financing strategies Valuable sample forms and documents A new chapter--"What the banks don't want you to know: why are they so motivated to sell?" New strategies to help investors cut through the red tape In-depth discussions of the benefits and risks of all types of financing A completely updated pre-bid checklist

Author Biography

Melissa S. Kollen-Rice is a real-estate professional with more than 20 years experience in all phases of the industry, and the director of Long Island Real Estate Training.

Table of Contents

List of Sample Forms, Illustrations, and Checklists xi
Acknowledgements xv
Introduction xxi
1. Understanding Foreclosures 1 (12)
An Overview of the Legal Procedure
3 (2)
Mortgages and Deeds of Trust
5(5)
A Mortgage Foreclosure
8(1)
A Trust Deed Foreclosure
9(1)
The Soldier's and Sailor's Civil Relief Act of 1940
10(1)
Three Opportunities for Purchasing Foreclosures
10(3)
2. The Basics of Buying Foreclosures at the Auction 13 (16)
A Day at the Auction
15(6)
Three Types of Auctions
15(1)
The Opening Bid Amount
16 (1)
The Bidding Procedure
16 (1)
The High Bidder
17(1)
Thirty Days to Close in Bank Auctions
17 (1)
Unusual Closing Delays
17(4)
Warning: Peculiar Purchase Ahead
21(8)
Buying for Less Than Market Value
21(1)
No Down Payment Refunds
21(1)
The Burden of Dispossessing Occupants
22 (1)
Buying in "As-Is" Condition
22(1)
The Delinquent Borrower's Right of Redemption
22 (1)
Unanticipated Liens You May Be Responsible for in Addition to the Purchase Price
23(2)
Finding Upcoming Foreclosure Auctions
25 (6)
Foreclosure Auction List Publications
25 (2)
Announcements in Local Newspapers
27(2)
3. The Basics of Buying Foreclosures after the Auction-From Banks 29(14)
Defining Bank-Owned Properties
31(1)
The Property Was Not Sold at the Public Auction
31 (5)
The Deed to the Property Was Returned to the Lender (a.k.a., a "Friendly" Foreclosure)
32(1)
Redefining Bank-Owned Properties
32(1)
A Lender's View of Bank-Owned Property
33(2)
An REO Purchase Versus a Bank Auction Purchase
35 (1)
Finding REOs
36(2)
Lending Institutions
36(1)
Web Sites
36(2)
Real Estate Offices
38(1)
Word of Mouth/Observation
38(1)
Preparing Your Offer
38(2)
Negotiating Strategies That Help You Cut Through the Red Tape
40(3)
Justify Low Offers with Documentation
40(1)
Rise Above Your Competition
41(2)
4. The Basics of Buying Foreclosures after the Auction From Federal, State, and Local Government Agencies 43(8)
Defining Government-Owned Property
45(1)
Government Services Administration (GSA) Sales
45 (1)
Department of Housing and Urban Development (HUD) Sales (a.k.a. FHA Foreclosures)
46(2)
Veterans Administration (VA) Sales
48(1)
Federal Deposit Insurance Corporation (FDIC) Sales
48(1)
Federal Home Loan Mortgage Corporation (Freddie Mac) Sales
49 (1)
Federal National Mortgage Association (Fannie Mae) Sales
49(2)
5. The Basics of Buying Foreclosures before the Auction 51(12)
Understanding the Delinquent Owners
53(1)
How You Can Help
54(1)
Negotiating with the Delinquent Owners--When the Property Has Equity
55(1)
Negotiating with the Delinquent Owners-When There Is Negative Equity (a.k.a. "Short Sales")
56(1)
Finding "Pre-Auction" Foreclosures
57(1)
Legal Notices In Local Newspapers
58 (1)
Lis Pendens Lists
58 (1)
Local Real Estate Offices
58(1)
Contacting Delinquent Owners
58(3)
Once Is Not Enough
59(1)
Dress for Success
59 (1)
Letters that Open Doors
59 (1)
Envelopes that Beg To Be Opened
59(2)
Additional Strategies and Tips for Buying Pre-Auction Foreclosures
61(2)
Include These Contract Terms
61(1)
Use the "B" (as in Bankruptcy) Word In "Self-Defense" if the Lender Is Unreasonable
61(2)
6. Financing Foreclosures with Traditional Mortgage Loans 63 (16)
The Burden of Proof
65(1)
Decisions, Decisions
65(2)
Types of Mortgage Loans
67 (4)
Conventional Fixed-Rate Mortgages
67 (1)
FHA/VA Loans
68 (2)
Balloon Loans
70 (1)
Adjustable-Rate Mortgages (ARMS)
71 (1)
Graduated-Payment Mortgages
71(1)
Comparison Shopping for the Best Lender
71(1)
Key Questions to Ask a Lender
72(1)
For Fixed- and Adjustable-Rate Loans, Ask the Following Questions
72 (3)
For Adjustable-Rate Loans (ARMS), Ask the Following Questions
75(4)
7. Creative Alternatives for Financing Foreclosures 79(14)
Category #1: Foreclosure Purchasers with Limited Cash and Good Credit
81(5)
Put the Equity in Your Home to Good Use
81(2)
Obtain Financing from Banks and Government Agencies to Purchase (REO) Foreclosures from Their Inventories
83(1)
Obtain Financing from a Foreclosing Lender Before a Property Is Auctioned
83(1)
Get Your Foot in the Door with a Hard-Money Loan
84 (1)
Build Wealth through Contract Transfers
84(1)
Borrow Against Whole Life Insurance Policies (Are You Sitting on Hidden Treasure?)
85(1)
Category #2: Foreclosure Purchasers with Limited Cash and Tarnished Credit
86(1)
Buy Foreclosures with Partners
86(1)
Category #3: Foreclosure Purchasers with a Lot of Cash and Good Credit
87(4)
All of the above Plus
90(1)
Buy Foreclosures with Cash at the Auction
90(1)
Buy Foreclosures in Bulk from Banks and Government Agencies
90(1)
Category #4: Foreclosure Purchasers with a Lot of Cash and Tarnished Credit
91(2)
Purchase Now and Finance Later
91(2)
8. Equity Sharing: Buying Foreclosures with a Partner 93(22)
How It Works
95(1)
Why It Works
95(1)
The Owner-Occupant's Goals and Challenges
96 (1)
The Investor's Goals and Challenges
96(2)
Owner-Occupants versus Investors-Comparing Purchases
98 (3)
Equity Sharing to the Rescue
101 (1)
Contract Terms to Agree Upon
102 (6)
The Risks Involved in Equity Sharing
108 (1)
Equity Sharing for Parents and Children
109 (1)
Equity Sharing for an Investor and a Contractor
109 (3)
Finding a Partner for Equity Sharing
112 (1)
Equity Sharing Helps People Achieve Their Goals
113(2)
9. Choosing the Right Property: What You Don't Know Can Hurt You 115(26)
Finding the Right Price
117(2)
Prequalified Versus Preapproved
117(1)
Questions to Ask a Lender when Shopping for a Preapproval
118 (1)
Finding the Right Property
119(3)
Getting Access
119(1)
The Preliminary Inspection
119 (1)
Life-Saving Safety Tips for Inspections
120 (1)
Once Is Not Enough
121(1)
Asking the Right Questions
122(9)
Questions to Ask the Foreclosing Lender's Attorney, Referee, Real Estate Broker, Property Manager, or Other Designated Official
122 (4)
Questions to Ask the Town/City Hall (Where the Foreclosure Is Located)
126(4)
Questions to Ask the Utility Companies (That Service the Premises)
130(1)
Organizing Yourself
131(1)
Inspecting the File of the Foreclosure Action
131(1)
Hiring a Title Expert
131(1)
Asking for the Terms of Sale before Bidding on Foreclosures at Auctions
131(2)
Uncovering Hidden Costs
133(4)
A Homeowner's Insurance Policy
133 (1)
Missing Property Documents
134 (1)
Outstanding Utility Expenses
135(1)
Repair Costs
135(1)
Eviction Costs
135(1)
Unpaid Property Taxes
135(2)
Establishing Property Values
137(1)
Calculating Cash Flow
138(3)
10. Preparing Your Bid Sheet 141 (12)
Identify the Property's Condition
143(8)
Condition 1: Vacant and Accessible
143 (4)
Condition 2: Occupied and Accessible
147 (2)
Condition 3: Vacant and Inaccessible
149 (1)
Condition 4: Occupied and Inaccessible
149(2)
Final Confirmation
151(2)
11. Congratulations! You Are the Successful High Bidder 153 (14)
When You Are the High Bidder at the Auction
155(1)
When Your Offer for a Bank or Government-Owned Foreclosure Is Accepted
156(1)
When Your Offer to the Delinquent Owner Is Accepted
156(1)
Coast to the Closing with These Five Standard Operating Procedures
157(3)
Standard Operating Procedure 1: Order Your Appropriate Insurance
157 (1)
Standard Operating Procedure 2: Protect the Premises
157 (1)
Standard Operating Procedure 3: Hire a Neighbor
158 (1)
Standard Operating Procedure 4: Order a Title Search and Title Insurance
158(1)
Standard Operating Procedure 5: Apply for Your Financing (If Applicable)
159(1)
Applying the Five Standard Operating Procedures to Your Particular Circumstances
160(3)
After Contract: Implementing the Standard Operating Procedures for Vacant and Accessible Foreclosures
160 (1)
After Contract: Implementing the Standard Operating Procedures for Occupied and Accessible Foreclosures
160(1)
After Contract: Implementing the Standard Operating Procedures for Vacant and Inaccessible Foreclosures
161(1)
After Contract: Implementing the Standard Operating Procedures for Occupied and Inaccessible Properties
161(2)
An After-Contract Checklist
163(4)
12. Now That You Own the Property 167(6)
Steps to Take for Completing the Transaction
169 (3)
Record the Closing Documents
169 (1)
Schedule the Repair Work
169 (1)
Restore the Utility Services
169(1)
Begin Eviction Proceedings (if Applicable)
170 (1)
Contact Your Local Tax Collector
170 (2)
Execute the Lease
172(1)
After-Closing Checklist
172(1)
13. Making Repairs to Your Foreclosure 173 (32)
Pinpointing Priorities
175(1)
Finding a Contractor
175(1)
Implementing a Competitive Bidding System
176(19)
Conducting the Initial Interview
176 (1)
Preparing the Bid Package for Estimates
177(15)
The Specifications
177(11)
The Notice to Bidders
188(3)
The Bid Summary Sheet
191(1)
Setting Up a Comparative Cost Analysis Worksheet
192 (1)
Awarding the Job
192(3)
Implementing a Performance-Based Payment Plan
195(6)
Establishing an Escrow Account
196 (1)
Developing the Contractor's Agreement
196 (1)
Other Contract Terms to Include
197(4)
The Big Picture
201(4)
14. Getting Started Today 203
Follow These Six Steps for Success in Purchasing Foreclosures
205(4)
Step 1: Arrange Your Financing
205(1)
Step 2: Develop Your Network of Support
206 (1)
Step 3: Send for Your Foreclosure Lists
206 (1)
Step 4: Review Your Foreclosure Facts
207(1)
Step 5: Select the Property That Is Right for You and Do a Trial Run
207(1)
Step 6: Don't Give Up
207(2)
From Rags to Riches with Real Estate Foreclosures
209(2)
Index 211

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The New copy of this book will include any supplemental materials advertised. Please check the title of the book to determine if it should include any access cards, study guides, lab manuals, CDs, etc.

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