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Cashing out of Preforeclosures - Exit Strategies for Maximum Profit
By Richard Odessey
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
Article Source: http://www.simplysearch4it.com/article/7418.html
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| Some other articles by Richard Odessey | |
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