|
Special Offer |
| Get
your FREE Commercial Real Estate
Loan Application What every serious real estate investor
needs in their toolbox!
No more handwritten forms. Type your data on your pc and print out. Saves
you a huge amount of time!
|
| |
Foreclosure Listing and
Report Services:
What You Should Know
Many consumers are baffled by the onslaught of
foreclosure reporting, listing or information services. Many are confused about
the different types of information available or even the kind of information
they need. Even some industry professionals aren't sure what to make of many of
these services.
Unfortunately, there is too much misinformation regarding lists of foreclosed
properties, whether bank owned or government owned, pre-foreclosure or
post-foreclosure, statewide, nationwide or local.
Some History
The original listing service was born from those who did actual courthouse
research for attorneys, title or search companies. The information was accurate
and reliable. After all, it was used by industry professionals. Recognizing the
demand for such information, many firms expanded their services making the data
available to consumers, specifically those who wanted the data most: investors.
Today there are several top-notch organizations that strive to deliver accurate
information to their customers, whether they are home buyers or investors. They
understand the foreclosure process, the opportunities that are available and the
type of data their customers need.
There are, however, way too many organizations that do minimal research, pay
little attention to detail, and make false claims and/or deliver useless
information with the promise that you will get rich from having purchased their
materials. Can you become financially independent investing in real estate?
Absolutely! Thousands of investors are doing it everyday. However, not in the
way suggested by some of these services' telemarketers.
Some Realities
The industry is not what it was several years ago. The economy has improved
substantially. Inventories of bank owned and government owned properties are
down. The banks no longer just give the properties away. True, bank owned
opportunities were more abundant in the past. Today, several lenders enjoy
selling their properties at market value. Opportunities will always be available
however, for those who take the time to learn and understand the process.
Some Absurdities
The following is our Top Ten List of the most absurd claims, promises and/or
sales pitches we've ever heard.
'"'Government agent will come to your residence to
explain to you, one on one, how to buy their properties.'"'
If a government agent ever comes to your residence, he's going to be from the
DEA, FBI, CIA or IRS, which means that you are either a major drug dealer,
leader of a threatening militia group, an international spy, a terrorist or a
tax evader, and buying a foreclosed property should be the least of your
concerns. There are not now, nor have there ever been, representatives of our
national government that will come to your home to explain to you one on one how
to buy their properties.
'"'Just take over the low, low monthly mortgage payments.'"'
The process involved regarding the repossession of one's home stems from the
borrower defaulting on the loan agreement. The mortgage document along with the
loan agreement gives the lender the right to pursue this repossession through
court action (in states where this method is applicable).
The lender forecloses the mortgage, not the home owner or property. If the
lender is the successful bidder at the auction and wins the property, 99.9% of
the time the mortgage is foreclosed and the property is now owned by the lender
free and clear. There is no mortgage attached to the property because the
mortgage has been foreclosed, it ceases to exist. You can't take over the
monthly mortgage payments because there is no mortgage or payments to take over.
If an investor bought the property at auction, then the property is not bank
owned and would not appear on any list of bank owned properties.
We brought up these objections to the telemarketer who made the above claim, and
he explained that this is what he was told to tell all callers and that he was
quite certain that his bosses knew a lot more about foreclosures than we did.
'"'For only 29.99, we'll send you foreclosure lists for the rest of your
life.'"'
This company sends you a list of contact sources at HUD and VA that you must
call to order a list of their properties. They do not produce any original data
themselves. You want lists for the rest of your life? You'll have to call
regularly... for the rest of your life.
'"'Every property in our listings sells for 60% off market value.'"'
'"'Every single one,'"' we asked twice. '"'Yes, every single one,'"' the
telemarketer replied. We know that lender owned properties can sell for market
price or at discounted prices. The average discount on REO properties is less
than the average discount achieved through other investing methods and much less
than the claims of this salesperson.
'"'30,000 government properties must be given away.'"'
Government agencies usually take title to real property through the foreclosure
process. They dispose of the properties through sales agents, brokers, bid sales
and auctions. Some will resell directly.
Some of these and other quasi-governmental agencies have great first time home
buyers programs and/or financing programs. But none of these agencies,
governmental or other, give away anything for free.
'"'Most of our customers buy a property in 30 days or less.'"'
Then why do most REO list publishers only sell annual subscriptions? Statistics
show the average home buying process takes 3-4 months. Perhaps the answer lies
in the 349 to 499 dollar annual subscription rates charged by these providers.
Which leads us to...
'"'Just purchase a property from our listings during your subscription period
and we will refund the prorated, unused portion of the subscription.'"'
Why is the refund of a product contingent upon the purchaser's ability to use
it? Our research indicates that this makes an effective sales tool for the
company offering it, but we only found 3 customers out of 10,000 who were able
to take advantage of it.
'"'We are networked with over 4,000 banks.'"'
At last count we couldn't even find 4,000 banks. There is no national network
that banks or other lenders subscribe to for the purpose of listing their real
assets. Some institutions aren't even networked with their smaller branches. If
there were such a network, why is it that all of us in this business list
different properties, and a significantly different number of properties in the
same states we produce these lists for? Why wouldn't all the lists be identical?
Further, if the information these services provide consists of bank owned
properties, why do they call all the local real estate agents for their lists of
bank owned properties?
Why then would they tell you to deal directly with the bank, when the
information they sell you comes from the real estate agents who are selling the
properties? One firm sent us a list that they admit was retrieved from someone
else's listings of foreclosures, right here on the net.
The only true database of foreclosed properties reported directly by the banks
and lenders themselves is our very own Foreclosures Online. We never use
secondary sources, only pure original research. Our database includes every type
of property. The information comes from banks, mortgage companies, credit
unions, insurance companies, government agencies, consumer finance organizations
and state housing authorities. Please visit Bankhomes.Net to learn more about
how we accumulate our foreclosure information.
'"'Make tens of thousands of dollars buying premium foreclosed properties
directly from the banks.'"' '"'Premium'"' foreclosed properties generally never
make it to the level where consumers can reach them, as they are gobbled up by
insiders and industry professionals or are purchased at auction by seasoned
investors. Everyone wants a nice property at a low price. The demand for the
product keeps premium prices on '"'premium foreclosures.'"'
'"'Value 145,000, Sold for 53,000... or Market Value 125,000, Start bank offer
at 39,000.'"'
None of the professional investors
we know achieve the percentage discounts depicted in several advertisements of
attractive properties '"'sold'"' at unbelievable savings.
Several publishers and their copy-cat competitors invent these '"'value'"' and
'"'sold for'"' prices to wet your appetite. Most don't even use real pictures of
foreclosures. They use stock photos or even take pictures themselves.
We question the advice offered by one listing service to '"'start bank offer
at'"' an invented price. This information provider, like most, has little or
none of the information needed to determine the property's current value, market
value or comparable sales prices. REO list providers, including ourselves, do
not perform inspections, appraisals, damage and repair estimations or market
analyses on the properties listed in our databases. Therefore, even we don't
know which properties have the potential of being good deals or not. The only
way to know is to do the investigative research.
The Price Debate
How much is too much? Is it worth it to pay 195 dollars for a list of
properties? What if you saved 8,000 dollars on the house you just bought? What
if you just made 15,000 dollars flipping a foreclosure? Is it worth it? What if
you just paid 300 to 400 dollars for a list of properties and found that they
were all sold by the time you got it?
True investors will pay just about any price for quality data. The cost has
little significance, as they will make thousands in profits buying and selling
the properties. The type and quality of the data you need should help in
determining the service you use. The integrity and reputation of the service
provider must be considered.
Answers to Your FAQ's
Following are the answers to your most frequently asked questions.
Why do I have to pay for a list of properties, isn't this public
information?
The answer is yes and no. The transfer of real property is always recorded in
the county courthouse where the property is located. That makes it public
information.
A list publisher or consumer for that matter, must request a list of foreclosed
properties from participating lending institutions. Why request? Because there
is no law stating that the lender must make this information widely available,
just as there is no law requiring you to make public a list of your personal
possessions for anyone who may demand it. You can, if you so choose, visit your
county courthouse, go through all the deed and mortgage books and locate one
property at a time, those that have been transferred to the lender. An arduous
process at best. An alternative would be to go to every single auction, in every
county you have interest in, and watch which properties go back to the lenders.
So in buying a list, what you're paying for is content and convenience. By
yourself, it would take hundreds of hours and a lot of money to compile the data
you need.
Can't I just call the bank and get a list for free?
Again, yes and no. Most consumers have a difficult time trying to reach the
right party at the bank in an attempt to get a list. Some lenders are more
cooperative than others. Citibank for example, now charges 50 dollars for a list
of their properties. While we disagree with this policy, we understand their
reason. Too many uniformed buyers call the banks in an attempt to buy properties
for 30 cents to 50 cents on the dollar. This charge is most likely an effort to
separate the know-nothings from the serious investor. The bank does not want to
be bothered by those who do not understand the process or by those who make
absurd offers ultimately wasting the banker's time.
Why are some properties sold or not available from the list I just received?
In fairness to all list publishers, many lenders do not update their lists
frequently enough. Some properties may be sold. Some may have been off the
market for quite some time. NO list of REO properties, even ours, can be 100%
accurate.
Remember, there is no national network. The proper accumulation and recording of
this data is an imperfect science. Data quality and integrity is dependent on
the source and the method of reproduction used by the provider.
Are there any good listing services out there?
Yes, several. Daily Default InfoService is just one example of a superior
organization that we have endorsed for years. We highly recommend them for
pre-foreclosure data in Northern California. You can reach them at
1-800-310-7730.
Do your research. Buy the type of information that most closely matches your
investing criteria. If you are skeptical, ask for a sample. Always compare
quality and prices. It is up to you to protect yourself from the scam artists.
|
