Short Sale and Foreclosure Investing

It's no secret that foreclosures are at an all time high, more and more properties continue to fall into foreclosure each day. Due to this increasing volume and indifference by lenders, opportunities for real estate investing in foreclosures and short sale properties are tremendous. McFarlin & Geurts attorneys and real estate professionals counsel our investor clients to take full advantage of the market for distressed properties.

Short sale listings and foreclosures are becoming quite popular when considering a real estate investment because of the huge discounts the right deal offers investors. There are investment opportunities in every segment of the market, residential, commercial, industrial and multi-family. As you probably already know, it is critical to have the right knowledge and representation in order to take advantage of the tremendous opportunities that exist. McFarlin & Geurts has had so many inquiries from investors requesting representation in the identification, evaluation and purchase of properties that we have put together a real estate short sale practice.

Simply because a property is in foreclosure or preforeclosure, does not automatically make it a bargain or a good investment. In fact, it's just the opposite. These are properties that no one wants, and that are being liquidated. Additionally, these types of properties are typically sold "as is" with no representations or warranties about anything, even simple things like square feet or number of bathrooms. An over-anxious investor could end up buying into a huge problem rather than a good investment.

AN EXAMPLE: Nothing illustrates a point like a good example. An investor client of McFarlin & Geurts recently came to us considering purchasing a Real Estate Owned (REO's) property from a lender who had recently taken the property back at a foreclosure sale. McFarlin & Geurts attorneys evaluated the property, the neighborhood, title history and analyzed the transaction including the sale price. After our thorough analysis, we discovered that the real estate listing misrepresented the square footage, the lot size, and the number of fireplaces as compared to the title history. After further investigation, we discovered the property had an illegal addition which was not permitted or approved by the city or county. Obviously this issue changed the price our investor was willing to pay. A "terrific deal" could have easily turned out to be a nightmare without the representation of our real estate attorneys.

THE FORECLOSURE INVESTING PROCESS

Foreclosure investing consists of three general phases: Pre-foreclosure, foreclosure process, and post-foreclosure REO. Each stage in the foreclosure process can offer opportunities when you utilize creative real estate investing techniques and are properly represented. McFarlin & Geurts real estate professionals will assist you in successfully finding bargains in all phases of foreclosure so that you can profit from your investment. Many would be investors scan short sale listings and occasionally submit an offer to purchase on short sale house without truly knowing what they're getting themselves into. The best short sale training of all is to have representation and counsel from experienced real estate attorneys. Once you "get the hang" of what to look for and what to avoid, of course you are welcome to venture out on your own, but with the value McFarlin & Geurts can consistently deliver, you may not want to bother.

PRE-FORECLOSURE SHORT SALE LISTINGS

Opportunities for investing in pre-foreclosures, with short sale listings, has never been better. we introduce you to a creative Techniques to identify bargains, take control of the deal as the investor buyer and close with the lender(s). An offer to purchase on short sale will be at a discount to the amount owed, and a substantial discount to the prior sale price of the property. Some people mistakenly believe that simply because the offer is an offer to purchase on short sale or because they are considering short sale listings only, they will get a deal. Many online "short sale training" courses promote such thinking, but it's simply not true. Most short sale house listings are not bargains at all. That's why we say the best short sale training is to work with real estate attorneys and professionals to learn how to offer to purchase on short sale only when there is money to be made.

THE REAL ESTATE FORECLOSURE AUCTIONS

The foreclosure auction can be a rewarding place or can, again, be a money pit without the right planning. There are huge investment opportunities with discounts, if you know what to look for and have diligently researched the properties going to sale. Buying properties at real estate foreclosure auctions is intensely time consuming because it is a huge numbers game. There may be 100 properties scheduled to go to auction on a particular day from a particular foreclosure trustee. As an investor, you must adequately research all 100 of those properties to determine which of them may be a bargain. At the right price ANY of those 100 properties is a good investment. The problem is, of the 100, maybe only 20 will actually go to sale. The rest will be pulled back by the beneficiary, or have a "reserve price" higher than fair market value and go directly back to the lender as a "credit bid" to become REO's. However, you will not know beforehand which 20 properties will actually sell. You must be ready and know what you are willing to pay for all 100 properties in a split second as they come up for bidding, hesitate and you lost it. It's a tough game to play and an expensive game to lose.

REAL ESTATE OWNED PROPERTIES (REO'S)

Bank owned properties (commonly called REO's) have become commonplace today as lenders take enormous numbers of properties back at foreclosure sales. These are typically short sale house listings that have gone through the short sale and foreclosure auction process with no takers. Now, because there was not an acceptable bid or offer to purchase on short sale, these properties are owned by the lender and for sale. As with any aspect of distressed property investing, just because a property is an REO does not automatically make it a deal. It could have terrible mold, a cracked foundation, termites or be a complete tear down and you wouldn't even know it by driving by. Additionally, there may be title issues despite the lender recently taking it at a foreclosure sale. If it was a junior lien holder that foreclosed, there may actually be a mortgage on the property already.

REAL ESTATE LAWS

The real estate investing laws can be complex and sometimes contradictory. If you are serious about investing in distressed real estate, it is wise to call on the assistance of an experienced attorney rather than risk losing out because you didn't understand something like a "Section 8" designation, or the like. McFarlin & Geurts can navigate you through these treacherous waters.

Rather than going into a highly competitive and cutthroat investment arena armed only with some sort of "training course" or real estate manual, consider the best short sale training of all, working with experienced professionals to consider short sale listings, offer to purchase on short sale listings and buy the short sale house investment you've been searching for.

Falling home prices, home equity lines of credit, and punishing interest rates on adjustable mortgages are converging to create a unique and complex real estate market for investors. Contact McFarlin & Geurts and lets us represent you in your investment endeavors.