Foreclosures List

There are many opportunities for buyers in today's real estate market. Among those are the opportunities created through foreclosures list. A foreclosures list is created by packaging REOs which is the acronym for "real estate owned". These are properties that a lending institution has repossessed and grouped together to be sold as a "package".

The lender needing and wanting to get the property off of their books quickly, offers the foreclosures list to a wealthy investor, hedge fund or other institutional investment group at bargain prices. These are then resold to other investors and individuals looking to purchase real estate. This is an opportunity for these buyers to pick up property at wholesale prices.

There are indications that the real estate market has seen the worst of its decline. There appears to be a flattening of prices in many cities and even appreciation in some areas. It is not clear whether the real estate market will rebound from here but the worst of the decline is behind us. With the worst and perhaps all of the decline is behind us, there are great opportunities to make money in this market.

Let's not jump up and down and feel as though we have moved into a seller's market. That is by no means the case. There are still millions of people that are in default on their mortgages. A reasonable number of those will ultimately become foreclosures and go back to the bank. This is not only devastating for the people who will lose their home but it will also continue to put pressure on real estate prices.

The other side of the coin, is that it will continue to swell lenders' inventory of REOs. It will continue to force those banks and other lenders to do their utmost to remove these bad assets from their books. This will lead to more and more foreclosures list coming out of the banks. This means more and more opportunities for investors.

Prices do not have to increase to make money in real estate or any other investment for that matter, provided you are able to purchase the "investment" at wholesale prices. For the first time in quite sometime, real estate can be purchased today at prices that will allow properties to cash flow.

The elements are in place for good profits to be made through real estate investments. There is a more than ample supply of real estate available at attractive prices and prices have become stable. Make sure you do your due diligence and take advantage of the opportunities.

Foreclosures List: A Tool For The Investor

marty@landpartners.biz

A foreclosures list can be an excellent tool for the investor. There are many places that an investor can find motivated sellers. Most investors are aware of the more traditional methods of finding these people. There are foreclosures, divorces, job transfers, job losses, estate sales and the list goes on. Each of these areas will provide an investor with an excellent opportunity to purchase real estate at good to excellent prices.

A foreclosures list has some advantages and some disadvantages for the investor. This list is not meant to be all inclusive but to give you a general idea of the pluses and minuses in dealing with a bank foreclosure list.

These lists can be very difficult to get. When banks take a property back it goes to their REO (real estate owned) department. Banks have various names for this department but industry wide if you refer to an REO, people will understand that to mean real estate that a bank owns after a foreclosure sale. It is extremely important to the bank to liquidate these properties as quickly as possible. Why? Simply because it inhibits the banks ability to lend. Keep these facts in mind when thinking about how damaging a foreclosure is to a bank:

• For each dollar in bad debt that a bank has they are required to keep 50 cents on hand.
• For every dollar of bad debt that a bank has they cannot borrow up to 5 to 8 times that amount.

Those are just a couple of the important reasons for a bank to quickly sell its REOs but it does give you an idea of how damaging it is to a bank to hold this real estate. For this reason the bank is a highly motivated seller. Banks rid themselves of these properties by either selling them individually through a realtor or "packaging" a group of the properties and selling them to an investor.

These packaged groups of properties are sold in very large quantities. They are typically in the thousands of properties and millions of dollars in cost. Although the properties can be sold at as low as 30 cents on the dollar, it is next to impossible for an average investor to acquire. So due to the size of these "packages" it is difficult for an investor to get involved in a bank foreclosure list at this level.

Another disadvantage is that these properties are normally bought sight unseen. At this level, the investor is deciding to purchase the bad properties with the good. Many of the properties in the portfolio will have issues that will make them less than good investments. However, because of the enormity of the package the investor will do well with the overall package.

Due to the number of properties in the Bank Foreclosure List, individual attention cannot be given to each property and the properties are typically resold in smaller packages to other investors. All in all, the big institutional investor that purchases the bank foreclosure list does so with the intent of making a relatively small profit on each of the properties.

The very large packages are broken down into smaller packages to resell to other investors. Typically they are grouped into regional or state packages. The foreclosures list at this level is more manageable for the local investor buying it. A foreclosures list of this size is at a level at which more local investors get involved. Depending on the size of the package, it may be possible for the investor to actually do a good amount of due diligence on the properties. The investor buying the property at this level may resell the entire package or once again break the package into smaller packages. In this case, the investor may keep a property or properties that he or she feels fit well into their portfolio.

You can see that the larger the package the less due diligence can be done on the property. Therefore, the smaller the profit. As the packages get smaller and more geographically concentrated it becomes easier to do the due diligence on the properties. At the smaller package level and when able to buy only one or a small number of properties from a foreclosures list, the higher cost of the property is offset by the ability to know exactly what you are buying when you buy a foreclosure home listing.

A small local package can afford the smaller investor an opportunity to purchase a foreclosure home listing or several from the foreclosures list after having done due diligence. In this case, the investor will pay more per property but be much more aware of exactly what he or she is buying from a foreclosure home list.