Opportunities Abound…but which ones?

Lately I’ve been asked by people if this market has produced any “opportunities” which I might be able to find for them. I tell them that yes I can find them opportunities, whether this market or any other market. Opportunities are always around but some times they are more plentiful in some markets than others.

Foreclosures, REO’s, Short Sales, Pre-forclosures, Desperate novice home flipper investors, and so forth have been on the rise very recently, becoming especially noticeable through media publication and television news reports. Visit google.com and type in “Foreclosures” or “Short Sales” and you’ll be bombarded with an assortment of links too numerous to mention here.

Without writing too much, let me give you the definitions of what certain words mean and how they can be opportunities. More info can be found in the tabs found at the top of this web page.

Foreclosure: An all cash deal which is bought at at a court auction. Most people ask if foreclosures are in their area and how they can find out about them. I’m more then willing to help them out, pointing them to sites like Realty Trac

But when I mention that foreclosures are buys which require 100% cash and no loan contingencies are allowed for such a purchase I usually get an “Ohhh, so thats the catch!”

Foreclosures can bring discounts of up to 20% or more but you have to search hundreds if not thousands of foreclosures in order to find the very good deals. It’s a full time job and a real estate agent does not search for foreclosures because it is beyond their scope and no commission or compensation is made towards the agent for looking them up plus it takes a good portion of your time to sit down and actually look for them.

Probates: When an executor (Used when the deceased died with a will or testate) or administrator (Appointed by the courts when no will was left behind or intestate)  authorizes the sale of real estate formally owned by the deceased. Probates can bring in some good deals because the heirs sometimes have no ties, either emotional or financial, and wish to see the property sold as quickly as possible in order to get cash on hand.

There are many ways to buy probates, one way is when the court awards the heirs the property itself instead of cash. The heirs wish to quickly sell the property in order to get their portion. You can negotiate or talk with them about selling you their home and that you can close escrow quickly. You can buy a probate through an agent. Probates that are good deals though are far and few between. Probates require a more thorough explanation which will be covered in more detail in other posts.

Short Sales: Basically when what the seller can sell the home for in the current market is insufficient to cover the debts or liens against the home. If a homeowner wants her home sold for 100 thousand dollars and she owes 125 thousand dollars and the homeowner will not be able to sell above 100 thousand dollars because current comparables say that 100 grand is the most she can get…then a short sale is created. The bank or beneficiary decides whether or not to allow a short sale and asks the sellers listing agent to provide comparables on current local home values and what homes have sold for recently. The bank decides virtually everything and price is set by the bank. Opportunities can crop up if the lender has had the home on the market for a certain length of time and has seen no offers or bids on that particular property, it then may be inclined to lower the asking price significantly. In the above example, though the bank is owed 125  thousand dollars the lender might ask for 110 thousand dollars. 15,000 dollars is a nice chunk of change in your pocket, wouldn’t you agree?