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 slumped substantially. Inventories of bank owned and
government owned properties are rising and we have not yet seen when the
peak will hit. True, bank owned opportunities are more abundant NOW then
ever before. Never before have we had the combination of falling home prices
AND low interest rates, perhaps lower then we have seen in decades.
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.
1- "A 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.
2- "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.
3- "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.
4- "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.
5- "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.
6- "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-$499 annual subscription
rates charged by these providers. Which leads us to...
7- "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.
8- "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.
9- "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."
10- "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 for a list of properties? What if you saved $8,000 on the house you
just bought? What if you just made $15,000 flipping a foreclosure? Is it
worth it? What if you just paid $300-400 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 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 already sold or
otherwise 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 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, reliable lists available
on the net?
Yes, there are many honest, reputable services
currently in operation.
To sum up, 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.
Distress Sales resulting from bank
foreclosures often represent a great way to get a fantastic deal on a
home. It's not easy for the average homeowner to find these deals,
because you have to keep scouring the paper to see when one comes up.
If you're the type of person who
recognizes what a great deal some of these properties could represent,
you will be interested to know about a new free computerized service
which automatically searches out and downloads a current list of all
such properties day in and day out. When you receive this free, no
obligation service, you're automatically plugged in to the most current
list of Foreclosure Properties on the market, in the price range and
area that interests you. This FREE service every week will save
you a lot of research and running around.
Here's how it works. Every week, you will
receive a FREE computerized report listing the current
Foreclosure properties in your desired price range and location. There
is no cost for this information, and absolutely no obligation. This
insider information, sent to you in an incredibly simple and efficient
format, will give you a huge advantage over other buyers in the
marketplace.
You can request this free service by
simply filling out the information on the Palm Beach County Foreclosure
Weekly form available
by clicking here and including the specific price range and area you
would like the "Foreclosure Weekly Report" on. When you have
completed the form
just click the "Submit" button at the bottom of the page.
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