Foreclosures

Welcome to our special foreclosure homes page.  On this page you will find links and information on real estate owned homes (bank foreclosures), short sales (pre-foreclosures) and other distressed property information.
With all of the hype over the subject of foreclosures, television and special seminars would have you believe that hundreds of thousands of dollars are just waiting to be plucked from the tree of life. 

I can tell you this having been working the foreclosure market over the past 9 years; I have learned a few things. First, finding and purchasing distressed property as your primarly source of income can be a full time job.  It’s a lot of work and the pay-off may not be as great as you think.  That’s not to say that it can't be profitable.  I am a firm believer that great deals can be made in any market.  It’s just that most people are not going to simply hand over their property happily unless there is really something wrong.  And that simply means working through many, many problems.

So the skinny from my perspective is the following.  Up until last year, foreclosures were frequently sold at or above market prices.  Recently, the market has adjusted downward a little.  Let’s say 3% to 5%.  So you might pick up a Bank owned property an additional 3% to 5% below market if the bank is motivated.  Why not more you ask?  Simple, banks are not stupid.  Once they have the property appraised and have paid to go through the foreclosure process, they don't want to loose any more money than they have to.  Things of course will change if the property sits vacant very long, or if bank inventory levels rise, but until then, banks are still negotiating strongly on these properties and not deeply discounting them.  Even a 5% discount can mean savings of $25,000 or more, but I really am not seeing deep, deep discounts. Furthermore, market activity has been picking up and I have been finding multiple offers on some of thee properties.  In the end, the bank may not pay to fix up the REO property at all and you may have to decide if the hassle is worth the added expense.

With regard to short sales, I have found the banks to be giving better discounts.  Somewhere in the range of 5% to 10%.  Even though you would think a bank would be more motivated on a foreclosure property, this is just not the case.  Since the bank has not paid to go through the foreclosure process and as the delinquency may be smaller earlier in the process, banks may be more willing to come to an amicable solution.  I have been most successful when one particular bank owns both the first and second on the property.  If there is more than one bank involved, then the bank holding the second will usually not be willing to get wiped out and probably will not be cooperative thereby forcing the foreclosure.  This is obviously not the case if there is enough equity in the property and the majority of the note on the second can be recovered.  It is important to find out how many banks are involved and how much is owed.  Then you can calculate your probability of success.  I have seen buyers recently save $40,000 or $50,000 off of market highs. 

A popular source of motivated sellers can be the notice of default list.  This is information that can be obtained on potential sellers that are behind on their mortgages.  When a homeowner gets behind on his mortgage, the bank typically files the notice of default with the county recorder.  This public knowledge can be used to try to contact these individuals to work out a deal.  **** Use Extreme Caution**** The state of California has some severe penalties for investors and agents that violate what is known as Equity Sales Contract law.  If you are an investor and do not plan to occupy the property, you must use a specific contract that gives the seller the right of rescission, and do not lend them any money prior to the sale.  If you do, you may be in violation of the law and could be sued by the seller for hundreds of thousands of dollars after the sale closes.  Again, please use extreme caution when dealing with these individuals.
Regardless of weather of not you choose a foreclosure home, REO (real estate owned) property, short sale, or notice of default, you will need a source for information.

Since most banks have established relationships with agents, most foreclosures end up in the mls.  We have provided this information free on our REO and Foreclosure page.  In addition, we also have a large supply of short sale properties.  Notice of default information can be obtained through public information services.  I have linked to some of the more popular services below.   Be advised that this information is available to thousands of potential investors, so these data services may be a little overworked. 

When working these properties, it is useful to have a realtor on your team. 

1. Realtors in your market know the inventory.  I can usually save my investors hundreds of hours of work since I know most of the tracts and have been in many of the models. We always discuss them before they start running around.

2. The best indicator of the market is what is happening in the active MLS listings.  You can't know what is truly happening in a tract of homes unless you look at this recent trend.  It’s not available anywhere but in the MLS.  And for that, you need to consult with a Realtor.

3. Turning the property timely (if that is what you intend to do) is critical to making money.  The longer you hold it vacant, the less your profit will be.  In order to turn it quickly it is imperative that you list it in the Orange County MLS for exposure to thousands of agents and buyers.  We offer a discount program on commission costs for anybody that buys and sells multiple homes with my company.  It will save you money and put more in your pocket.

4. Its going to take many offers before you get a deal together.  Since realtors have all of the forms and know how to use them, they can save you a lot of time.

5. My network of Agent friends can be very influential in helping to locate and secure the right deal.  It takes a lot of effort be all parties involved and it helps to have people willing to advance your cause.

I am sure you can think of a few more, but the bottom line is that 2 heads are better than one.  So happy house hunting and please let me know if you have any questions or would like assistance with one of the properties on our REO and Foreclosure homes pages.

Orange County reo properties, foreclosures, and short sales

County Records Research

Search Forclosure.com