Harry's Blog

Tale of two Markets

Harry White (Southland Realtors) — Wed, 27 Feb 2008 23:27:06 -0600

2008! It was the best time to buy real estate, it was the worst time to buy real estate. This years real estate market is definitely going to be one for the books. To be sure, if you have shaky credit or an unsure employment picture this is probably not a great time to be trying to get a loan for a house. However, if you got the credit and the income, this market is offering once in a life time deals. Existing home prices are dropping by the month as sellers get more desperate to avoid foreclosure or other problems. New home builders have all but stopped new home construction, and are laying off workers. In fact, those builders who aren't offering deep discounts on the price of the house are throwing in more and more incentives just to move inventory.

It's also a mixed back for investors and house flippers. For the investors that have the cash to buy the properties, or who have a successful track record with the bank, it's probably business as usual. For the new or casual flipper who needs credit to make the next deal, the banks are closed for business. When will the market return back to a more predictable state, the pundits are saying anywhere from this fall to the end of 2009.

While 2008 promises pain for a lot of people in the housing market, it certainly won't be dull. If anyone has any horror stories or successes, let us hear from you.

Buying foreclosures in bulk can yield extra discounts

Harry White (Southland Realtors) — Thu, 08 Nov 2007 20:35:57 -0600

As the foreclosure market heads toward the next year, things don't appear to be turning around for the better any time soon. But sometimes you can make more money in a bad market than in a good one. I recently read that the time to buy (whether it's stocks or houses), is when prices are falling and people are rushing to cash out or are losing their homes as the case may be. Couple that with the fact that banks do not want to be holding real estate that they just foreclosed on, and opportunities do exist.

For the investor that has enough capital to be able to purchase 2 or more properties for cash, banks want to talk to you. Banks get calls all the time from investors wanting to purchase a foreclosure house. But occasionally they get the investor that can buy 2 or more, for the right kind of discount. If you really want to get the bank's attention, offer to buy a house they own that nobody wants in addition to the house that you really want. The bank will love you, and they may call you on a regular basis with deals if you prove you can deliver and close the deals.

The catch is you gotta have cash, financing probably won't cut it. If you want to see an extreme example, search my blog for the article on Odel Barnes, all he does is buy properties that know one wants. The banks call him every day while he sits on his porch, and he pays around 10 cents on the dollar. So this information may pay off for you now, or maybe in the future. But I'm sure the strategy will always be effective.

Knowing your market can help you in house flipping

Harry White (Southland Realtors) — Thu, 08 Nov 2007 19:24:40 -0600

The real estate market by nature is local, and that applies to buying investment properties as well. Most experienced investors stick to neighborhoods and areas they know well. They know the price ranges as well as what kind of features that the homes in that neighborhood have. For an investor that is just starting out, I would recommend picking 1 or 2 neighborhoods that are fairly mature in age. Look for and go to as many open houses in that neighborhood as you can find. If other potential buyers are at the open house, listen to what they say about the property. This is an excellent way to learn what potential buyers in the area are looking for.

Once you have bought your house, by acquiring your knowledge of the other homes in the neighborhood, you will know what fixtures and features you should be spending money on. And more importantly, not wasting money on those that don't add to the sale price of the house. It sounds like a simple concept, but you would be surprised at how many times I see people putting marble counter-tops and stainless steel appliances in a starter home. These same people are amazed that buyers aren't willing to pay a higher price for these features. It always pays to do your homework before you spend your money.

Information on the Internet - continuation

Harry White (Southland Realtors) — Sat, 20 Oct 2007 22:58:40 -0500

As a side note to my last blog about informative sites on the internet, I just found another site devoted to house flipping. Although it does have a book it is trying to sell, it gives away a lot of first hand advice from an experienced flipper that is very interesting. The link is as follows:

http://getflipping.com/ and one page in particular is very interesting,

it's link is: http://getflipping.com/flipper_ed/success_stories.html

This site seems to be a lot more real world and realistic about the process of acquiring foreclosures and flipping them, than the shows you see on television. Having gone on numerous broker price opionion trips to document foreclosures, his account seems to be dead on accurate. Anyway, this looks to be a website to keep in your favorites list.

Internet is now offering more information for free, than ever before

Harry White (Southland Realtors) — Fri, 19 Oct 2007 16:21:11 -0500

It never ceases to amaze me at what can be found on the internet, especially for free. The trick is to know how to ask the question on the search engine. Google is very helpful, you can navigate their help site and it will give you all kinds of tips and tricks to make your searches more successful.

Another online development that is now happening, is that big time newspapers like the New York Times and the Wall Street Journal have made their papers free for the browsing, on their websites. This is in response to the declining number of people who no longer subscribe to newspapers, but go online to get their news fix. The Wall Street Journal is especially a sweet deal, because they have sister sites that are devoted to certain markets, like The Real Estate Journal. This is so much easier than spending the day at the library, and cheaper than buying a ton of publications every week. The Realty Times is another great source of real estate information, and the chances are your local newspaper is also online and free. My paper only requires you to register online to have free access.

The papers are shifting the source of revenues from the consumer to the advertisers, but the consumer really benefits. Anyway, I will list a handfull of links to some of the sites I mentioned. If anyone has other sites, please let us know the links.

www.realestatejournal.com

http://online.wsj.com

www.nytimes.com

www.realtytimes.com

How to make money when the dock is worth more than the house!

Harry White (Southland Realtors) — Fri, 21 Sep 2007 15:58:10 -0500

While this blog is primarily for people who like to flip houses and/or buy foreclosure properties, it is always about great ideas for making money in real estate. I ran across a great article on the Real Estate Journal online, a division of the Wall Street Journal. The article, which can be read in it's entirety by clicking the link at the end of this blog, is about what happens to a dock on waterfront property when restrictions against building new docks are put into effect.

People love their docks, and some have bought waterfront properties with docks in these restricted areas, and knocked down the old or less desired house. They then rebuild the house or leave the land bare with the dock, and resell for a premium. In some cases, areas that did not have restrictions suddenly pass them and some people will buy properties or land, and build a dock as an instant appreciation feature. And the value that the docks add to the total properties value is huge, and to avoid getting into the numbers, you gotta read the article to get the full scope.

Another similar strategy, in some hot markets like Charlotte, Atlanta, and other markets. Some older neighborhoods with modest homes are seeing another anomaly taking place. As people now desire bigger homes and more square footage than homes 30 years ago, some are buying 2 homes that are side by side and tearing both homes down. Then replacing them with a much bigger home. If enough of these happen in a given subdivision, it can transform the whole face of the neighborhood and property prices start to go up accordingly. In Charlotte (my home town), Uptown has been transformed over the last 8 years from mostly office and minority neighborhoods, to being the new place to buy a home and to go out for the evening. Given this, poor and neglected inner city neighborhoods are being discovered by investors. More and more of these homes are being rehabbed and sold for good size profits as the neighborhood starts to attract upper middle class home owners.

A few interesting ideas on making profits in a challenging market. If anyone has other ideas, please

www.realestatejournal.com/secondhomes/20070702-casselman.html

How to make money on the worst houses on the market

Harry White (Southland Realtors) — Fri, 14 Sep 2007 15:30:12 -0500

Everybody in real estate knows about the prime real estate market, which tend to include the upper priced to luxury priced homes of the market. Then you have modest homes in the working to middle class neighborhoods. But what happens to the worst homes in the worst areas that the banks get stuck with thru foreclosure. These are the homes nobody bids on, often in high crime areas. How do banks get rid of these homes that nobody wants to bid on? They call Odell Barnes!

Odell Barnes buys these homes that are spread out all over the country, for anywhere from 20 cents to 10 cents on the dollar from the banks, without ever looking at the properties. As a matter of fact, he never has to leave his farm near Columbia S.C.. The banks call him at his house, and most deals are made over the phone while he sits on his porch. ABC news did a segment on him a few months ago, and it's a very interesting business model, and one thats made him a millionaire.

Instead of explaining the whole senario, if you click the links below, you can read the ABC story and also hear an interview of the man himself from NPR radio. It just goes to show, there is always another way to make money in the business, you just have to think out of the box sometimes. Just click the links below for the rest of the story, and happy flipping!

http://www.abcnews.go.com/Nightline/story?id=3084500&page=1

http://www.npr.org/templates/story/story.php?storyId=8895894&ft=1&f=1006

Update on the foreclosure out look for the coming year

Harry White (Southland Realtors) — Sat, 08 Sep 2007 20:20:48 -0500

From all the articles and expert opinions I have been seeing and hearing, it looks like the worst is yet to come in real estate market in the way of foreclosures. The number of houses on the market because of repo's will be somewhat higher as the numbers get worse for the mortgage industry. At present, the jobs market is not looking as rosy as many thought it would. You add that to the housing slump and the credit crunch and the dreaded R word (recession) is suddenly a possibility.

All is not doom and gloom however, a lot of money can be made in a poor market. whether you are talking about stocks or houses, 1 man's default is another man's treasure. Not only will it be wide open on great deals for lower priced foreclosures, there will be a better than normal pool of renters to fill them with. One could create a nice portfolio of rental properties in a short period of time if you have the capital.

Anyway, the next 24 months will be anything but boring, I can assure you of that!

Rent to own should not overlooked as source of revenue

Harry White (Southland Realtors) — Sat, 08 Sep 2007 18:38:09 -0500

One avenue that tends to be overlooked by home investors is offering a rent to own option to their tenents. There are plenty of lease option buyers, even in a slow market. It's a win-win situation for both investor and resident alike. Once the renters lock in a sales price that the investor has offered, the investor simply can't lose. The owner gets a bigger revenue stream of rent, and his house gets sold at a profit. If the sale does not happen, the owner keeps the extra money. If the renters exercise the option to buy, they buy the house under circumstances more favorable to them (by having a down payment saved up).

Another interesting way to look at properties when considering a purchase to hold for investment purposes, is to look at the land as the appreciating part of the package, and not the house. Under this strategy, you will not usually want to deal with luxury homes. Instead, you will want to be looking at properties in working and middle class subdivisions. These houses are more likely to be in the range of most tenants and rent to own candidates, and the land will usually be the driving force in the property appreciating in price.

Good markets or bad, these are 2 strategies that should work day in and day out.

FICO score requirement going up for prime mortgage loans

Harry White (Southland Realtors) — Sat, 18 Aug 2007 20:22:16 -0500

Traditionally, the credit score of 620 is where prime mortgage rates end, and sub prime rates begin. While this can vary from bank to bank, that's kind of the rule of thumb. It looks like with what's happening in the current credit crunch, that dividing line has gone (or is going) to about 680.

From a Realtors point of view, this makes getting a buyer preapproved more important than ever. From an investor's point of view, this tight market will probably make or break a lot of good deals out there. As a matter of fact, some lenders are shying away from making loans on second homes, investment properties, commercial loans, even borrowers who have decent credit. Some loans that were preapproved are now being rescinded before the loan happens.

All this makes for a very slippery playing field in the real estate market today. At some point in the future, lenders will come out of their cave and decide to do business with the real world again. But for now, financing has to be at the front of the process before buying anything right now. As I have mentioned before, the silver lining to this is there will be a sizable number of foreclosure properties to choose from, if you can just get them financed. If anyone has any recent financing horror stories to tell, please share with us.

Banks more flexible now when trying to avoid new foreclosures

Harry White (Southland Realtors) — Sat, 11 Aug 2007 16:44:09 -0500

With all the news today about how tight future mortgage lending is going to be, and how borrowers with less than perfect credit will find it difficult to impossible to get a mortgage; an interesting sidenote to this story is starting to emerge. Being somewhat over a barrel, banks are more and more likely to accept some options than they would have in years past, in order to avoid a foreclosure.

I've read articles recently that banks are more likely to replace a possible defaulting party on a loan with another party who proves to be credit worthy. Banks are desperate to avoid any more foreclosures, which could mean that the ever growing glut of foreclosed properties may be had for less than in the fairly recent past.

As is usual, one person's loss is another person's gain. If anyone out there has any stories or experiences for or against this theory, lets hear them. Knowledge is power!

How will the new credit environment affect house flipping?

Harry White (Southland Realtors) — Tue, 07 Aug 2007 21:45:50 -0500

As I'm sure everyone in the Real Estate industry is aware of by now, mortgage loans for credit challenged customers are going to affect our business plans. As a Realtor, this is going to reduce the number of potential clients I am going to be able to assist in closing on a house sale. But this could also affect the real estate investor, either positively or negatively.

On the one hand, if you flip houses, the low income customers you may be used to selling to may no longer be able to get a loan thru the subprime market. One possible solution to this problem ( if you have the means) is to finance them yourselves. You take back a first mortgage on the property and realize a nice return on the investment. Obviously you hold the house as colateral.

On the other hand, if you rehab houses and rent them out, this credit crunch could be a blessing to you. The rental market will be rebounding as more people will be turned away from the lenders. You may even see a higher income level of renter interested in your properties. Rent to own deals may start to take off as this credit landscape remains difficult. So thinking out of the box is going to be really important for the next couple of years or so.

The credit market is very fluid right now, the news seems to ebb and flow daily. So now is the time to share with the group so we all benefit.

Just how easy is it to sell your own home yourself without a Realtor

Harry White (Southland Realtors) — Sat, 14 Jul 2007 22:44:13 -0500

It always amazes me how the news shows and reporters make out how easy it is to sell your home yourself and save all that money that your not paying out in sales commissions. Granted, I am a Realtor so I expect a certain amount of scepticism from the public because I do have a dog in the fight. But to be fair, I do talk to a lot of potential customers who are considering doing it themselves and they don't even know the basics of what it takes to show their house, let alone get the deal closed.

Almost none of the homeowners know that they are required by law (in North Carolina) to have a property disclosure form to give prospective buyers. I'll wager that any commision they might save will be less than what they will lose in a lawsuit if they do not disclose a defect of the property that is material to the sale of the house. Another common mistake, homeowners think potential customers will make appointments that conform to the homeowner's schedule. Most think that no one can show the property like the homeowner themselves. While that may sound great on paper, will the same homeowner take offense when they get a lower offer than they think is reasonable and let their emotions take over.

The biggest problem with selling your own home is advertising. In most cases, the only advertising being done is a sign in the front yard. Even with the For Sale By Owner companies, if you pay an extra fee to be in their magazine and/or website, most of the people who are seriously looking for a house won't see your sign or their adverstising. Buyers and their agents will be looking at the MLS, which unfortunately won't include your house.

The premise behind the For Sale By Owner concept is that some of the savings from not paying a commission will be passed along in a lower price to the buyer, thus resulting in a faster sale for the homeowner. That happens less frequently than you think. With all that said, if you really think you can sell your home yourself, by all means give it a try. Just go in to it with your eyes wide open, which means you realize the odds are against you. 20% to 30% will actually succeed, and almost all of them will have to pay 2% to 3% to a buyers agent to complete the sale. As usual, all comments or stories are welcome!

Financing for the first time house flippers

Harry White (Southland Realtors) — Fri, 13 Jul 2007 18:28:42 -0500

One aspect I have not touched on in this blog lately is financing. For the more seasoned and experienced investors of foreclosures, a lot of the time they can buy with cash. That also makes them more attractive to the banks who are trying to unload these homes as fast as possible. But what about the small time investor just getting in to the business, can they even get financing for investment properties.

Yes they can, but maybe not with a conventional mortgage. There are banks who won't lend if the house does not have a working stove, or is missing floor coverings, or if a window is broken, or if the hvac unit is not operating. I have had some clients miss out on some great deals because of these kind of hangups that were not anticipated. One great source of credit for homes that don't meet the afore mentioned guidelines is the HARD MONEY LENDER. This is a short term loan usually for 6 to 12 months at a higher interest rate, like about 14-16%. You just pay interest each month and pay the principle at the end of the loan. You have closing costs in the $2000 to $3000 range. If the deal makes sense and the profit margin is high enough, this can make the sale happen. It's a pretty good deal for house flipping because you can usually flip it in that time period and you won't have to pay another set of closing costs to refinance it.

The hard money lender will not only lend the funds to buy the property, often times they will lend additional funds to complete the rehab of the property (if they agree the property is a good buy). If there is anyone with examples of this or other inovative forms of lending, please comment so we can all benefit. I had to learn about hard money lenders the hard way, after having 2 deals with the same investor client fall thru with the lender I recommended. Knowledge is power, my pain is your gain, and vice versa. Anyway, thanks and happy selling!

When you're flipping a house, know when to call a professional

Harry White (Southland Realtors) — Sat, 07 Jul 2007 22:37:24 -0500

I saw an article recently about a homeowner attempting to remodel her own bathroom. She had tackled other smaller tasks around the house but very much over estimated her ability to take on a project of this magnitude. By the time a plumber had corrected the problems, her budget for the project was shot. I think as people see the realty shows on tv and get the idea how easy it is to flip a house, this kind of gross over estimation happens more than you think. I Have an investor customer who buys foreclosures in poorer neighborhoods, does slight renovations, and rents them out. He is very handy but he knows his limits, he draws the line at electrical and plumbing.

I think it's important to know what you are qualified to do before you make an offer on a property. It is not fun to realize after the fact that you underestimated the cost of rehabing the house, and instead of making a nice little profit you end up being in the red! It sounds simple but it's a mistake that happens more than it should. Anyway, if you have had any examples of similar events you have been witness to, please share with the group. You can never have too much knowledge!

Leasing vs. flipping, what makes sense

Harry White (Southland Realtors) — Fri, 29 Jun 2007 15:29:06 -0500

In a followup to a previous post about whether one should flip a house after the rehap, or rent it out, there were a few great comments from fellow bloggers. One fellow realtor from Charlotte addressed the fact that some neighborhoods may be in a price range such that renting is not as likely a senario. That's absolutely true! If you are buying a property in a higher price neighborhood, the average person coming to that area is much more likely to be in the buying frame of mind (and to have the resourses to do it), than to want or need to rent shelter. Converesly, lower and middle income neighborhoods would be more likely rental markets.

Also, while it is a good rule of thumb that you want to spend the least amount of money on the rehab of a house in order to reap the highest profit, you also don't want to be penny wise and pound foolish. If you have a house in an upper middle income neighborhood, you don't want to buy the lowest grade countertops you can get to go in the kitchen, it will look cheap and turn off potential customers. When it comes to permanent features such as sinks, tolets, countertops, ect, be frugal but be smart. You will want to go with neutral colors and patterns, but you will want your house to stack up well with other houses in the neighborhood that also might be up for sale.

Expense control in general is the name of the game. Kitchens and bathrooms can sale a house fast, but can also kill your budget if you spend friviously. Windows on the other hand don't offer as much bang for the buck, so I would try to keep the original windows if they are in halfway decent shape. Nothing offers more returns than paint and landscaping. When buying a house with the right things wrong, those are the easiest cosmetic items you can change to update a run down house. And the difference in appearance can be staggering.

Some of these points probably come as old news to some of you, but it's easy to lose sight of these in the heat of a rehab. If there are any readers out there who have stories of their own about this topic, please share with the group. Everyone will be richer for it!

With Subprime lenders going under, available foreclosure inventories to soar

Harry White (Southland Realtors) — Wed, 27 Jun 2007 21:49:55 -0500

With the recent news that the nation's subprime lenders are going out of business because of skyrocketing foreclosure rates, this should create a great opportunity for investors looking for deals on distressed real estate. This should apply to all areas of the country to varying degrees. This could be the last big wave of this size for years to come. The reason for that is because after the shakeout of the mortgage industry, two things are likely to be the case.

First, there will be only a handfull of companies doing subprime lending in the country, and the restrictions for what types of customers are qualified will be higher than they were in the past. This will result in less foreclosures and less opportunities to pick up distressed properties. With so many properties that will soon be on the market , you can bet that banks are going to want to reduce thier inventories as soon as is reasonably possible.

Secondly, for prime mortgages you are also going to have to clear higher hurtles and quite likely put down a bigger down payment than before. There will be a lot fewer no down payment deals in the future.

Interestingly enough, this loose real estate market that seems to be tighting up was largely created by the dotcom bust in 2000. As investors looked for safer havens to put their money in after stocks went belly up, real estate was deemed the safe way to go. While I think this is still the case, there is likely going to be an exudus of investment capital from the real estate market to some other market place. This seems to run in cycles, and I wish I knew what the next market will be. If you could get on the ground floor now, you could really cash out in few years.

Anyway, whether you are looking to flip a house, or build a portfolio of rental properties, now could be the best time to jump in. If you have the cash or financing available, you could certainly negotiate with banks from a position of strength. You may offer to buy 2 or more properties at the same time if the price is right, it never hurts to think outside the box. As always, I welcome your thoughts and views and wish you a prosperous summer!

Should I flip or rent that house out

Harry White (Southland Realtors) — Tue, 26 Jun 2007 13:16:28 -0500

There are generally 2 kinds of investors when it comes to the foreclosure market. There are the types that are strictly flippers; they want to buy low - put minimal materials and labor into the house - then sell it and cash out. Then there are the landlords; they want to put about the same effort into the house as the first group - then hold on to the investment for the medium or long term while collecting rent to carry the property.

Occasionally, I run into a third type of investor - The Hybrid. I label them this because they utilize both of the first 2 group's strategies. While being a landlord (or hiring a property manager) may not be everyone's cup of tea, I think this strategy in the long term yields the highest rate of return. The main reason for this is because as the economy goes thru its various cycles thru out the years, and as the local real estate markets appreciate (and sometimes depreciate), you can sometimes lose money or maybe not make as big a return as you had anticipated. I think this is especially true for the more volatile markets of the country such as the northeast and some areas of the west coast for example, timing is very critical. More stable markets, those that have had the steady but still attractive appreciation rates over time, are a lot more predictable. You are a lot less likely to be left holding a suddenly depreciating property.

Another more recent factor that could make holding and renting your investments more attractive, are the soaring foreclosure rates that some areas are witnessing. The big market in my area is Charlotte NC. Charlotte is experiencing foreclosure rates 4 times the state average. While this gives an investor a long list of properties to choose from, it also is creating a group of future renters who lost their homes to foreclosures. So as supplies are up, demand for rentals will also be up in the near future. And according to the mortgage brokers who are also in my office, banks are going to be tightening up on their credit requirements because of the high default rates. So this also points to the rental market going back up.

At the end of the day, an investor's got to know what they can and are willing to handle. But sometimes it does make sense to hold instead of flip. If you don't currently know or understand your local real estate market, you must get up to speed to be successful in the long run. If anyone has any insights on this topic, please post you responses so everyone can benefit! Until next time, happy flipping.

Flipping houses is not for the faint of heart!

Harry White (Southland Realtors) — Sun, 17 Jun 2007 15:50:38 -0500

With all the real estate shows on TV these days, especially those that deal in flipping houses, everybody wants to get into the business. It seems so easy to splash some paint on the walls, clean up the yard, steam the carpet, and you can have a 1 month turn from buying to selling and make thousands in profits. This is not the usual scenario when it comes to flipping properties. These shows are good entertainment, and you can get some general knowledge out of them, but the devil is in the details.

First off, unless you buy a property and live in it for at least 24 months before you sell it for a profit; you will pay capital gains tax which is about 35%. Also, if you use contractors to do a lot of the renovation work, then you will further eat into your profits. So the biggest aspect of a successful flip is to buy at a big enough price discount so that you will have worthwhile profits at the end.

In addition to price, location is also a prime consideration. Ideally you would want to buy in a stable middle class or middle upper class neighborhood where prices are appreciating. There are exceptions to every rule. In Charlotte North Carolina, investors and speculators are buying and holding properties in very poor inner city neighborhoods. This is happening because Charlotte is experiencing a rising demand for inner city homes, mostly from newcomers who are used to living in an urban environment. These homes will probably be torn down and a new subdivision will rise from the rubble.

And last but not least, you want to buy properties with the right things wrong. Houses with cosmetic and landscaping issues will require less capital and less time to get back on the market. If major structural problems are an issue, you are better off crossing that property off your list unless you can get a deep enough discount in the price (and have a contractor that will cut you a deal on the repair). If you do go after a house with enough defects that will keep it from appraising for a normal loan, you could consider a hard money lender. This type of loan is short term, usually 1 to 2 years at a high interest rate. You can flip it within that time, or refinance it to a regular mortgage if you should want to keep it longer. Most serious investors will have the cash to buy outright, so this may put you at a disadvantage if you are bidding on a bank foreclosure and you need financing.

So in a nutshell, flipping properties is harder work and will take you longer to complete the flip, than is shown on TV. The more sweat equity you put into finding the property and rehabbing it, the more you will profit from it. So happy house flipping, and if you have any interesting experiences please tell us about it!

How do you find foreclosure properties in your area?

Harry White (Southland Realtors) — Fri, 11 May 2007 16:45:40 -0500

For the average lay person or beginning investor, a common question I get a lot is how does one find foreclosure properties in the first place. The most used approach is driving around neighborhoods looking for the tell-tell signs. An over stuffed mailbox, a pile of newspapers on the porch, an over grown yard, or the house is vacant on the inside. Given that death, divorce, foreclosures and bankrupcies are the usual reason for the loss of the property, you can get a lot of information out of the classified ads of your local newspapers.

The probate section and anouncement section of the classifieds is where you will find a lot of opportunities. You can obviously pay 3rd party sources to locate these opportunities for you for a fee. But the easiest and cheapest way to find up to date listings would be to utilize a local realtor who specializes in these listings. As a buyer, their services would be free because the seller or the bank who owns the property is the one who pays all the commissions. Divorce attorneys and probate attorneys are another source of leads. Anybody you know could know about a distressed property in their neighborhood, so don't overlook anyone.

If you wish to catch foreclosure properties before they go back to the bank and ultimately on the MLS, visit your local courthouse write down the addresses and aution dates of properties you may be interested in. At the day of auction, the bank will typically bid what is owed on the house to them. If you bid higher than the the bank, usually they will be happy to let it go because that means they get their money back and they are out of it.

Lastly, if you know of a homeowner who is facing a pending foreclosure, you could approach them about doing a preforeclosure sale. Some homeowners would welcome a chance to get out from under their mortgage payment and keep from taking a hit on their credit score, even if it means they lose some or all of their equity. This option is a little more complicated, so we will go into more detail in the future.

As always, I welcome any questions or comments about this or any other related topics.