The Process Of A Foreclosure

By Author: Tony Starks
Total Articles: 2
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Real Estate is an excellent investment
Real Estate is an excellent investment because its always in demand and everyone has to have a roof over their heads. Real Estate is a comodity just like anything else in our society and when the prices get too high (like the stock market) it adjusts down to where the majority of buyers believe that there is value. So when Real Estate (R.E.) is high, few buyers buy and when R.E. is priced below the comparibles more people buy. If you buy and your an owner occupant and you plan to stay in your home for about 5-10 years, the market 'ups & downs' don't really concern you. However if you are a speculator and you buy near the top of the market and the values peak and turn down, you could be holding a commodity that is worth much less than what you payed for it. (Which is not a very good short term investment)
Exit strategies when buying a property are very important. In our recent market many speculators and even home owners have extended them selves by buying expensive properties with the expectation of continued appreciation. Owner occupants with poor credit and no money ...
... down used short term arms (adjustable rate mortgages) and went out on the limb to get involved with property that they also hoped would continue to appreciate, and so because of all the speculation we have the highest amount of foreclosures than ever before. Most home owners thought they they would be in & out of their property in a short period of time, thinking they would have sold the property before the interest reset to a higher percentage. However because property values went down the property owners are not able to sell their properties, their arms left them with higher interest rates and larger payments that they can't meet. Now home owners who actually own property and have lost value are not so worried because they still have a roof over their heads. Home owners in this situation just plan on staying put until a couple years pass and the value comes back. Now the circumstances have left first time home buyers and investors with an enormous opportunity to make some money off of foreclosures. Its a given that money in Real Estate investment is made when you buy the property, its a great time to buy it at a discount with very low interest rates. The only thing that is challenging us right now is the exit plans, and so with the amount of present inventory its important that you buy at a low price as well as sell at a low price compared to properties in your area. 'Quick flips' sometimes take a little long to sell, but its always best to price a property at a price thats less expensive than the other properties that are going in your area.
Foreclosures have been around forever, only now there are just more of them. (Its like the buzz on the street) Seasoned and novice investors want to invest in foreclosures. In 2004 the number of foreclosures was 2% of the total sales in USA, In 2008 the number of foreclosures was 30% of the total sales in USA. Can you see why there is so much interest in foreclosures? The reason why they are so attractive is because if you are going to be successful in R.E. you need to work with a motivated seller, and there are not any more motivated sellers who are going to loose their homes because they are not making payments. Prior to this point foreclosures were typically a result of divorce, unemployment, and medical bills. In addition to these recurring reasons, today they are also a result of the adjustable rate loans being reset from a low I.R. to a high I.R. (interest rate). Which is making the payment higher and most likely unaffordable for the home owner, at the same time the property value is dropping and leaving no equity.
What happen to create this whole situation? Well people with bad / poor credit were given loans when they should not have gotten them in the first place because they could not afford them. In California they were actually qualifying people 22X they're actual annual earnings, instead of the usual 3X. They were hoping that the appreciation would continue and get out of the property with a decent amount of cash, to use for a down payment in a more affordable market. However the market lost its steam, property values dropped, and buyers were stuck with a property that was usually worth less than what they bought it for; so by the time their loan reset they could not make the payments. Investors also bought homes, hoping they could ride the gravy train and earn a lot of money for being at the right place at the right time. Many of these people that are actually walking away from their homes have good credit but they just can not afford the payments. What they are thinking is, why make high payments on a house if it is not worth what i payed for it? Sometimes it takes several years for the actual property value to come back, so they just let their houses go to foreclosure. Which brings us to a great opportunity for the investor who knows what their doing. Every once in a while the planets are aligned and everything is in sync and there is stupendous opportunity, which is exactly what is going on in Real Estate today.
Tony is a member of "http://www.foreclosemorehomes.com"> Which is a step by step guide teaching others how to benefit from foreclosures. http://www.foreclosemorehomes.com . Members can also by the extended dvd session after the free trial (at)foreclosemorehomes.com .