Cashing Out Of Preforeclosures - Exit Strategies For Maximum
By Richard Odessey, Fri Dec 9th
One of the quickest ways to real estate profits is throughpreforeclosures. What is a preforeclosure, exactly? Apreforeclosure takes place from the time the bank gives noticeof default to the time the house sells at auction. Typically,this is around the time of 90 days into default, depending onstate law.
The key to preforeclosure investing is equity - the differencebetween what a house will sell for and what is owed on thehouse. Preforeclosures allow you to buy a house for less thanfair market value, creating immediate equity for yourself.
Preforeclosures are your opportunity to buy low and sell high,maximizing your profit quickly. How can you cash in onpreforeclosures and exit with the maximum profit?
Here's how to do it.
Step 1. Find and Secure the Preforeclosure
You must submit a written contract directly to the owners inorder to buy a preforeclosure, since the property still belongsto them during this stage. Ads in newspapers and subscriptionsto preforeclosure listings will help you locate the properties.(See more about this in article 1.) Once you've located aproperty, you'll need to do the following to screen them andprequalify your homeowners:
· Find out all you can about the physical and financial detailsof the property. (Are there liens? Loan balances? Major repairsneeded?)
· Gather correspondence from the lender(s) that will fill in thedetails the owners may not be fully aware of or may not fullunderstand.
· Meet with the homeowner at their property and have them signthe documents that place you complete control of the house.*Make sure that you know who ALL the owners are, and that areserious about selling before you start negotiating a deal.
* Note: Do this quickly once you have decided you are interestedin the property as a solid real estate investment. This willhelp you turn around your equity quickly!
Once you establish that you are there to help the homeowners,you can make a reasonable offer that will that will help youachieve the profit you're looking for.
Step 2: Begin Your Pre-Sale Marketing
One of the most important steps in securing your preforeclosureis to begin marketing as soon as you have your paperwork inorder. It's time to cash in on your equity.
Here's how to get started:
Stake your claim - literally.
You're going to need a heavy supply of signs. Once yourpaperwork is in order, take a picture of the front of theproperty. You'll want to keep some “For Sale by Owner” signs inthe back of your car and have them ready once