News / Business
Purchasing Foreclosures, Short Sales and Auction Properties
Why 95% of the people who write offers on these types of properties never get their offer accepted.
Maybe a little bit of both. A lot of times these foreclosures create so much activity by the time that they finally close escrow, they are paying the full market price. A lot of people do not even realize what the comparable sales of the last 45 days are and what the property is actually worth TODAY. Work with a company that educates you on exactly what to do in order to get your offers accepted. Make sure you are not over-paying for a property. What is a good deal? If you can get at least 10% below the most recent comps from the last 45 days, you are doing good. Sometimes, we are even able to get about 18% - 20% below the most recent comps. This lower price allows for a little further market correction. "A lot of times it depends on the area," says Solomon.
Fifty percent of the people who try to qualify for a loan modification (an option to foreclosure), just don’t qualify for it. For more info on how to qualify for a loan modification and what questions to ask, click on this previous press release. If you don’t qualify for a loan modification, unfortunately, you’re only option at that point is a hard money loan (if you have enough equity), a short sale or foreclosure. Don’t become a future foreclosure statistic. Learn what your options are. At Solomon Financial, we are changing that by educating people, one client at a time.
So how do we do help people get their offers accepted? For starters, we have a network of over 10,000 clients. Some of these people are having difficulty making their monthly mortgage payment. Some of them are looking for opportunities in today’s market. We are just introducing these people to each other. By networking everyone wins.
For those who don’t qualify for a loan modification because they earn too much money or have too much money in the bank, you must learn and understand the tax and credit ramifications of doing a short sale or letting your property go to foreclosure. That is what we call a pre-foreclosure.
Two Types of Pre-foreclosures
The one’s with equity will probably lose their home if they don’t sell. These are the ones that all the late night infomercials on television tell you to find, but you got to pay thousands in order for them to tell you that. This is where you get to meet all the vultures in our industry. Maybe the homeowner tried to call a hard money lender or two only to find out that these hard money lenders are only lending up to a maximum of 60-65% LTV (loan to value) based on a conservative appraisal amount. These people need to obviously sell quickly and walk away with, at least something, in their pocket. It is a very upsetting and devastating process for the people who have equity who are losing their homes. They have seen their property value drop dramatically along with their equity and they are being forced to sell or lose their home to foreclosure. Not a very fun time in their lives.
Investors here will pay 80-82% of the current market value (from the last 45 days) and get these deals closed quickly all at one location. We want everybody to walk away with something. We get the buyer a great deal and make sure he qualifies (on a 30 year fixed). We get the seller some money out of the deal and obviously they avoid foreclosure. It allows the seller to have some money for a deposit on an apartment/home and reduce their payment to a much lower monthly rent. A lot of them don’t want to leave their neighborhood because their kids have friends so they find a home for rent right down the street from where they were living. It works out for everyone involved.
The one’s without equity are called “pre-foreclosure short sales.” This category has no equity and are just trying to save their credit report and minimize their taxable situation, if applicable (please consult with your CPA). There are also some potentially significant tax issues you must be aware of, if you have a capital gain on the sale of your primary residence of more than $250k (if single) or $500k (if married). A lot of people used their homes like a cash register and kept pulling money out of them. Then they got into a little financial difficulty, they have no equity left to pull out any more cash and are now faced with having to sell the home when it is upside down or let it go to foreclosure. You need to get proper council and tax advice. We can certainly shove you in the right direction and help you out and explain your options. We are certainly not tax advisors, Real Estate Tax Attorneys or CPA’s but have contacts in those areas.
In putting people together, it's important to help people who want help and are ready to figure out what to do. The most upsetting thing for us is that people don’t react. It is too over-whelming for them. Homeowners that are losing their home are very emotional and are feeling terrible. We see it and deal with it daily.
Learn your options with a company who has a “AAA” rating on the better business bureau and sign up for one of our free web classes or “live” seminars.
Call Solomon Financial Line (800) 811-7709
Go to: www.freemoneyhour.com/webinar6.php
