Jaret Ghent

Foreclosure is the proceeding in which a Bank or other Secured Creditor sells or repossesses a real property after the Homeowner has failed to comply with their agreement with the lender. This agreement is called a mortgage or a deed of trust. This is most common when a homeowner has defaulted on their payments or obligations to the bank or creditor. Depending on the terms of the agreement, the lender now has the right to call the loan due or sell the property to satisfy the debt owed.

The 3 Stages of Investing in Foreclosures:

There are three basic stages of foreclosure, each with specific investing strategies:

1. Pre-Foreclosure

2. Auction

3. REO

Most Real Estate investors would like to acquire Real Estate at 70¢ on the dollar or less, including repair/rehab costs. While successful property acquisition is possible in all three stages of foreclosure, there is greater success in properties that are in the Pre-Foreclosure stage.

If you are truly looking to purchase properties at 40-70¢ on the dollar, this is the stage in which you should concentrate. While purchasing properties at this stage may be a little bit more difficult, the discounts can be much larger. Why are Pre-Foreclosures more Profitable? Simple! As the property advances through the stages of foreclosure, there are more costs associated with processing the property. Those penalties, interest, legal fees, filings, etc., all add to the cost of acquiring the property.

So, let’s take a look at the three basic types of foreclosure properties as they progress through the process.

Pre-Foreclosure:

A Pre-Foreclosure is created when the homeowner falls behind on the primary mortgage, secondary mortgage or home equity loan payments. The Foreclosure process usually begins once the homeowner has missed three consecutive monthly payments. Once the lender starts the foreclosure process, the homeowner has only a set amount of time to bring their mortgage current before the formal foreclosure process begins. During the preforeclosure period (ranging anywhere from 21-455 days), you can be a tremendous asset to the homeowner, by providing alternative solutions to foreclosure and helping them to avoid acquiring additional penalties and fees that can be tacked on to their arrears. You will find that the Pre-Foreclosure period is the ideal time to locate properties. During this stage you can do everything from an equity buyout, to taking the property subject-to, to doing a double closing or simultaneous closing, to a lease-back, and, in most cases, a shortsale. At this stage you are purchasing the home directly from the homeowner before they lose their home at a Foreclosure Sale.

Auction/Sheriffs Sales:

Of all the different types of deals you can pursue, purchasing real estate at the courthouse requires the most experience and the most resources. If you are going to bid at auction, you will be competing with the lender as well as other all-cash, seasoned investors. Though auction deals can be lucrative, they are not for the amateur investor. To acquire these deals you will need to use your own funding, putting 10% to 100% of your bid price down immediately in the form of a certified check. Any balance would also be due immediately within 30 days or less after you accept the bid. The time frames for full payment depend on your county. Property purchased at auction can be resold by the winning bidder, but not usually assigned. Be careful, because poor research procedures can cause your deal to be a loss, as it is almost impossible to pre-inspect the property. Therefore, you are risking overpaying for a property that needs a lot of repair/rehab. You may also be responsible for evicting the current homeowners, which will add more costs and risks to your deal. Carefully check your state’s regulations regarding homeowner redemption timeframes. If you are in a state that allows redemption, the homeowner has the ability to purchase the house back, typically within 6-12 months for the same price it sold at auction, plus interest. As the auction winner, you will not be able to resell the house during this time period, and any money you put into the house can be lost if the previous owner redeems. After spending a lot of time and effort on research, the auction may be canceled or postponed. In many cases, the foreclosing lender will bid up to what is owed on the property to protect their interest in the property. Therefore, they end up being the winning bidder or raise the bids to almost market value. However, if you have done your homework correctly and you have the resources to personally invest in the property, the payouts in some circumstances can be very large.

REO’s – Real Estate Owned or Bank Owned:

REO is an acronym for ‘Real Estate Owned’ by the bank or lender. An REO is created after a foreclosure auction occurs and the lender is the winning bidder or the minimum bid has not been met and the property reverts back to the lender.

Often, what is owed to the bank is more than what the property is worth at fair market value. Therefore, many auctions never result in a sale. If the lender is the only bidder, the lender will gain possession and take back the title on the property. When purchasing an REO, you can usually do a traditional closing with traditional financing. You will be able to inspect the property the bank has already obtained clear title. In most cases, you will purchase the property as-is. You can not usually assign an REO contract to another person or investor. The bank usually requires an earnest money deposit and if you fail to close on the deal you can lose the deposit.

Feel free to contact me for more information or to sign up to receive a free list of Pre-Foreclosure and Bank Owned Properties.

Kara Machado in her own words:

After a couple-year stint of the most horrible luck, I decided it was time to change career goals.

I’d been a journalist in print media for several years before losing my job in 2008. Since then, I dealt with being sick, losing just about everything, a rape, having friends and family steal from me, moving to another state, being homeless with my family until three days before Christmas, relying on rides from others, having a new son and then almost dying after I had him … the list goes on.

However, being able to stand on somewhat firm ground since all those horrible things happened, I thought, “I’m tired of struggling each month. It’s time to make a change and make a future for family and myself.”

For some reason, I decided I would look further into being a real estate agent.

I found Jaret Ghent, Founder and Broker of Vision, on Facebook and asked him a couple questions about the business. Rather than give me a few short answers, he warmly welcomed me to come into his office to meet with him.

Long story short, Jaret assured me there was hope, even though he was not aware of my past difficulties.

As soon as I was able to, I paid to go to real estate school at Genesis Training Group. That was – aside from meeting with Vision’s Team – one of the best decisions I’d made in a long time. Not only did I have one of the most rewarding educational experiences in my life, I learned how to think positively. I also learned that being a real estate agent is a public service and how great a feeling it is to help make things easier for people who are making the big leap into buying or selling a home.

After being pushed around by shady people in the business while dealing with trying to save my own home, I was pleasantly surprised to find people like those were not a part of the Vision Team. Vision’s goal, it seemed to me, is to work from the inside out: When you support, encourage and help those you work with, they are better able to serve those who come in the doors for help selling or buying homes.

Although I’m a little nervous about having other people’s hopes, fears and dreams in my hands as they go through the process of buying or selling homes, I feel confident that I’ll be in the most supportive environment to do so.

I want to not only secure my financial future by getting into this new career field, but I also want to help eliminate some of the fears and concerns of those who walk into Vision’s doors.

I would recommend Vision Real Estate, whole-heartedly, to both clients and agents looking for a different approach to the business. The people at Vision have been there for me from my first questions, to lending me a calculator for school, to helping alleviate some of the schooling costs, to helping me to take my state exam.

For people to just lend a hand to a stranger like me, shows me they have heart.

I have overcome so much and am thankful I met the caring and helpful people at Vision. Vision made my decision to change career paths an easy one. If they are able to do that, I have no doubt that anyone who walks through Vision’s doors will get the same helping hand.

God bless those at Vision. I look forward to becoming a part of the Vision Real Estate Team.

As the market shifted we found it extremely important to begin becoming an expert in FHA financing. The FHA is quickly becoming the lending vehicle of choice for many wanna-be Home owners. Here are some little known SECRETS of FHA Loans.

1. FHA Can Help Clients With Blemished Credit History. New programs are coming out that will allow borrowers with less than perfect buy a home.
2. Bankruptcy. You can obtain an FHA loan two years from the date of your bankruptcy discharge, as long as you've maintained good credit since your debts were discharged.
3. Foreclosure. If you keep your credit in excellent shape after a foreclosure, an FHA loan will be available to you two years from the final date of your foreclosure.

Ultra Competitive Rates & Terms

* There is little or no adjustment to the interest rate for an FHA loan, as the rates vary within .125 percent of a conventional loan.

* Mortgage insurance is funded into the loan, meaning a premium of 1.5% is added to the loan balance instead of being paid out-of-pocket. In addition, a small portion for the mortgage insurance premium is added to the monthly payment, but it is far less than private mortgage insurance premiums.

* Qualifying Borrowers can finance 97% of the purchase price and put down 3 percent. In some instances, when combined with other types of loans, the down payment can be zero.

1. Allowable debt ratios are higher than the debt-ratio limits imposed for conventional loans.
2. Borrowers can get up to 6% back from the seller to help with all of their closing costs.

Forget what you thought you knew about FHA...

At one point, FHA repair demands were so excessive that sellers would discount the list price to buyers who would agree to obtain conventional loans over FHA loans. Today the requirements appear more reasonable.

* You can purchase a home in need of repairs and finance the repair costs with the mortgage. This way you can make the necessary repairs immediately without having to come up with the money yourself.

* You can purchase manufactured homes and condominiums with a FHA loan.

* You can finance the cost of energy-efficient repairs with the mortgage.

* Defective roofs that leak still need to be replaced but an older roof does not necessitate replacement if it doesn't leak. An roofing certification is acceptable in most cases.

* Windows that stick upon opening or have cracked panes do not require replacement.

* FHA appraisals do not take the place of a home inspection, and never have. Buyers should still obtain a professional home inspection.

It's time to take advantage of the return of the FHA loan! It's about to become significantly better than before, with higher limits and an easier appraisal process. If you have questions or comments let me know I have spent hours trying to become an FHA EXPERT, which is a challenge with the everyday mortgage changes.

FHA loans are the best choice for most Buyers across America. The FHA Loan is not just for First Time Home Buyers anymore.

In fact, it is quickly becoming the loan of choice for almost 90% of all Home Buyers. Visit this web address for updated FHA mortgage limits for your state and other general FHA loan information.

http://www.hud.gov/offices/hsg/sfh/lender/sfhmolin.cfm