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- What are the benefits to me when I subscribe to the shortsales.net database?
shortsales.net offers the largest national selection of foreclosure, preforeclosure,
government-owned, and bankruptcy properties available to private individuals.
Here you can locate bargains in real estate that you may purchase at discount prices.
Our data is updated daily, not monthly, directly from the tax rolls, government agencies,
and notices of the lenders legal actions.
View valuable real estate that you may buy, renovate, and then resell (or "flip")
for quick cash profits, or hold your properties in a portfolio of rental investments
for long term wealth build-up. Available to you 24/7, our online database includes
real estate from a wide variety of sources and represents the most current and
comprehensive inventory of "opportunity-laden" real estate available on the Web.
More than just property descriptions, we provide a "Foreclosure Knowledge Center"
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the ropes if you are just getting started in the exciting activity of investing in foreclosed
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- What kinds of properties are in your database?
Our database contains preforeclosures, foreclosure auction properties,
bankruptcies, REOs (real estate owned by lenders), and properties from HUD,
VA, Fannie Mae, and other government agencies. We also include properties
from over 100 corporate sellers. All of our information comes directly from
these sources on a daily basis, so you know that what you are seeing is fresh
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shortsales.net provides subscribers like you with all the detailed information
available on each property. Descriptions include data from property tax rolls,
the lender's files, the listing details, and the local school districts.
Property information includes the type of property, the street address, property size,
number of bedrooms and baths, and usually a photograph. Tax roll information often
provides previous sale prices, assessed value, and the age of the improvements.
The seller's listing data includes the name and phone number of the contact person to
arrange for showings and to start negotiations. No other single source includes as much
valuable information as shortsales.net. That's why we are the largest, most reliable tool
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- What are real estate foreclosures?
These are properties that have been acquired by mortgage lenders because
the owners have defaulted on the loan payments. The lender or "mortgagee"
takes the property that was pledged as collateral for the loan when the
payments are behind (that is, when the payments are "in arrears" or "delinquent"
and the owners are said to be "in default"). Lenders must follow the state
laws where the property is located. Owners default on loan payments for a
variety of reasons including divorce, illness, death of a spouse, and loss
of employment. Lenders try to work out some kind of resolution with the
owners to make up the payments in a process called "loss mitigation."
This period is referred to as "preforeclosure." If efforts to work out a
correction for the problem do not succeed, the lender will generally initiate
foreclosure procedures after three months of non-payment.
Another party may offer to solve the problem by buying the property from the
owner during preforeclosure, or from the lender at time of the public foreclosure
sale, or afterwards. This presents an opportunity for savvy investors and
prospective home owners looking for bargains. Foreclosure properties represent
an exciting way to buy real estate because they can be purchased at
discount prices, typically between 10% to 50% (or more) below market value.
These discount prices are possible because the sellers, which can be the
borrowers, the mortgage lender, or one of several government agencies,
are motivated to sell as quickly as possible to avoid further losses. As
an owner-occupant buyer, you can purchase a foreclosure as your home and
enjoy instant equity. As an investor, you can buy foreclosures for rental or
resale with built-in profit margins.
- What are the different types of foreclosure properties?
There are basically three stages to the foreclosure process. At each stage, the real estate
is thought of as a distinct type of property that a new purchaser can acquire:
- "Preforeclosures" are still owned by the borrowers who are in default on one or more
mortgage loan payments. shortsales.net lists thousands of properties that are in this
- "Auction" properties have been posted for public sale and may be bought at the time
of the foreclosure auction by arranging to pay the arrears plus other costs at the
same time the lender legally takes ownership of the collateral.
- "REO" is the term for "real estate owned" by the bank, savings and loan,
or other lending entity after the foreclosure sale (or "auction") is concluded
with no other purchaser buying the real estate.
To summarize, a preforeclosure occurs when the lender initiates foreclosure
proceedings as the result of a default. If the borrower cannot cure the
default by paying the arrears, and does not sell the property, it is sold at
a public foreclosure auction. If no one buys the property at the auction, it
becomes REO and the lender is now the seller.
There is also a fourth stage for some properties. In the case of loans
"insured" by a federal agency such as HUD or Fannie Mae, or "guaranteed"
by the Department of Veterans Affairs (VA), the properties are eventually
acquired by the government. When such properties are foreclosed by the mortgagees,
the agencies reimburse the lenders for the loan amount and certain costs of foreclosure.
The government then takes ownership of the real estate and makes arrangements to
sell the properties to the public through contractors and Realtors.
You can see how at each stage, the owner is a highly motivated seller.
Watching the progression of properties through one type to the next will
allow you to understand when is the optimum time for you to seize the
opportunity to benefit by helping others to solve the problems that have
arisen from the borrowers' difficult circumstances.
- How do lenders foreclose on property owners?
Lenders foreclose according to the laws in the state where the property is located.
There is either a "judicial" or "non-judicial" foreclosure procedure that must be followed.
States that use mortgages to document property ownership follow the judicial procedure,
which requires lenders to file a court case to prove default before they can foreclose.
States that use deeds of trust follow the non-judicial procedure, which does not
require a court case. Non-judicial foreclosures can take as little as 30 days to complete.
Judicial foreclosures can take much more time because of the need to have the court approve
the foreclosure action.
- Can people make money investing in foreclosures?
Absolutely! Most of the great family fortunes in our country have been created
through real estate ownership and investments in real properties. People just
like you are attracted to the opportunities presented by dealing with foreclosures
because frequently they can buy the properties at prices substantially below market value.
Buying properties at discount prices is the surest and quickest way to make money
in real estate. Individuals who are looking for a home can get a significant amount
of equity up front with foreclosures. Of course, there are no guarantees with any
investment, but all across the country, people earn almost immediate income
by "flipping" foreclosure properties for big profits. And many landlords are
able to buy and rent foreclosures, producing positive cash flow and long term wealth accumulation.
- How do I get started with foreclosure investing?
You have already taken the most important first steps! You are reading to
learn more about the process, and you have come to the right place.
shortsales.net serves as a "Knowledge Center" with information,
analysis of trends, and actual property listings for each of the types of
foreclosures. Our site offers the best available nationwide database
of foreclosed properties, making it easier for you to begin your search.
Property information is up-to-date and comprehensive, with the most
extensive use of sources for preforeclosures, auction properties and other
foreclosures. We provide details about the real estate directly from the
lenders, government agencies, tax rolls, and other sources. REO listings
come from foreclosing mortgagees, HUD, VA, Fannie Mae, and about 95% of
the corporate sellers in the market. People just like you all around the
country subscribe to our enormous, user-friendly property database to
find the best deals in real estate.
- Is the assistance of a Realtor® required to buy foreclosure properties?
Buying real estate is a tricky process, whether it's a foreclosure, preforeclosure, auction, REO or traditional transaction, which
requires a good amount of knowledge and experience to ensure that it is done right. So the short answer to this question is "No:"
You are not required to enlist the services of an agent or broker to buy foreclosure properties. However, we don't recommend that
you go at it alone ... especially in the beginning of your real estate investing career. It's a lot of work, which can become
overwhelming and confusing if you do not have time or experience at your disposal. A savvy Realtor® can become a very important
member of your team, finding, negotiating and closing the best deals possible with your best interests in mind. Therefore, we
encourage you to find a local agent or broker near you who can make your life easier, as well as save you valuable time, energy
and money by finding you the very best deals in your area. It will more than likely turn out to be a wise investment that pays
for itself and more in the long-term.
- How do I find cash to buy foreclosures?
You might be surprised to know that there are several sources of investment capital
available for funding foreclosure deals. These sources fall into four main categories:
- Conventional financing
- Partners who will supply cash to invest
- Lines of credit from a variety of sources, and
- Hard money lenders
You can obtain conventional financing from any number of commercial banks and
mortgage companies. This type of source can be very cost effective, providing
you have good credit. Many buyers of foreclosed properties use conventional
financing to fund their purchase. Conventional financing sources would be the
same sources you would use if you were buying a non-foreclosure property. Try your
local bank or mortgage broker because both of these sources should have competitive rates and terms.
Partners are individuals, including friends, relatives, and other investors,
who would be interested in providing some or all of the money in exchange for
a percentage of the profits you will make when the property is resold. You
can advertise by word of mouth, via the Internet, or in local newspapers. You
can use existing lines of credit from home equity loans against your own property
or from credit cards to fund your deals when you are first beginning.
You can also use hard money lenders who are in the business of providing loans
for real estate deals. These sources require you to make monthly payments on
the loan until you sell the property and pay off the balance. Check local sources,
including the newspapers, for ads from hard money lenders and investor-partners,
or consider advertising your interest in meeting such persons for the purpose of
making foreclosure investments.
- What should I be aware of in buying foreclosures?
You should be aware that foreclosure properties are sold in "as is" condition.
That means that neither the owner, foreclosure attorney, lender, government agency,
nor their agents are required to do any property repairs. You should therefore expect
and be prepared to fix up the property, either by yourself or by hiring a contractor.
Occasionally, REO properties, especially VA homes, may have had some repairs or cosmetic
work done to them, and in that case, you are buying that work too, like it or not,
so the "as is" principle still applies.
Another point is to arrange for your financing in advance of
your foreclosure purchase. Then you can bargain with the owners from
a position of strength. Contact your lenders or partners to negotiate
and settle on the terms and conditions of your financing so that you will
be prepared to complete the purchase once you negotiate a good deal with the owners.
- What is a preforeclosure?
A preforeclosure is a property whose owner has defaulted on the loan
payments and whose lender has initiated the foreclosure procedure,
usually starting with an official "Notice of Default" to the owner.
A preforeclosure property exists during the first stage of the legal procedure,
and therefore still belongs to the owner. The length of the preforeclosure period
depends on type of foreclosure process mandated by state law and the applicable legal
documents the borrower signed with the lender when the property was originally purchased.
As mentioned earlier, either judicial or non-judicial procedures are required by law in different states.
- How do I find preforeclosures?
Once again, you are at the right place. There are several ways to find out about
preforeclosures, including buying paper lists or online database subscriptions,
constantly checking the local newspapers for Notices of Default, and
contacting foreclosure attorneys directly. Does this sound difficult and/or expensive?
It is. That's why shortsales.net has been developed to offer you the high-quality,
updated, user-friendly information you need to succeed.
shortsales.net was established and is maintained by experienced real estate
investors, and we know the value of providing our subscribers with easy access
to all types of properties in each stage of the foreclosure process.
- How do I buy preforeclosures?
You must submit a written contract directly to the owners in order to buy a
preforeclosure, since the property still belongs to them during this stage.
You can initiate contact with the owners by mail, by phone, or by visiting
them, depending on your personal preference. When you make contact, find out
all you can about the physical and financial details of the property in addition
to the information you have from our database. For example, find out the condition
of the property and its major systems (e.g., roof, plumbing, heating/air conditioning,
appliances, and foundation). You are there as a problem-solver, and you MUST learn the
full extent of the problems. Also find out the number of liens, type of liens,
loan balances, and total amount of arrears. Ask to see any correspondence from the
lender(s) that will fill in the details the owners may not be fully aware of or may not
full understand. The sooner you can establish yourself as a true professional who needs
the complete and honest cooperation of the owners, the sooner you can make a reasonable
offer that will help them, and enable you to achieve a profit.
You will need all this physical and financial information to do your research
and to determine whether the property represents a good deal, given what
you (and your partners, if any) want to do with it. Once you have made the
determination, you can then prepare a written contract and submit it to the
owners. When you have successfully negotiated the purchase, you must then inform
the foreclosure attorney to stop the foreclosure process during the time necessary
to proceed to closing and settlement of the purchase transaction.
- How much cash do I need?
At first, you generally don't need much of an earnest money deposit when negotiating
with property owners. Deposits can be $1,000 or less. Later, of course, you will need
to obtain the funding to pay off the current debt on the property
- What should I be aware of?
There are two primary points to consider. The first is that all of the debt that encumbers
the preforeclosure property remains against the property until it is sold at
the foreclosure auction. This means that any "junior" or subordinate debt stays
in place, including trusts, second and perhaps even third mortgages, tax liens,
assessments, and judgments. Any of these debts incurred by the owner and secured by
the real estate, which may exist against the property, must be paid off. Most of the
time, there is only one trust deed or mortgage on a property; however, it is of vital
importance that you find out about any other possible indebtedness before you spend too
much time and money pursuing a purchase of the property.
The second issue is that only the individuals who are named on the title
can sell the property. This seems obvious, but it can go overlooked and
valuable time can be wasted. All of the owners of the property must agree
to sell it to you before a legal sales transaction can be completed. Make sure that you
know who ALL the owners are and that they are all interested in selling before you
start negotiating a deal. Most homes are owned by individuals or couples, so finding
them and negotiating with them should be straightforward. Owners who have co-signors
or non-resident partners, and owners who have abandoned the property and may have moved
out of the area will obviously take additional time and effort to locate, negotiate with,
and get documents signed. Just remember that even one deal that nets you thousands of dollars
will make your time well spent.
Real Estate Owned (REOs)
- What is an REO?
An REO is "real estate owned" by the mortgagee, usually a property that was
not sold at the foreclosure auction to a bidder and was therefore acquired
or "taken back" by the lender. Since lenders are not in the business of
managing real estate, they are willing to sell REOs quickly to interested
homebuyers or investors. REOs are sometimes called "special" or "non-performing"
assets to distinguish them from properties that are owned and actually used by the
lenders, such as corporate facilities or branch offices.
- How do I find REOs?
Many people find REOs by following the properties through the stages of the
foreclosure process (i.e., preforeclosure to auction property to REO) or by contacting
the lenders REO or Special Assets departments. Some lenders establish relationships
with local Realtors® who manage and market the REOs for sale to the public.
You may be directed by the lenders to contact these real estate brokers or
agents to find out about available properties.
Of course, we know there is a better way to find REOs! As a subscriber to shortsales.net,
you benefit from the work of a nationally-connected company that "makes searching easier."
For less than the cost of a tank of gasoline for most cars these days, you can see all the
information you need 24/7 for a whole month. And it comes to you in the comfort of your own
computer station at your home or office, along with helpful instruction and tips.
You know the facts are up to date as part of the largest database of "opportunity-laden"
bargain properties in the country. Today, more than ever, working smarter is much
better than working harder.
- How do I buy REOs?
You can buy an REO by submitting a written contract directly to the lender
or through the lender's Realtor®. As in the case with preforeclosures,
find out all you can about the REO and determine whether it is a good deal
before you submit the offer.
- How much cash do I need?
Lenders will generally request an earnest money deposit to be submitted
with the offer. The deposit may be up to $5,000 or more, depending on
the lender and the value of the property. Once you have successfully
negotiated with the lender and have agreed to the terms and conditions
of the deal, you then need to obtain your funding in order to close
or "settle" the purchase of the property. Whether or not the lender
will carry financing is an important consideration. Other key terms to
negotiate include whether contingencies are allowed based upon professional
inspections, the amount of time you have to close, and so on.
- What should I be aware of?
Some lenders will be interested in offering you a loan to buy their REO; others will not.
Some will provide financing to investors; others will only provide financing
to owner-occupants. You must communicate with each REO owner to determine its
loan policies, along with its financing terms and conditions.
- What is a HUD property?
The U.S. Department of Housing and Urban Development (HUD) is a federal agency
that insures mortgages to homeowners through its Federal Housing Administration (FHA).
HUD acquires properties from lenders that foreclose on FHA-insured mortgages
and HUD then offers them for sale to the public. These properties are properly
referred to as "HUD owned." Technically, they are not "HUD foreclosures" or
"HUD repossessions" because HUD is only the receiver of the property AFTER
the mortgage lender has completed the foreclosure. Although HUD becomes the
owner and sells the property, it did not foreclose, because only the mortgagee
had that legal responsibility.
- How do I find HUD properties?
shortsales.net is your single best resource for HUD homes nationally.
HUD also advertises to the general public through over a dozen asset
management and marketing (M&M) companies that are contracted by HUD
to maintain and sell its properties. You may check the HUD Web site
for the names of M&M Contractors who list the properties by posting
them on their respective Web sites.
You can also find HUD properties by contacting Realtors® who are
subcontracted by the M&M Contractors to list and sell them.
These brokers list the HUD properties assigned to them in the
Multiple Listing Service (MLS), where they are accessible to other
MLS members. Ads in your local newspapers or contacts with local real
estate brokerages may enable you to learn the names of brokers who have
registered with HUD to show and sell HUD properties in your selected areas.
- How do I buy HUD properties?
Bids to buy HUD properties must be submitted during the bid period through a
registered real estate broker. Your agent will generally submit your
bid using HUD's Web-based, electronic bidding process. A computer
system stores the bids until the end of the offer period, which is
the bid opening date, and automatically performs the calculations to
determine which bid offers the highest net proceeds.
If you are the winning bidder, the M&M Contractor, acting on behalf of HUD,
will notify your agent who will then notify you. The agent must then submit
your signed sales contract (on the HUD-9548 form) within 48 hours, reflecting
the offer that was made electronically and that became the winning bid. The
agent should have all the paperwork you need. Once your contract is submitted
and approved, HUD will ratify the contract and schedule your settlement date to occur within 30-60 days.
- How much cash do I need?
HUD requires an earnest money deposit as low as $500 (for properties that sell for $50,000 or less)
that must have been supplied to your real estate agent at the time of
electronic bidding. This deposit will be submitted to the HUD
Closing Agent immediately after your bid is acknowledged as the winning offer.
You will have time to finalize your financing, but you must submit a pre-qualification
letter from a lender at the time your contract package is sent to the M&M Contractor.
- Can I buy HUD properties for $1?
No. Only registered state and local governments can buy HUD properties
for $1. HUD offers some of its properties to government agencies to support
community programs. These properties are not generally available to the public.
As an individual, you can only buy HUD properties using the process described above.
- What should I be aware of?
Even though HUD property listings are available to the general public,
there is an initial period during which only owner-occupants can submit bids.
At the end of the period, if the properties have not sold, the bidding is
opened up to both owner-occupants and investors. Properties available to
investors are noted in the database.
Also, make sure that your contract package is complete and that it exactly
matches your bid. The package, with a copy of the pre-qualification letter
and cashier's check for the earnest money amount, must be received within 48
hours after the bidding closed. Otherwise, HUD requires the M&M Contractor to
cancel your bid and return the property to the market or offer it to the next highest bidder.
Fannie Mae Repossessions
- What is a Fannie Mae property?
Fannie Mae is the popular name used to identify the Federal National Mortgage
Association (FNMA). Fannie Mae was established by the government to purchase
FHA and other mortgages in order to bundle them for sale on the secondary
market as "mortgage-backed securities." Fannie Mae acquires properties
from lenders that foreclose on such loans and offers them for sale to the public.
- How do I find Fannie Mae properties?
shortsales.net gives you access to information about these
properties just like all other sources of REO. Fannie Mae
advertises its properties to the general public via its Web site.
The properties are also listed in the local Multiple Listing System (MLS),
which is accessible by Realtors®. You can contact local real estate brokerages
to find agents who market and sell Fannie Mae properties.
- How do I buy Fannie Mae properties?
Fannie Mae sells its properties via real estate agents. You must present your
offer to the agent who in turn presents it to Fannie Mae for consideration.
Fannie Mae will review each offer and notify the agent of its decision. Fannie
Mae will accept your offer, reject your offer, or make a counter offer. The
counter offer demonstrates Fannie Mae's willingness to negotiate for a price
that is mutually agreeable to both parties.
- How much cash do I need?
As with other properties, an earnest money deposit is required with your contract.
Fannie Mae offers a variety of loan programs including some with low down payments.
These down payments are typically between 3-5% of the purchase price.
- What should I be aware of?
Although Fannie Mae may sometimes make a few repairs to properties to increase
their value, the properties are sold in "as is" condition. This means that
Fannie Mae does not guarantee any work that may have been done on the property.
You will have to check the repairs to validate the quality of the work.
- What is an auction property?
An auction property is one that is sold or about to be sold at a public auction,
usually at the county courthouse. This means that the property owners
could not payoff the arrears or sell the property before the date of the auction.
The auction is open to all bidders, including investors and homebuyers, and it
is sold to the highest bidder. An auction property is under the control of the
foreclosure attorney who conducts the sale on behalf of the lender.
- How do I find auction properties?
Our shortsales.net database enables you to know about the properties in
your selected areas well in advance of the auction. Many foreclosure
investors and bargain home buyers work with the original owners during
preforeclosure, then if that process does not produce an acceptable deal,
proceed to buy at the auction. It is important for you to be patient and diligent
in using our database and maintaining your efforts to acquire the properties you
find that offer opportunities. Nothing succeeds like persistence in this business!
- How do I buy properties at auction?
Buying properties at the foreclosure auction or "at the courthouse" is an
experience unlike any other in purchasing real estate. You will look for
the attorney who represents the interests of the mortgagee and assure him
or her that you are qualified to buy the property at or above the price set
by the court in a judicial state, or by the trustee in a non-judicial state.
That minimum bid price includes the full amount of the unpaid indebtedness
owed to the foreclosing lender, plus legal costs. Other bidders will be
investors like you and possibly junior lien holders whose interests are
otherwise extinguished by the foreclosure action.
The attorney will qualify bidders by asking to see their earnest money deposits.
We suggest you contact him or her in advance. You will need a cashier's or
certified check that is usually non-refundable if you win the bid. This
secures your purchase of the property and is not contingent on financing or
inspections. Observe closely when the attorney examines the deposits to
identify the real bidders and thereby establish the extent of the competition.
The winning bidder will have to be fully prepared to close within as little as
30 days after tendering the deposit to the attorney and signing the contract.
The attorney starts the bidding at the specified minimum amount and
continues to solicit bids from you and other interested parties until
the winning bidder is determined. Don't picture the image of a fast-talking
auctioneer with a gavel. Although, the bidding process can occur very quickly,
often in as little as three minutes, it is more like a conversation among a few people,
with the attorney in the center. Be vigilant in tracking the bids and watching your competition.
You should always decide on your bidding strategy and your upper limit before you start bidding.
- How much cash do I need?
It depends on the seller. Contact the foreclosing attorney in advance and
don't be too surprised if the requirement is for an amount equal to 10%
of the minimum bid price. In some jurisdictions, the required earnest
money deposit amount is specified in the sale notice either as a percentage
or a fixed amount. If you are the winning bidder, you must pay the deposit
in the form of "good funds" such as a cashier's check immediately after the
auction. This amount will be forfeited if you fail to close.
- What should I be aware of?
There are three points to consider. The first point is that auctions start on time
and are conducted very quickly, so make sure you arrive early and introduce
yourself to the attorney to demonstrate that you brought the correct amount
of earnest money deposit in the required form. Brief last minute questions
may be asked and answered then. Secondly, you should expect to have some competition,
even if it is minimal, so make sure you have your bidding strategy and the top price
you will pay fixed in your mind in advance. The third point, as mentioned before,
is that you must have cash or a cashier's check, and must be prepared to sign the
seller's contract and settle the transaction shortly thereafter.