Title: Making Money Helping Sellers: The 6 Things You Need to Know
1Making Money Helping Sellers
- The 6 Things You Need to Know to Make Your
Fortune in TODAYS Foreclosure Market
2The 6 Things You Need to Know
- How todays foreclosure market is different than
it was 10 years ago - How the foreclosure process worksand where YOU
can profit - How to find the deals
3The 6 Things You Need to Know
- 4. How to buy at a discount BEFORE the auction
- 5. How to buy foreclosures without using YOUR
money - 6. How to profit once youve tied a deal up!
41 Todays Foreclosure Market Really is New
- The typical home loan, 1993
- 30 year fixed rate
- 5-20 down
- secured by a first mortgage
- made to a borrower with average to high credit,
or government-insured
5So when a home owner in 1993 got behind on
payments
- It was usually because of a financial or personal
crisis - He had enough equity to offer his property at a
below-market price for a quick sale to avoid
foreclosure!
61 Todays Foreclosure Market Really is New
- By 2005
- ARMs and interest-only loans were the largest
part of the mortgage market - Today as many as two-thirds of home buyers are
taking out variable rate mortgages, gambling that
interest rates won't rise faster than their
ability to payConsumeraffairs.com, 5/05 - The dramatic increase in the prevalence of
interest-only loans, as well as the introduction
of other, more-exotic forms of adjustable-rate
mortgages, are developments that bear close
scrutiny. To be sure, these financing vehicles
have their appropriate uses. But to the extent
that some households may be employing these
instruments to purchase a home that would
otherwise be unaffordable, their use is adding to
the pressures in the marketplace." --Alan
Greenspan, 9/05
7Look at the Effects of Rising Rates on Payments!
- Payments on a 150,000 loan, 30 year loan at
- 5 interest801.89
- 6 interest894.85
- 7 interest992.17
- A 2 rate increasea 24 payment hike!
Rates on a typical arm can go up this much in 1
year
81 Todays Foreclosure Market Really is New
- By 2005
- No Money Down Loans were the Rule
- an eye-popping 43 of first-time home buyers
purchased their homes with no-money-down loans."
Forbes Magazine, 3/04
91 Todays Foreclosure Market Really is New
- By 2005
- The Subprime loans market exploded (then
imploded!) - A subprime loan is 10 times more likely to
default than a conventional, prime-rate
loan.The Cleveland Plain Dealer - the subprime sector has grown from 150 billion
in 2000 to 650 billion today, about 20 of the
overall marketUSA Today, Feb. 8, 2007 - Thanks to home equity loans, easy 2nds, and 125
cash-out loans, owners have MUCH less equity - Americans borrowed 705 billion against their
home equity in 2006, vs. 266 billion in
1999Economist.com
10The other factors
- Historically high homeownership ratesmore loans
to go into default - Flat/falling house prices throughout the US
- Higher interest ratesmedia-induced real estate
bubble panicfewer buyerslonger time on market - Although the Texas real estate market is healthy,
homes don't sell fast enough to allow most owners
to avoid foreclosure. San Antonio Express News
8/06
11So when a borrower in 2008 gets behind on
payments
- Its just as likely because of an adjustment in
his monthly payment as that he had a financial
crisis - He must sell for full price (or full price) to
cover his mortgage - He cant sell because there are fewer buyers
- And so he goes into foreclosure and loses the home
12All of Which Brings Us To
- The highest overall number of loan defaults years
- A banking system that is straining to deal with
huge numbers of bad loans and REOs - Desperate sellers who believe that they are out
of options - and it will get WORSE, not BETTER, in the next
3-5 years!
13Nationally
- We're all going to have to be more creative in
the next 12 to 24 months" in selling foreclosed
homes, says Chad Neel, president and chief
operating officer of Fidelity National Asset
Management Solutions, a unit of Fidelity National
Information Services Inc., Jacksonville, Fla. Mr.
Neel's company helps lenders manage and sell
foreclosed homes. Wall Street Journal, Nov. 30,
2007
14More news
- The number of U.S. homes that slipped into some
stage of foreclosure in 2007 was 79 percent
higher than in the previous year, a real estate
tracking company said Tuesday. Many homeowners
started to fall behind on mortgage payments in
the last three months, setting the stage for more
foreclosures this year. MSNBC.com 1/25/08
15More news
- A report released Monday by First American Core
Logic rates foreclosure risk for 381 metropolitan
areas, and found that the risk of foreclosure has
jumped 22 percent from January 2007, and 9
percent from three months ago. - The Core Logic report speculated that foreclosure
risks may get a lot worse, and stay that way for
a long time. - In the wake of recent speculation that the United
States economy may be entering a recession - or
is already in one - the report stressed that
defaults continued rising for almost 2 years
after the end of the last recession in 2001.
Based on that history, Core Logic expects that
foreclosure risk will continue to increase over
the next 18 months, at least. --CNNMoney.com
January 28th 2008
16More news
- New foreclosures increased 30 from the 2nd to
3rd quarter of 2007 - New foreclosures increased 51 from the 3rd
quarter of 05 to the 3rd quarter of 06and 100
from 3rd quarter 06 to 3rd quarter 07 - In November 2007, 446,726 properties nationwide
entered some stage of the foreclosure process - 1.3 million households received some kind of
foreclosure notice in 2007 - This represents 1 new foreclosure filing for
every 99 households nationwide - Source RealtyTrak
17And locally
- Indiana ranks 10 among all states in number of
foreclosures - More than 1 in 60 home owners in Indiana received
some sort of foreclosure notice in 2007 - There are over 16,000 bank-owned properties in
Marion county alone
18Illinois SB 2349 (full text at
www.ilga.gov/legislation)
- AKA The Mortgage Rescue Fraud Act
- Applies to people and companies offering
forbearance or loan modification services - Creates requirements and disclosures for these
services and provides for penalties if not
followed - Applies to investors who buy foreclosures and
lease back to the sellers - Creates disclosures, right of cancellation of the
contract, and limits the price of resale to the
seller to 125 of the purchase price. Also
requires the investor to pay the seller at least
82 of FMV if the seller cannot repurchase the
property.
19And locally
- Cuyahoga County, Ohio, which includes Cleveland,
has more than 16,800 homes that have been
abandoned because of foreclosures. Infoshop
news.com 1/27/08
20Our Goal as Real Estate Entrepreneurs
- Should be to grab this opportunity (it wont last
forever!) by learning all the ways to help these
desperate sellers, while making a fortune in the
process.
21The Foreclosure Summit
- Everything You Need to Know to Profit from
Todays Exploding Foreclosure Market - More than 20 National, Regional, and Local
Experts in early-morning to late-night workshops - May 2-4, 2008 (Bonus Day May 1)
- Adams Mark Hotel, Indianapolis, In.
- 1,695 per person, 1,995 per couple
222 How a Property Makes its Way Through the
Foreclosure Process, and How to Make Deals at
Each Stage of the Game
233 Reasons to Know the Process
- Because WHOS INVOLVED depends on where the
property is in the system - Because how you FINANCE the deal depends on where
the property is in the system - Because theres a way to make money at every
stepbut HOW depends on where the property is in
the system!
24The Foreclosure Process(as most investors see it)
Late Payment
Sheriffs Sale
You Buy
Bank Buys
You Buy
25The Foreclosure Process (as it really is)
Late Payment
Owner Sells
Owner Catches Up
Notice to Borrower
Owner Files Bankruptcy
Forbearance Agreement
Debt Reaffirmed
Property Surrendered
You buy note
deed in lieu?
Sheriffs Sale
Payment plan
successful
unsuccessful
successful
unsuccessful
Bank Buys
You Buy
Bank lists with agent
Insurer sells
Bank sells from REO dept
Bank gives to insurer
26The Foreclosure Process
Deal with Owner Lender
Late Payment
Owner Sells
Owner Catches Up
Lender Gets Judgment
Deal with Trustee
Owner Files Bankruptcy
Forbearance Agreement
Debt Reaffirmed
Property Surrendered
Note Sold
Deal with Sheriff
deed in lieu?
Sheriff Sale
Payment plan
successful
unsuccessful
successful
unsuccessful
Deal with Bank
Deal with Agent
Deal with Agent
Bank Buys
3rd party buys
Insurer lists
Bank lists with agent
Bank gives to insurer
Bank sells from REO dept
273 How to Find Foreclosure Deals
- The best time to find them BEFORE the suit is
filed - The best place to find them foreclosure filings,
probate, agents, attorneys - The best way to find them get them calling YOU!
28Why Owners Get Behind
29A Real-Life Example
Price Ave, Cincinnati 5 room, 3 bedroom 1
bath Rental-type area Called from a building
order mailing
30A Real-Life Example
Purchased by Mr. Mrs. Clark in
1950ish Refinanced in 2002 for 42,000, subprime
12.5 interest loan Mrs. Clark developed
dementia, all proceeds went to living expenses
and her care
31By February 2005, the Property is Here
45,000 ARV 15,000 in Repairs Needed Vacant,
vandalized, order to board up
32By February 2005, the Seller is Here
10 months behind on first mortgage, balance
49,652 2 years in arrears in taxes, balance
2,000 Total Owed 51,652 Total
arrearages 7,455
33And We are Here
Owner wants to sell How can we buy?
Late Payment
Owner Sells
Lender Gets Judgment
344 How to Create Equity in Pre-foreclosure
Properties
- Since most pre-foreclosures have no significant
equity, you MUST create it. - The rise in bad loans also is leading to a pick
up in so-called short sales, in which a lender
allows the property to be sold for less than the
total amount due and often forgives the remaining
debt. For the lender, the process can be shorter
and less costly than foreclosing, especially in a
declining market. AOL Money - There are 2 ways to do this short sales and
buying notes - If you dont know how to do them, youll have to
walk away from 99 of the deals out there - If you dont know how to do them RIGHT, youll
drive yourself nuts!
35Back to Price
ARV 45,000 Repairs 15,000 Balance owed on
mortgage back taxes 51,652 Profit Potential
arrearages are paid in full -21,652 EXCLUDING
holding costs!
36After the Short Sale
- First Mortgagor
- Owed 49, 652 Accepted 8,000
- County Treasurer
- Owed 2,000 Accepted 2,000
- Total purchase price 10,000
- Plus Repairs 15,000
- 25,000
- Profit Potential 20,000!
37But what if
- The owner wanted to keep the property, but
couldnt pay the arrearages OR - The owner didnt want to sell OR
- You live in a state where its difficult or
impossible to do short sale? - Buy the Note!
38Review
- First Mortgagor
- Loan balance 49, 652 You Pay 8,000
- Tax Assessor
- Loan Balance 2,000 You pay 2,000
39Now What?
- Option 1 offer the owner the option of giving
you a deed in lieu of foreclosure in return for
total debt forgiveness - Result You buy the property for 10,000
40Now What?
- Option 2 offer the owner the chance to keep the
property. Restructure the loan like this - 1st mortgage
- Old New
- balance 49,652 35,000
- Interest rate 12.5 7
- Payment 475.31 231.51
- Balloon none 5 year
41Option 2 results
- If the owner makes the payments
- You paid 10,000
- You are owed 35,000
- You get payments of 231/mo
- For a return of 27.8 per year
- PLUS 22,945 cash at yr 5
- If the owner defaults
- You get a deed in lieu of foreclosure and buy the
property for 10,000 -
425 How to Buy Foreclosures No Money Down
- TIME is always of the essence!
- Being able to close FAST makes or breaks your
deal - There are SOOOO many dealsyoull NEED other
peoples money to close them all!
43Top 4 Ways to Buy Foreclosures Using OPM
- Subject to the existing loan
- Private Lenders, at 8-10 Interest
- Hard Money Lenders, at 14-16 interest
- Partners using retirement funds to get the
profits tax free
44Back to Price
Purchase Price 10,000 ARV 45,000 Repairs
needed 15,000 What Now?
456 How to Get the Profit Out
- You need to be able to evaluate EACH deal to see
the best exit strategies! - Wholesale?
- Retail?
- Lease/Option?
- Hold for Rental?
46What Now?
Fix and Sell Profit Potential ? Fix and
Lease/Option Profit Potential 25,000300/mo
cash flow over 1-2 years Fix and Rent Profit
Potential 20,000 equity appreciation 300/mo
cash flow Tax breaks
47What Now?
Wholesale Profit Potential 5,000 In 10 days or
less!
48What Really Happened!
Sold the contract to Linda for 5,000 Her Total
purchase price 15,000 Her Total
investment 30,000 Her profit 15,000cash
flow TAX FREE!
49The Foreclosure Summit
- Everything You Need to Know to Profit from
Todays Exploding Foreclosure Market - More than 20 National, Regional, and Local
Experts in early-morning to late-night workshops - May 2-4 2008 (Bonus day May 1)
- Adams Mark Hotel, Indianapolis
- 1,695 per person, 1,995 per couple
50Youll Learn The Basics
- How to Find More Desperate Sellers than You Can
Handle - How to Negotiate Big Discounts from Banks
- How Buy and Sell Notes and Mortgages
- How to Find the Money to Close Your Deals in Days
51And the Details Your Competitors Dont!
- How to Use Your IRAor Someone Elsesto Make
Tax-Free Profits - How to Write Contracts on Foreclosure Properties
- How to Buy Properties from Sellers in Bankruptcy
- How to Invest in Tax Liens and deeds
- How to Negotiate with Sellers and Lenders
52And even more details
- How to Assign Unassignable Bank-Owned Contracts
- How to Write offers on REO properties (that will
actually be accepted) - How to Take Over Unassumable Mortgages
- How to Invest in Commercial Foreclosures
- How to Select the Right Entities, Rehab
Foreclosures, and MUCH MORE!
53With These National Experts
- Donna Bauer, The NoteBuyerHow to buy bad
paper for pennies on the dollar - Don Derosa How to Buy Foreclosures No Money down
- Lee Phillips, esq How to Protect Your Deals (and
Your Assets) - Vena Jones-Cox and Missy McCall-Hammonds How to
Run Your Foreclosure Business Like a Business
54With These National Experts
- Kathy Kennebrook How to Attract More Motivated
Sellers than You Can Handle - Caryn McKinney and Mark Klee How to Buy
Properties from Bankruptcy - Larry Goins How to Flip Foreclosures in Just
Days
55Your 1,695 Tuition Includes
- 3 Full Days of Foreclosure Secrets PLUS
- 2 Meals a Day, Plus the Networking Banquet on
Saturday Night! - The Right to Bring a Spouse or Partner (sharing a
room) for Just 300 More! - PLUS Thursdays Detail-Packed All-Day Workshop
Successful Short Sales with Donna Bauer, just
399 more
56STILL Cant Decide?
- Register now, and Well Pay For Up to 4 Nights
at the Adams Mark! - (1st 175 Registrants Only)
57Sign Up Now, and Save Even More!
- Grab our ACT NOW DISCOUNT and Save 400!
- Just 1,295 per person,
- 1,595 Per Couple
- PLUS Get Donna Bauers All-Day Thursday Class,
FREE!
58Dont need a hotel room?
- Save 300 More
- Just 995 per person,
- 1,295 Per Couple!
59Our 100 Satisfaction Guarantee
- The Foreclosure Market WILL Boom, and We WILL
Teach You How to Make a Fortune Helping
Sellersor You Can Claim Your Entire Tuition for
a FULL 30 DAYS
60Extra Special Sign Up Tonight Bonus
- Register Today, and get the Entire Foreclosure
Summit Audio Course in MP3 Format for FREE!a
995 Value!
61See You At The Summit!
- www.ForeclosureSummit.com