Trustee Sale
What is Foreclosure?
Foreclosure is a process in which the estate becomes the absolute property of the lending institution. It extinguishes a mortgagor's right of redeeming a mortgaged estate. It is a termination of all rights of the homeowner covered by a mortgage.
Buying Foreclosures
There are many ways to buy foreclosures: from the no cash, no credit methods taught on late night TV, to billion dollar bulk purchases. There are significant discounts available on foreclosures, but buying a foreclosure is not a get rich quick proposition. For those willing to work, and in some cases take some risk, foreclosures represent a unique opportunity for acquiring real estate at discount prices.
The first step towards buying a foreclosure, is to determine which stage of foreclosure to focus on. Each of the 3 stages has it's own advantages and disadvantages, and each requires a slightly different approach. Here is a brief overview of each:
Preforeclosure
Prior to the completion of the foreclosure process and the owner losing the home, you can purchase the property from the owner. Today, many owners in foreclosure owe more on the property than it is now worth. In these cases, known as short sales, you will also need the approval of the bank. In some cases, pre-foreclosures will be listed with a Realtor® and be available for sale through the MLS. If the property is not listed, you can approach the owner directly, or preferably using a Realtor®. Pre-foreclosures are much like any purchase of real property and you typically have the opportunity to get inspections, title insurance, and financing prior to completing the purchase. It is also possible to purchase the property Subject To the existing loans; which is similar to assuming those loans, but does not necessarily require cash or good credit—this is the method often taught by late night promoters, and has risks that should be carefully considered.
If you are interested in purchasing pre foreclosures, "short sales" you can contact me directly at (714) 870-2020 or email me at jamieyang1@gmail.com I can provide you with a list of short sales according to your specifications in your desired locations.
Trustee Sale Auction
If the owner is unable to sell the property, refinance, or otherwise resolve the problem, the property is taken to auction. These auctions are referred to as Trustee Sales. The process for the auction varies by state, but typically properties are sold as-is, where-is, subject to existing loan and liens, and require payment in full and in cash, at the time of sale. Properties are also typically sold while the owner or renter is still living there, which means there is no opportunity to inspect the property, and you may have to do an eviction after purchase. By far the riskiest method of purchasing foreclosures, buying at auction can also offer the deepest discounts due to these risks and the limited number of buyers willing to take them.
If you are interested in purchasing properties at a trustee auction, call me at (714) 870-2020 or email me at jamieyang1@gmail.com for appointment.
Bank Owned or REO
If an investor fails to bid at auction, the property is essentially sold to the bank and becomes bank owned. Within the banking industry, these properties are referred to as R.E.O., which is an abbreviation for Real Estate Owned. Most REO properties will be listed with a Realtor® whom the banks refer to as an REO Broker. These real estate agents often handle the eviction and clean up of the property, in addition to listing it for sale. Buying an REO is very similar to buying any home that is listed with a real estate agent, and you have the opportunity to do inspections, get title insurance, and get financing. Most banks, however, do require that the property is purchased "as-is", and may also impose other non-standard terms, so it is especially important to work with an experienced Realtor® that can explain these terms.
If you are interested in buying Bank Owned Properties, please look at the available foreclosures in my website.
|
Opportunity |
Traditional Financing |
Subject-To Financing |
Title Insurance |
Inspections |
Eviction Required |
Overall Risk |
|
Pre-foreclosure |
Yes |
Yes |
Yes |
Yes |
No |
Low |
|
Auction |
No |
No |
No |
No |
Maybe |
High |
|
Bank Owned |
Yes |
No |
Yes |
Yes |
No |
Very Low |
Are you interested in finding another way of investments? Have you considered investing in trustee auction sales? Are you familiar with flipping properties? Our investment division is opening up opportunities for new investors to invest with our company. Investors can earn up to 12% annual return on their investments without having to do anything. If you are interested in becoming an investor with our company please call me at (714) 870-2020.
Below our a few samples of our flip property investments
931 N. Keystone St. Anaheim, CA 92801
Property Type: Single family
Year built: 1954
# Bedrooms: 3
# Bathrooms: 2
Home Size (Sq.Ft.): 931
Sales Price: $340,000
Purchase Price: $225,000
Expense / Commission: $59,475
Net Profit: $55,525
The Opportunity
Well located property in desirable market. Property appeared to be in good condition.
Execution
The property was acquired at auction with a cash purchase. Trustee’s Deed was recorded within 14 days of the auction. We completed a modest renovation including new carpet, tile, paint and fixtures. Including closing cost, delinquent and current property taxes, insurance, and contractor fees, the total acquisition budget has been estimated to be $284,475
Result
The property sold for $340,000 on November 5, 2009
The project accumulated to 40 days.
Total closing cost for this project $25,000
Total cost of repair for this project $34,475.
The net profit was $55,525
(All Gross & Net percentages are based on this specific project and acquired purchased amount)
205 N. Sweet Avenue Fullerton, CA 92833
Property Type: Single family
Year built: 1949
# Bedrooms: 3
# Bathrooms: 2
Home Size (Sq.Ft.): 1,284
Sales Price: $370,000
Purchase Price: $278,000
Expense / Commission $31,679
Net Profit: $ 60,321
The Opportunity
Well located property in desirable market. Property appeared to be in good condition.
Execution
The property was acquired at auction with a cash purchase. Trustee’s Deed was recorded within 14 days of the auction. We completed a modest renovation including new carpet, tile, paint and fixtures. Including closing cost, delinquent and current property taxes, insurance, and contractor fees, the total acquisition budget has been estimated to be $309,679
Result
The property sold for $370,000 on October 7, 2009.
The project accumulated to 62 days.
Total closing cost for this project $14,526
Total cost of repair for this project $17,153
The net profit was $60,321
(All Gross & Net percentages are based on this specific project and acquired purchased amount)
