By Kelly Quigley, REALTOR® Magazine
The Pre-Foreclosure Property Investor’s Kit by Thomas J. Lucier (John Wiley & Sons Inc., 2005)
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If you want to get into real estate investing, author Thomas J. Lucier says you’d be smart to consider pre-foreclosure properties. Today’s lax lending policies have overextended many homeowners, resulting in higher foreclosure rates. But instead of waiting until homes hit public auction, buy the properties directly from the owners—beating your competition to the punch, Lucier says. By working with the owner, you also can inspect the property before making an offer and avoid costly bidding wars. The book offers detailed steps, including how to perform due diligence, estimate market value, negotiate with difficult owners, and conduct business ethically. Also included are worksheets, letters, forms, and links to Web sites with lots more information. For those interested in exploring this particular niche, this book is a straightforward and quite thorough guide to getting started.
Tips From the Book:
- Go to the source of foreclosure notices. To find property owners with a mortgage in early stages of foreclosure, you first must track down the local government agency that records such information for public record. Go to your county government and don’t leave until you speak face-to-face with an employee in the office where the loan foreclosure actions are filed. While you’re there, find out whether the notices are published online, and if not, get the name of the newspaper that publishes them.
- Contact owners through a series of letters. Send up to six letters to the owner during the loan’s reinstatement period—the time from when a lender declares the loan is in default to when the public foreclosure auction occurs. Make sure the letters are professionally written and convey these main points: You want to buy the house, you’ll provide a cashier’s check within five days, you’ll handle all details of the sale, and you’ll help the owner find a new place to live.
- Do your due diligence. Even if you’re getting a great deal, it won’t matter unless you can resell the property. Check out the neighborhood in the evenings and make note of excessive noise, parties, or other public nuisances. Find out what the crime rate is in the neighborhood, and hire a competent property inspector to make sure the home doesn’t have major defects.