Apr 08

What Is a Real Estate Tax Sale.  Real estate is taxed in most areas with a property tax. The money raised from property tax can go to the municipalities, schools, hospitals, etc.  When property owners fail to pay their taxes the organizations still need the money to meet their budget to do this they seek the help of investors.

The counties will create either a tax lien or tax deed for the investor.  I will go into more detail on the differences in another post, but I will briefly cover them now.

A tax lien or tax certificate is formed and sold to an investor for the amount of taxes owed.  The investor then will receive the principle back plus interest.

A tax deed is created and sold to the investor which means the investor receives the deed to the property with the voluntary liens, like a mortgage, removed in most cases.

The properties often sell for the amount of taxes owed plus other fees. This can result in a home for pennies on the dollar.  You have probably thought about buying a home appraised at over $100,000 for only a few thousand.  With tax sales it can happen.

Not every property for sale in a tax auction is going to be a gem. I have come across many properties that are in a swamp or out in the desert without roads or utilities.

Proper research is vital to making money and not losing money in tax sales.  There will be some great finds that can make you a lot of money, but there will also be some properties that are worthless.  I will cover research another time, but now you know what a real estate tax sale is all about.

If you are interested in getting started in real estate taxes sales now, visit http://BankREOTraining.com

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Apr 06

What is a short sale? Understanding what a short sale is can be important if you are a real estate investor.  A short sale is when a lender is willing to accept a payoff of less than is owed thereby shorting the lender.

There are specific conditions that must be met before the lender would consider a short sale.   First of all, the borrower must have some economic hardship that prevents them from being able to make the payments.

The current market value of the home must be less than the amount owed otherwise the borrower would have to sell the home and pay off the mortgage.

If the bank is willing to grant a short sale they have their own system for determining how much they will be willing to lose on the home.  Many investors start by offering a very low offer hoping the bank will come back with a low counter offer.  The truth is many banks will reject or ignore the offers that are ridiculously low.

Banks will generally sell the home for the market value first.  If the home sits for a few months without any near full price offers, they will lower it until it sells.  There is a limit to the amount they will accept.

If you do submit an offer on a short sale, be sure to include reasons for the price you chose.  Start off with the market price and deduct quotes for repairs. Also include comparable home sales to back up the starting price.

If you can back up your offer the bank will be more likely to accept it even if it is lower than the current list price.

For more short sale tips and information visit http://BankREOTraining.com

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Dec 08
WASHINGTON - NOVEMBER 13:  (L-R) CEO of the Ce...

Image by Getty Images via Daylife

Short sales are a big strategy in the today’s economy for most real estate investors.  If you are just starting out or a seasoned pro, this information may be helpful to you.  If you understand what the rules are it will help you weed out homes that won’t work.

Government Announces Short Sales Guidelines

The U.S. Treasury Department announced new guidelines this week designed to make short sales go more smoothly.

To qualify under these new guidelines:

1. The property must be the home owner’s principal residence.

2. The home owner must be delinquent on the mortgage or close to defaulting.

3. The loan must have been made before Jan. 1, 2009, and be for less than $729,750.

4. The borrowers’ total monthly mortgage payment must exceed 31 percentof their before-tax income.

Under the plan, borrowers will receive $1,500 from the government for selling homes for less than the amount of their mortgages. Mortgage-servicing companies will get $1,000 for each completed short sale. Second-mortgage holders can receive up to $3,000 of the sales proceeds in exchange for releasing their liens. Investors who hold the first mortgage can collect up to $1,000 from the government for allowing the payments.  –more

2010 IS THE YEAR of the SHORTSALE | Treasury Department Short Sale Guidelines

From Bloomberg News:

Banks are beginning to go along with short sales in increasing numbers, three years into a U.S. housing slump that pushed the economy into a recession and cut resale values by 30 percent from the peak in July 2006. Short sales almost tripled to 40,000 in the first six months of 2009 from the same period a year earlier. Yet for each short sale, there were 25 foreclosures started or completed in the first half of this year, according to data from the Office of Thrift Supervision and the Office of the Comptroller of the Currency.

Wells Fargo, Bank of America Corp. and JPMorgan Chase & Co. this year have hired and trained more staff, developed software systems for expediting short sales, and increased marketing of short sales to delinquent borrowers.

Banks are increasing such sales under pressure from the Obama administration and lawmakers who criticized them for favoring foreclosures and delaying short sales, Green said. Lenders and loan servicers also stand to receive up to $2,000 in incentives to close short sales under a Treasury Department plan unveiled Nov. 30. –more

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