The 'Truth' About Real Estate Preforeclosure Profits

by Mike Upshaw

Published on this site: March 16th, 2004

If you want to make BIG money in the Real Estate Business you must know the 'truth' about preforeclosures; not only do you need to know exactly what preforeclosures are, but you also have to learn how and when to invest in preforeclosures.

As an investor you'll have to understand and be up-to-date with the foreclosure laws in the state where you live.

A foreclosure takes place when the owner (borrower) is unable to pay his lender the monthly mortgage payments; the lender will notify the borrower and let him know to find the money within a specified amount of time (varies in each state) otherwise the lender will be forced to repossess the home and begin the foreclosure procedure.

The borrower will have to leave his home; more than that, he will not be able to save his credit for other purchases.

The lender will try to sell the home at public auctions for a price lower than the actual market value of the house simply because he wants his money back.

Sometimes the house sells quickly, but often the lender is unable to sell the house and it will remain unoccupied.

Hope you get the BIG picture about foreclosures. Now, you must understand what a preforeclosure is.

A preforeclosure happens before the foreclosure procedure has taken place. In a preforeclosure, you contact the borrower yourself and let him know that you have a serious investor who is interested in buying the home from the
borrower.

The borrower has the advantage of receiving money from the investor so he will not be forced to leave his home and his credit will not be ruined.

The lender receives the rest of his money (the borrower's mortgage) from your investor. Once you resell the house both you and your investor will remain with a NICE profit.

In a preforeclosure, ALL involved parties benefit: the lender, the borrower, you and the investor. It's a Win-Win situation.

Most real estate agents want to keep the information above SECRET because you are 'stealing' the business from them.

One of the 'BEST' ways to make profits with preforeclosures FAST is by looking on the Internet for preforeclosure listings.

Sign-up with a service that sends you preforeclosure listings (lis pendens) You'll receive official notices when a NEW foreclosure process is about to begin. You will also receive information on the house, the names of the lender and the owner (borrower).

Make sure you CREATE a list of the homes you are interested in and start contacting each owner (borrower) by phone or e-mail. It's faster than by doing it in person.

Talk with each person in a serious and warmly manner, pay attention to their wants and needs. Let them know that a preforeclosure is really their 'BEST' option and provide your SUPPORT and help along the way until you successfully make the deal and beyond.

If they are happy most will tell others about your HELP (e.g. friends, partners, contacts, etc.) thus generating for you more loyal LEADS for future business deals.

Remember: be persuasive, kind and helpful to ALL serious people in the real estate preforeclosures business and you'll succeed no matter what.

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