Hop on: Foreclosure Bus Tours
Content Manager By: Diane Tuman, | April 1, 2008 |
Sports Illustrated has a feature – or, maybe they stopped running it (dunno, since I haven’t picked up the magazine in a while) – named something like, “This Week’s Sign That Apocalypse is Upon Us,” which deals with some bizzaro incident (usually sports-related) that defies comprehension. Here’s one for real estate: foreclosure bus tours. I understand that someone’s loss is someone’s gain, but to pack a bus with a bunch of people on the hunt for foreclosed properties just seems a bit, uh, vulture-like. Here’s the Foreclosure Bus Tours’ description:
“We know that buying foreclosures can be risky and can make buyers a little uneasy, so how beneficial would it be to have a team of real estate professionals, foreclosure specialists, and rehab experts right there by your side to help you every step of the way? This is what Foreclosure Bus Tours is all about. We take the pain out of finding and fixing your foreclosure deals.”
I can’t imagine rumbling down the street on a bus with a bunch of foreclosure experts, driving past “stable houses” and then a foreclosure is looming up ahead, on the right. Oooh, ahhh. So, is this the best time to hop on a bus and get a foreclosed home for dirt cheap? According to the Housing Time Bomb, the bottom hasn’t fallen out yet since “…banks have only marked them down 10-25%.” When is the right time to hop the bus? HTB says 2009-2010… by that time, everyone will be aboard, wanting that one crazy deal.
See all Comments at: http://www.zillowblog.com/hop-on-foreclosure-bus-tours/2008/04/#comment-186284
Thanks for spreading the word. Buying foreclosures right now is crazy IMO.
The banks are just now starting to tighten lending standards and buying foreclosures now is very risky. Prices are continuing to drop even though it’s the spring selling season. The Cse-Siller index is showing that prices are free falling faster than any time in its 20 year history.
I think we are heading back to the “old school” lending standards of 20% down and good credit because the banks don’t want to lend due to the credit crunch, due to the fact that many of them are insolvent.
Financials [financial institutions, ed.] are currently in the process of hording cash in order to stay alive.
Please avoid the tour bus for now. You never want to buy on the way down. Let the bottom be established and then hop on the bus for good deals. I expect it might take 1-2 years before these bus rides are worthwhile.
Feel free to check out my real estate blog for information.
Coach Mitch’s REFLECTIONS
Amazing – don’t people spell check anymore?
It’s circus time
It seems that the traveling foreclosure circus has begun. Barnum would be proud. If you want to be a leader, just start a parade; lots of people will follow, no matter where you are going, even if you are taking a leap off of a bridge.
Our critical thinking skills are so slim that people are just lining up to be fleeced. Our hedonistic culture has turned that great American trait of desiring to work for ourselves into a desire for the quick buck. This, combined with a limited ability to discern, have created an opening for hucksters.
Foreclosures can be profitable
Foreclosure investing has always been one of the tried and true ways to invest in real estate, however, it takes discipline, a system, luck, and lots of cash and credit. The foreclosure systems sold by the gurus are all very similar, because the banks all work the same way.
Typically, the banks are selling their REO’s at about $ 80. cents on the dollar. That is not very much of a discount, at least it’s not the kind of discount that I am used too. At that level, the banks are not losing very much, if at all. Don’t forget, a bank may give a 100% loan, but the Private Mortgage Insurance that you are forced to purchase, covers the first 20% of the loan. The bank therefore, loans 80%, which just happens to be what they are selling the foreclosures at.
You will be able to get a better deal, sometimes. You will have to work hard for it, but every once in a while you can get a deal at 70% of Fair Market Value or even a rare deal at 60%. That’s not bad, but I’m used to bigger discounts.
Prices are still dropping
Be very careful if you are going to purchase real estate in a declining market. Presuming that you are buying for resale, you must make sure that you are buying at a very steep discount, otherwise you won’t have a good deal and you may become the “don’t-wanter.”
If you were to purchase a $100K property for $80K, 80% of FMV, and the market went down another 15%, then the retail market price would be at 85%, $100K – $15K = $85K . If you had any expenses at all, then you will not be making any profit. This might not be a real estate “deal,” rather, it has the potential to be a real estate “nightmare.”
We really must be aware of market realities. I have written a pamphlet which outlines 10 Ways That Investing In Tax Delinquent Real Estate Enhances Pre-Foreclosure Investing Techniques To Dramatically Increase and Accelerate Your Profits.
It’s a great time for tax delinquent deals
Don’t forget, tax delinquents are citizens also. If their personal financial circumstances are poor, they understand very well that they are in a bad negotiating position. They see that the market is down, that the banks are not lending, that houses are not selling.
If you can empathize with them and help them move on, then you stand a very good chance of getting that property at a significant discount; not at 20%, not at 40%, but at 50% and 60% discounts.
Paying only 40% of FMV, which is a 60% discount, allows you to purchase in confidence because you know that the market will not drop that much. These days, for the sake of safety, 40% of FMV is where you need to purchase at.
Only the tax delinquent data bases will provide those folks who might give such a significant discount. In Post 79, I showed how important it was to only deal with folks who were WILLING to “give-a-way” their properties. In Post 80, I showed that the most important information was to only deal with those who, because of their dire circumstances, COULD and WOULD “give-a-way” their properties.
If you like Pre-Foreclosure investing, you will LOVE investing in Tax Delinquent Real Estate!
By concentrating on tax delinquents, Coach Mitch’s “Ridiculously Simple System…” for Investing in Tax Delinquent Real Estate puts you in the best possible position to be able to find and close the “great” deals.
See Coach Mitch’s “Ridiculously Simple System…” ™ for details.
Go be great,
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