Foreclosure Investors Beware - Posted by Jack

Posted by Kristine-CA on April 24, 2007 at 23:58:19:

Hi there. As far as I know, none of my sellers have had anything but
relief upon completion of the sale. Many of them are touch in later in
the year regarding tax questions and concerns over any mail they
received that is related to the property.

If someone has enough seller’s remorse and enough anger to contact
the AG, then no gift after closing will remedy that. The gift would just
be perceived as a cover-up for whatever mis-deed they feel victim of.
In the beginning I was wary of heirs and sellers with their own
attorneys. Now I say bring 'em on. While I have dealt with some very
un-saavy attorneys initially hired by the sellers and have been
frustrated to no end by their lack of customer service (and had to pay
their fees in full), the sellers seem to feel more protected.

I have started going more towards probate leads that don’t require me
to initiate the probate–and I have found that easier, to be sure.

As you say, rapport building is important. My point is that no matter
how nice we are, or how much our creativity saves the day, some of our
actions will be misunderstood by those who have issues about money
and who know little about real estate. My guess is that would be about
99% of attorneys serving as AG. Kristine

Foreclosure Investors Beware - Posted by Jack

Posted by Jack on April 22, 2007 at 21:50:18:

For those of you who are new, or simply don’t care about the delicate state of foreclosures in the US, maybe you’d better read this article.

http://www.azcentral.com/news/articles/0422foreclosure-rescue0422.html

Keep this in mind…for the fist time in recent history, real estate conditions have become so problematic for so many people, that even congress has started to take notice and is now considering legislation to help homeowners who are getting behind in payments. The main reason is the subprime market and it’s devastating affects. This is a very different time in the REI market than just a couple of years ago, when most GURUs wrote their foreclosure courses.

If you follow some of the advice given is SOME courses, you now raise the risk of becoming the object of your state attorney general’s attention…and possibly much worse. Believe me, I invested in foreclosures in the past, but things have changed and I no longer do the things I used to do.

I’m not an idiot, I’m a full time investor and have been for years. And I’m telling you, If you don’t know what you are doing and are not keeping up with what’s going on in this market, you are risking EVERYTHING, even your freedom.

I’m not saying you should stop, as I did. I’m just warning you to be careful…very careful. The preverbial sh** is going to hit the fan, nationally, very soon. And there’s no telling how many of your recent sellers will claim they were taken advantage of when they see the trend. Whether you did anything wrong or not, you WILL be under scrutiny. And proving to a court you did everything legally is not fun, and you never know how the court will rule.

Once again, please be careful.

Re: Foreclosure Investors Beware - Posted by lukeNC

Posted by lukeNC on April 24, 2007 at 11:03:52:

I look at this as a sign to focus on the post-foreclosure market or anything that avoids me dealing directly with the homeowner in foreclosure.

Buy at auction, Buy REO, Buy note/lien then foreclose and etc. – these are the ways to go.

Once you start dealing with the pre-foreclosure homeowners directly and you end up making a nice profit – it can get kinda crazy…

I’d rather not deal with the drama…

I wonder how much those attorneys are making? at least $1500 per foreclosure, guaranteed.

Re: Foreclosure Investors Beware - Posted by rehabber

Posted by rehabber on April 24, 2007 at 09:33:16:

These ‘investors’ in AZ were SCUMBAGS.

“She didn’t know she had signed over her house in the process. She found out when the group sold the house out from under her.”

“The homeowners are so relieved, believing they will be able to keep their home, that they sign blank documents or documents they don’t understand. The documents, however, turn the home over to the foreclosure group. A quitclaim deed can do that in Arizona.”

I know, some will say it’s the distressed homeowners
reponsibility to read all docs before signing.
But, c’mon people… we’re not talking some obscure
’junk’ docs here - It’s a Quit-Claim DEED.
I would NEVER have someone sign a Quit-Claim without
telling them specifically that it gives me ownership
of their property. It is a very important doc - as
it transfers owenership. Sounds like these scumbag
AZ investors promised people help, then slid the
Quit-Claim in the pile of docs to sign, without
explaining it. Sure, the people in distress should
have read everything they signed, but unfortunately
many (most?) distressed homeowners are not sophisticated
business people. The transfer of ownership should clearly be stated to any distressed homeowner - you’re
getting the ownership of their house for God’s sake.
Ok - I’m calm now - the medicine is starting to work - off my soapbox, just my 2 cents.

Re: Foreclosure Investors Beware - Posted by BigV

Posted by BigV on April 23, 2007 at 20:11:00:

I think that one should shoot for around 30% of equity profit.

For example, if the owner owes 20K on a house that you can sell for 100K, a judge may be a lot more sympathetic to you if you paid 60K or 70K for a property vs. if you paid only 20K or 25K for the house.

Yes, it does not seem fair for a judge to tell you what you can make, but if you treat others like you want yourself or your family to be treated, then you will go a long way.

I would think that if you make a small percentage of the profit vs. 90 percent or more that you would be less likely to be considered as taking advantage of people.

Just my 2 cents

Re: Foreclosure Investors Beware - Posted by IB (NJ)

Posted by IB (NJ) on April 23, 2007 at 10:09:01:

Thanks Jack. I have some comments on the article:

“If someone knocks at your door and offers help, assume they are out to help themselves,” said Diane Drain, a Valley attorney specializing in foreclosures and bankruptcies."

“Specializing in foreclosures and bankruptcies”, eh? Who wants to take bets that even SHE buys properties in foreclosure?

“Regulators say Valley investor groups are finding homeowners in trouble, negotiating with the lender to buy the house for less than is owed and then turning around and flipping the house within days for tens of thousands of dollars more.”

This is scary as now INVESTORS are being blamed for BANKS not doing their homework.

I still do foreclosures. In fact, most of my deals are foreclosures. However, I only deal with abandoned properties. Rarely, if ever, do I deal with properties occupied by the owners. Also, in my marketing, I offer to buy the property and rarely ever mention the word ‘foreclosure’. I certainly don’t mention anything about ‘saving someone’s property’. I’m strictly out to buy your property and that’s it.

Still, in today’s climate, one has to wonder if that will be enough to stay a politically aspiring Attorney General. Articles like these make you want to reassess every aspect of one’s business. In fact, I will make it mandatory that every seller I deal with hire their own attorney.

Here in NJ, the courts are coming down are Investors who buy properties in tax foreclosure due to tax lien Investors not having a fair shot at acquiring the property. The whole thing is making title companies place extra requirements (i.e. court approval) on owners of properties under tax foreclosure before they can sell. They’re also looking at properties in judicial (mortgage) foreclosure.

Ib

Re: Foreclosure Investors Beware - Posted by LK

Posted by LK on April 23, 2007 at 08:25:08:

Thanks for the article and words of warning.

As usual the newspaper doesn’t have all the facts and is reporting one side of the story, the nice liberal side.

But, there are a percentage of unethical, improperly trained foreclosure investors out there that are possibly going to hurt the business for everyone. If nothing else, hurt our reputation of buying houses from people needing to sell fast. Even the ones that do it honestly, ethically, and with the sellers interest in mind (the ones of us that aren’t mentioned in the article).

Re: Foreclosure Investors Beware - Posted by DaveD (WI)

Posted by DaveD (WI) on April 24, 2007 at 12:41:04:

Auction and REO is pretty cut and dried. Show up with a lot of cash. Boring! Besides, how do you differenciate yourself from anyone else? You can’t.

There are infinitely more plays pre-forclosure where your creativity can generate equity and profit out of thin air. To just bail from the homeowners - the guys who offer direct decision-making capability for you to buy - is kinda silly.

Re: Foreclosure Investors Beware - Posted by Kristine-CA

Posted by Kristine-CA on April 23, 2007 at 23:54:12:

I think we have to face the fact that as long as an investor buys
property that has equity upon purchase, it will be perceived as equity
stealing by those out to protect consumers. It’s one thing to buy a
house and rehab it, hopefully adding value, etc. Even that can be
considered suspect by those unfamiliar with rehab costs, home values
and market conditions. But to buy something and sell it to the next
buyer with “no added value”? That is always going to look like stealing
or a scam to many.

I think it’s a good idea to put yourself in that mindset every once in
awhile–how it looks to those who don’t understand it. It doesn’t look
good, that’s for sure.

I deal with a lot of abandoned property and distressed property issues,
squatting tenants, etc. I solve legal problems and title problems. I’m
also full service–if you never want to see the property again, I take
care of everything, including sending you any precious family photos I
find during clean-up. I don’t rehab. I can’t tell you how many times
I’ve been asked by friends and family: why did the sellers let me have
their property for such a low price? Why don’t they sell it themselves?
Or, why don’t they at least get an agent? My favorite: how could the
sellers know what to sell for without an appraisal? Our DAs and
consumer protection agency people are like my friends.

Kristine

Re: Foreclosure Investors Beware - Posted by Bob Smith

Posted by Bob Smith on April 23, 2007 at 18:14:03:

Ms Drain is a hypocrite. She decries making money buying assets from somebody in foreclosure or bankruptcy, but doesn’t apply the same standard to the no doubt substantial fees she charges to clients in foreclosure or bankruptcy.

Regarding NJ, as long as the tax lien investor gets their money back with interest, why should they get any shot, let alone a “fair shot” (whatever that might mean), at acquiring the property? Why don’t they buy the property outright just like the big, bad “Investors”?

Re: Foreclosure Investors Beware - Posted by lukeNC

Posted by lukeNC on April 25, 2007 at 10:02:43:

you can make just as much and more doing things where you are not dealing with the homeowner in distress directly.

The infinite number of plays in dealing with pre-foreclosure homeowners = the number of plays available without dealing directly with the distressed homeowner. And, the profit is still the same.

Oh another boring $20k check? Ah…yawn…so boring…oh well…

Re: Foreclosure Investors Beware - Posted by Jack

Posted by Jack on April 24, 2007 at 22:44:14:

To quote you:

"There are infinitely more plays pre-forclosure where your creativity can generate equity and profit out of thin air. "

This sounds like you think the market (environment)is the same as it was a year or two ago. Maybe trends take a while to get to Wisconsin? I don’t know. I’m just warning you that the game has changed, and if you aren’t carefully managing your “creativity” dealing with preforeclosure sellers, the new trend of homeowner rescue will deal you a wake-up call, probably via a letter from your AG.

Just be careful.

Disagree … - Posted by Redline

Posted by Redline on April 25, 2007 at 15:43:18:

Kristine, I disagree with what you’ve said.

Of course it looks bad when you get a short from a bank, turn around and make $40k on it … but the bank made a business decision based on it’s current situation. It decided that instead of waiting 9 months (NJ is a judicial foreclosure state) and then risking more damage to the property, a vacant house, more repairs, time, energy, etc) they would rather take their loss NOW than almost a year from now.

So I get the property, and sell it and make a buck. All parties agreed to it as a business decision. It only becomes a problem when someone needs to get elected.

RL

Re: Foreclosure Investors Beware - Posted by IB (NJ)

Posted by IB (NJ) on April 24, 2007 at 23:29:54:

Hi Kristime - I do the same thing (rehabbing titles). However, depending on the neighborhood I will sometimes keep and rehab the property. I’m dealing with a young lady now whose deceased Father owned the property along with another person who was also deceased.

What a complete mess of the title.

I’m finally getting it all cleaned up - over a year after I started. Think this deal isn’t worth a profit?

On the original point - I would have to think that many of these AG vs. Investor cases start with complaints from the sellers. It would probably do the Investor good if she established a good rapport with the seller AND sent a nice gift after the closing to (maybe) minimizing the chances of seller’s remorse followed up by letters of complaint to the AG.

Ib

Re: Foreclosure Investors Beware - Posted by Redline

Posted by Redline on April 24, 2007 at 18:44:04:

Doesn’t work that way in NJ. Those guys got some pretty air tight legislation passed that protects their interest. Now even trying to pay off a tax lien can be a real issue …

RL