hot market - Posted by danny

Posted by Ronald * Starr(in No CA) on July 16, 2002 at 22:11:59:


Well, when working foreclosures, one has to be selective. Many of the properties going to sell will have no equity. But, some will–those are the ones you try to buy.

Now, OH, I think, sets the minimum bid at a sheriffs sale at 2/3 of appraised value, thus assuring the property owner of no bids being just–say 40% of property value. But, if the amount owed is greater than the 2/3 figure, the lender may compete with bidders, as their bids cost them nothing until they have bid in all of the amount that they are owed. At which point they should stop bidding.

What you need to find is properties where the appraised value is lower than true market value and the loan amount is less than 2/3 of the appraised value. The lenders should not bid up over what they are owed, since there is no benefit to them–the excess proceeds after paying the lender off go to the property owner. Or, if there are junior obligations it will cascade down to the juniors, which reduces the debt owed by the owner/former owner.

If the bid is lower than 2/3 of actual market value, you might get a property for 45%-60% of market value.

I don’t know what percent of foreclosure properties meet the two standards I mentioned above. And, you need to check, since it is a judicial foreclosure, whether there is some redemption period. That is not something investors like.

If you get into foreclosure investing, I recommend going into the law library and reading up on foreclosures, collection of debts, sheriff’s sales and so on. Then watch some sales before you start bidding. Get familiar with how it works. Research some of the properties that seem promising and then follow them to sale. If there are other knowledgeable bidders at the sale, try to get their viewpoint on the properties that you researched, to see if you are missing things or not.

Good Investing***Ron Starr

hot market - Posted by danny

Posted by danny on July 15, 2002 at 15:41:13:

hi everybody.
if someone has problem to sell his house, would’nt

$15000 less will solve this problem in a hot market???.
why would he need us to do l/o , subject to or other creative technique. so if he realy have problem and need to get reed of his house,so what he has to do is give a nice discount an get the darn property out of his hands.
is’nt it right.
thank you everybody for your answers

Re: hot market - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on July 15, 2002 at 21:54:27:


What you are saying makes sense. Lower the price if the property is not selling.

However, what about the people who have loans that are about equal to are equal to the property’s sales value? To lower the price by $15K, the seller will have to come to the closing table and pay out money to get the loan paid off, if the house sold for less than the loan amount.

And then, there is that little business of the real estate brokerage commission. If the house is worth about $100K and the loan is about $98K, how is the owner going to sell for $100K, pay off the $98K loan and then pay the real estate broker the $6K or $7K commission? Did you say the property owner will will have come out of pocket to pay off the loan and the real estate commission?

So, if you offer to take the property off the hands of this owner for no commission, might that have some appeal to the owner?

Note that many of the people doing these quick turn transaction investments are buying from people who have little or no equity in the property. Dropping the price to sell is thus rather unattractive to the property owners.

Good Investing and Good Thinking***********Ron Starr*************

Re: hot market - Posted by danny

Posted by danny on July 16, 2002 at 17:05:38:

thank you for your answer very informative

Hot Mkt=Appreciation - Posted by randyOH

Posted by randyOH on July 16, 2002 at 07:46:58:

But in a hot market, there has been a lot of appreciation. Hard to find property with no equity.

Re: Hot Mkt=Appreciation - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on July 16, 2002 at 11:43:44:


Yes. Foreclosure buying is easier. There are fewer getting to sale because delinquent property owners can easily sell their properties and get out of financial difficulty. But, for those which actually get to sale, many properties have enough equity to be good buys. And then it is easy to resell the purchases.

Good InvestingRon Starr****

Re: Hot Mkt=Appreciation - Posted by randyOH

Posted by randyOH on July 16, 2002 at 21:16:42:

Thanks for your thoughts on foreclosures. I may look into that. My assumption was that it would also be competitive and that properties would probably sell for full value or more at the trust deed sales. But, you seem to be saying that is not necessarily true, so I may look into it. I have also been wondering why you chose OK for REI. Just curious. I live in OC but invest in OH.