Maria Gudelis

†Determining fair market value — fair market value compares the property you are considering to similar properties in that area. The comparable properties should be similar in location, size, and age to your subject property. Choose properties from the same subdivision and record the same information you did about your subject property. I have included a fair market valuation form on the following page for you to record this information. You can obtain comparable data from local real estate agents, the local tax assessor’s office, or possibly online from public records as described previously.

Basic property information — Begin your analysis by collecting the following basic property information:

Property Address: ________________________________________________

City, State, Zip: __________________________________________________

Property Appointments: Sq. Ft.: __________ Year Built: __________

# of Bdrms: _______ # of Baths: _______ Carport/Garage/None (circle one)

Type of construction: Brick/Block or Frame (circle one)

Property Contact: ______________________ Phone: ____________________

Property Owner: _______________________ Phone: ____________________

Why is this property being sold? _____________________________________

Any offers? _______________ How long on the market? _________________

What do you feel are the best price and terms you can accept for a quick sale?

________________________________________________________________

What is the fair market value† of the house? ____________________________

What is the property potential assessment score‡? _______________________

†Determining fair market value — fair market value compares the property you are considering to similar properties in that area. The comparable properties should be similar in location, size, and age to your subject property. Choose properties from the same

Even though I rely a lot on my Power Team appraiser and realtor, using a system will make you successful in analyzing properties.
Once you find a property that appears to be a good candidate, you need to analyze all the data you collect to make the most informed decision about proceeding with this transaction. Collect basic information about your subject property and record it on the form on the following page. Then collect data on comparable properties in that area and record it on the fair market valuation form.

So, how do we find these homeowners in default or behind on payments? There are several ways in which to find motivated homeowners! Newspapers, ads, signs, courthouse, and attorneys, just to name a few. See, when a homeowner is delinquent on their mortgage, a legal notice, or notice of default, must be sent to the homeowner to let them know that their property will be going to auction soon. These legal notices are published weekly — sometimes daily — at the courthouse. Some counties have a website or newspaper that lists all the legal notices. When you find the notices, call up the homeowner and see if you can help them out of their situation. This is one way to find motivated sellers, because their home is going to the auction soon.

The national foreclosure statistics for 2005 are strong indicators of the wealth that awaits investors who understand defaulted notes. According to RealtyTrac™, the number of properties in some stage of foreclosure increased every quarter of 2005 for a year-to-year increase of 25%.
The District of Columbia experienced the largest increase (300%), followed by Massachusetts (199%), Connecticut (188%), and Michigan (170%). Even California, with its reputation for
wealth and growth saw an increase of 16%.
Will these numbers hold or even increase? It’s quite possible. Ironically, these near-historic levels have come at a time of solid economic growth, low unemployment, rising home prices,
and attractive interest rates. If any of these indicators were to turn south, the number of delinquencies would likely increase.

Homeowners in default are looking for a way out and a fresh start. Who wouldn’t want their insurmountable debt erased? But it’s foolish to assume they will beat a path to your door with
just a little prodding. Even the world’s most established products and services are aggressively marketed without end. Marketing is absolutely necessary because it works. Why else do we pay
twice as much for a bottle of name-brand aspirin?
Marketing is not a one-time event. It’s a campaign that grows and adjusts for as long as you are in business. I cannot stress enough the importance of following through on the marketing.
My mentors taught me that it is at the 3rd point of contact (letter or phone call) that you will make the sale – so don’t give up after sending one group of letters out to notice of default folks.

Once your marketing machine is up and running, you will
discover that persistence really does pay off . . . big! Try starting with 3 methods of marketing:

1. Put Signs up in the neighborhood you are farming simply stating “I buy houses, call xxx-xxxx now”.
2. Put an ad in the newspaper classified real estate wanted section “I buy houses, call xxx-xxxx now”
3. Send letters out to notice of default folks making it personal by hand writing the addresses and a simple 4 sentence letter saying you’d like to buy their house.

There are several reasons homeowners become delinquent on their mortgages. It could be because of a job loss, divorce, death of a spouse, illness, job transfer, and so on. These are all unfortunate situations, but the truth of the matter is these situations happen all the time. It’s now your goal to help this homeowner get out of this situation. You are trying for a “Win-Win”. You want to make money; they want out of their unfortunate situation. Most people have a lot of pride in their home; therefore, the biggest challenge they face is embarrassment. They don’t want their friends, family, and neighbors to know they are about to lose their home. So they would rather take a loss — “sell the home” and start over from scratch.

Foreclosure is just one of those areas. It was Robert Allen who said “More bargains are available in the area of foreclosures than in any other area of real estate.” (Multiple Streams of Income - p.157)

Foreclosures to most people automatically imply the word “discount,” which is great. This is exactly what you are after. You are after properties with discounts, which mean you are looking for homeowners in distress. You are looking for people in desperate circumstances, who are motivated, who want peace rather than money.

Are there people out there like that?

Absolutely…Without question!

Foreclosures are not new by any means. During the depression, savvy real estate investors were making all the money investing in Real Estate. They would buy houses dirt cheap, and then sell them for a little more than what they paid for them. So why do the rich keep getting richer? They know where to find the money.

Most people have heard that foreclosures are or can become a great investment. So why doesn’t everyone do it? Is it because it is hard? Too time consuming? Takes a lot of money? These are all good answers, however none are correct. Through our research, we have discovered that most people just lack the motivation, desire, and knowledge. They are stuck in what some call a “comfort zone,” satisfied with their surroundings, living from paycheck to paycheck.

Foreclosures right now are exploding with interest because people are finding out it is a better, safer, and more secure way to make a living. It’s no secret that foreclosures are at a 30-year high. Why? Some may feel the economy is to blame. Still others say it could be due to unemployment. Yet others speculate that it could be the leniency in the lending business. Whatever you choose to believe, the fact still remains that foreclosures are at record highs. This is wonderful news to the investor. This just means there are plenty to go around and several to search through so you can find that “diamond in the rough”.

As I mentioned before, many of your potential buyers may be from out of the area. You can beef up your chances of receiving bites on your property by adding information about the area and its surroundings, such as the commute time to downtown, to area school districts, to local shopping areas, and area attractions. You also might want to include information on the school districts as well as links to the districts for review, some of the activities in the area for children, and any other family- or pet-friendly community activities you know of in the area.