Foreclosure Investing

My First Hockey Post of the Season

2008-04-23T08:29:00.001-07:00

Hopefully not my last. I know it's also nothing about Short Sales.

Why the hockey post today? Just because the San Jose Sharks beat the Calgary Flames in Game 7 and move on towards the greatest trophy in all sports, The Stanley Cup!

That's why. (That and I have a Hockey Hangover, eh?)

For you non Hockey speaking readers here's what the cup looks like:

A quick Hockey Primer for you:

30 Teams compete during the season to be one of the 16 that enter the playoffs.
8 teams in the East, 8 teams in the West.
Teams play the best of 7 in a series. No Ties.
There are 4 Series or rounds in the playoffs;
1. Conference Quarterfinals
2. Conference Semifinals
3. Conference Finals
4. Stanley Cup Finals
Lose 4 in a series and you're "playing golf".
Win 16 Games in the Playoffs and you "Hoist the Cup!"

The Conference Quarterfinals ended last night. We're now down to 8 teams.

In the East

The Montreal Canadians will play the Philadelphia Flyers

and the Pittsburgh Penguins will play the New York Rangers

In the West

the Detroit Red Wings will play the Colorado Avalanche

and the San Jose Sharks will play the Dallas Stars

If you are graphical in nature here's a quick little Bracket I made for my computer desktop.

Ok, that's enough Hockey for now. I have to get back to work.

Go Sharks!

Suburban Renewal In The News

2008-04-04T21:38:00.001-07:00

I was interviewed by the San Jose Mercury News the other day. I had a couple of great in depth conversations with Sue McAllister, the real estate reporter for the paper.

You can read the entire article HERE, I cut the portion that directly involved S-R below.

Part of the problem is that lenders are overwhelmed by managing so many short sales nationwide, said Mike Mueller, co-founder of Suburban Renewal, a Concord short-sale negotiator. Another problem is that many agents handling such sales lack experience at it.

"Most don't know how to put together a compelling package and push the lenders' buttons," to get a swift sale, Mueller said.

Despite recent changes in federal laws, some sellers owe tax on the portion of their debt "forgiven" by the lender. But whether or not the lender reports the forgiven debt is negotiable, Mueller said.

One Bay Area homeowner in the midst of short-selling her home said so far, she's in favor of working with an intermediary company. The woman, an information technology consultant with three young children, said she needed to sell her Contra Costa County townhome following her recent divorce. She owes more for the home than it's worth, and her real estate agent suggested working with Mueller.

"He's given some amazing tricks and tips on what you need to do to make a short sale work," said the homeowner, who did not want her name published.

The townhouse was listed in February and got four offers, which her lender received about a month ago, she said. She hopes the lender will make a decision in the next week or so. "It's a stressful situation. It's nice to have someone else dealing with the ugliness of it."

Thanks Sue.

We're all doing our best, trying to make the best of the situation.

BTW: Sue writes a pretty mean blog: Square Feet Check it out!

Local Notice of Defaults

2008-02-21T11:37:00.000-08:00

Notice of Defaults Last week (week ending Feb 20th) we saw the following NOD filings.

For the State of California: 8,178

By County

Alameda: 323
Contra Costa: 487
Sacramento: 678
Solano: 180

By City

Antioch: 89
Modesto: 163
Oakland: 107
Sacramento: 400
Stockton: 216
Vallejo: 70

Data courtesy of :

California Notice of Defaults 2/7/07

2008-02-07T18:31:00.000-08:00

Last week (week ending Feb 5th) we saw the following NOD filings.

For the State of California: 6,736

By County

Alameda: 460

Contra Costa: 339

Orange: 334

Sacramento: 512

San Joaquin: 212

Santa Clara: 174

Sonoma: 273

Stanislaus: 276

By City

Antioch: 85

Bakersfield: 143

Elk Grove: 63

Fontana: 107

Hayward: 99

Modesto: 149

Oakland: 171

Sacramento: 326

Stockton: 110

Tracy: 50

Vallejo: 63

The highest: 6.3 Million for a 3 bedroom / 2 bath in Winchester, CA - It must have some view!

The lowest: a 3 bedroom / 2 bath in Anaheim that is behind on their $2,333 loan!

Data courtesy of :

Local REO Listings

2008-01-15T14:31:00.001-08:00

I just uploaded the current local REO listings covering the following cities:

CASTRO VALLEY
CONCORD
DUBLIN
LAFAYETTE
MARTINEZ
MORAGA
ORINDA
PACHECO
PLEASANT HILL
RODEO
SAN RAMON
WALNUT CREEK

The cheapest was 1133 Meadow Lane in Concord at $110,000

The most expensive?

Almost 1.3 million at 3709 Stonehenge Way in San Ramon.

There's a wide variety of bargain housing out there.

Here's the complete list: West Contra Costa County REO List

Your IRA and Unlimited Gains

2007-11-05T17:00:00.001-08:00

There was a local cement company that had the slogan on the side of their trucks,

"Find a Need and Fill It!"

I was thinking about that truck last weekend when

I found the NEED!

For the Real Estate Agent to begin discussions with the lender on a Short Sale they need to have an offer in hand. That offer doesn't have to be full price but it does need to be real. This is a very big NEED. The Loss Mitigation people will actually hang up on them if they do not have an offer.

NOW Here's the FILL IT!

Your Self Directed IRA has the capability to purchase real estate. It has the ability to buy it outright and it has the ability to put 20% down and finance the rest. Your Self Directed IRA has the ability to flip properties with no capital gains!

SUSIE SELLS SHORT SALES DOWN BY THE SEA SHORE...

Here's how this works... Susie Sells has just taken a listing for a $400,000 short sale. Susie needs to have a real offer in hand to begin negotiations with the lender. Your IRA offers to buy the property for 50% ($200,000). Remember the home may be valued at 450,000, the short sale listing is at $400,000 and you just offered to buy at half price.

Chances are the Lender isn't going to snap at the offer Susie presented them. Then again - they might. We're hearing some very amazing offers being accepted these days.

If the lender accepts the offer, you just secured an investment property at 50%! You can keep it and start playing monopoly with real houses or list it with Susie at 75% tomorrow. Either way, you win!

Chances are the offer will not be accepted. Don't cry. Move on to the next one. Don't invest too much time and energy in this. This is a game of speed.

If Susie calls and says, "Mike, I need you to make an offer on this clean 4-plex I took a short sale listing on today." You say, "Can you be here in 10 minutes?" It's all about the numbers. Play the game and eventually you may become the owner of a Real Deal.

Teamwork

In the meantime, you've given Susie the one thing she really needs right now, an offer. Susie now owes you. You can bet Susie is going to do everything she can to make you happy. You need to get on Susie's Team.

If you are looking for a local Susie of your own, give me a call. I know plenty in all areas of the country.

If you need help setting up a Self Directed IRA - I can do that too.

Mike Mueller - 925 288-9977 Ext 104

DirectBuy Sales Tactics

2007-10-29T09:50:00.001-07:00

When investing in foreclosed properties chances are the unit will need a little rehab. Reducing this expenditure as much as possible is a natural. Every dime you can save in the process of turning into cash positive is vital and crucial.

So you might be tempted by the infomercials you see of DirectBuy. Don't be. Investing in any distressed property requires all your noggin power and that includes on the rehab as well.

Being tempted by the seductive commercials is normal. When my wife suggested last week that we should "go check them out" I knew it was time for this post.

Here's the scoop

DirectBuy is a sales company right out of the timeshare industry. Here's what happens when you "check them out".

First you'll be greeted by your personal sales rep, after some "It's nice weather we're having...", you'll be ushered into a sales presentation, usually given by women. The presentation is very well scripted. It's been crafted to make a lot of economic sense - according to their stats. They say the best way to lie is by using Stats. That's what my Stat Professor used to say.
From there you'll be moved to closing. At least two managers will come in. They'll present the contract to you. If you stop to read the contract someone will ask you a question, "Mike, what style of cabinets do you like better, Colonial or Modern?" The question doesn't matter. The distraction does.
It's now or never. With the inner secrets they've allowed you to see they "can't let you walk away and think about it." Here comes the "Fear of Loss Close"
They already have an answer to every objection you have. Their closer's have role played the same scenario over and over again.
Want to compare prices? They've got you covered on that as well. They'll try to compare the prices you come in with against closeouts and non comparable items. The cabinets they quoted you in the signing room that beat the pants off the quote you have from the Home Depot, are probably not in stock, are discontinued, and unavailable. They don't exist.

Assuming you lost all sense of reason and signed on the dotted line, you are in for some surprises.

You'll pay a huge up front fee for signing up. You'll pay a monthly fee for access. There is virtually nothing in stock. Pay now - and wait. Now wait some more. Keep waiting. How does 6 to 8 weeks sound?

You'll pay for shipping - and shipping isn't cheap!

How about returns? Did you know they don't take back anything? NO RETURNS! Of course, you would had they let you read the contract.

Want to get out of the contract? Not a chance. It's been reported to be as tight as a drum.

Want to read some more? Here's a great compendium of disgruntled DirectBuy'ers.

www.InfomercialScams.com

Eduardo Ledesma

2007-10-19T13:49:00.001-07:00

Every Friday, Eduardo Ledesma searches the local MLS systems of Alameda, Solano, and Contra Costa for distressed investor properties.

Every Friday I get an email listing of all the properties Eduardo has found. It's a link to every property that he has determined fits my particular search requirements. He has put them all on one single page. Understand this, Eduardo doesn't just send his email to anyone. He sends the list to me because I am in his group.

Eduardo doesn't stop there. Eduardo also leads a small weekly group on a tour of selected Bank Owned Properties. You can't come. You have to be invited to go on this tour. Eduardo is what is called an REO Expert. He specializes in Short Sale and Bank Owned opportunities.

You see, Eduardo doesn't work like most Agents. He has a very defined and specific way of doing business. Eduardo will only take on clients who are ready and serious.

I bring this up because I just received a call from a reader who wanted me to forward the "Eduardo List". There's something wrong with that. This person doesn't know Eduardo. He doesn't know them.

Technology has enable the free flow of information all across the web. While the flow might be free, the work it takes to put it together isn't. The list Eduardo puts together takes up his valuable time. He's very willing to give his time to the right people.

One of the very first jobs I had was at The Sizzler back in 1977. I remember my first boss, Pat Malan. Pat had a saying he was fond of. It has stuck with me to this day.

"Don't take kindness for a weakness". Not that the caller was trying to personally take advantage of Eduardo. This is more of a case of the caller assuming that all information, especially on the internet is free.

In the end, I have introduced the the caller to Eduardo. They'll meet and Eduardo will develop a better understanding of what it is she is looking for. Instead of her receiving an overwhelming amount of useless information - she'll now get only the highly detailed and targeted content she needs.

If you would like to discuss your ideas with Eduardo - give me a call, I'd like to introduce you to him!

Mike Mueller (925) 288-9977

Technorati Tags: foreclosure investing, bank owned properties, short sales

Tax Lien Investing

2007-10-17T08:50:00.001-07:00

Last year a good friend of my wife had watched a late night infomercial where they were selling a program that taught you how you could buy homes for next to nothing. Buying Tax Liens. After watching the hour long program she thought it was "all good". She ordered the $500 package and was eager to start on becoming independently wealthy - just like the program touted.

Somewhere along the line she started to think. If she was buying a home for pennies on the dollar, she was certainly coming out a winner. So who was the loser?

She called me for my insight. I told her that someone has to lose. Chances are the home was not vacant and abandoned as the commercials always seem to show. Instead, if she bought a tax lien home she might be displacing an elderly person or maybe a homeowner that was down on their luck. Maybe the original homeowner passed away - the current heirs to the estate (think sons, daughters, and grandchildren) didn't know about the delinquent tax bills. I posed the question to her that would she feel right to take the equity away from that grandchild, maybe preventing her from going to college?

In the end she returned the 38 CD set and fought for months to get her money back.

I read a news story today about an 89 year old Widow. She is losing her 35 acre farm due to her failure to pay a $38 tax bill. That's no typo - that was Thirty Eight Dollars! The tax bill was from 2003 and was purchased in 2005 by a Tax Lien speculator.

Oh, did I mention she was blind?

Prairie State Properties LLC, the owner of the Tax Lien is set to make out pretty good. They have "Billie Bob's Tax Lien Sale System" down. Win - Win just isn't in their vocabulary.

NOTE: What Prairie State is doing is perfectly legal. It's a loop hole in the system. I'm all for capitalism. I'm not for "Pirate-ism". Stealing equity, stealing capital, stealing anything is just not ok. It's really not ok when you put a face to it.

Technorati Tags: Tax Lien Sales, Fraud, Theft

Clouds

2007-09-21T07:00:00.001-07:00

"Partly Cloudy", said my local weather person. Partly Cloudy is good thing if you are laying back after a picnic with your sweetheart on a summer day.

Any sentence with the cloud word in it is the last thing you want your real estate professional to utter, especially from your escrow / title person. A clouded title can easily kill a deal.

What's a Cloud?

Generally, a cloud on a title is due to someone owing someone something. Generally, that someone either didn't know about the debt, wouldn't pay the debt, or simply couldn't pay the money. Generally that cloud can be removed by a simple quit claim deed. That's the end of the generalizations.

Why is this important?

When the stock market has a correction to the downside we see the professional traders looking to buy bargains. The same holds true for real estate. There are some great bargains out there. The pro's are already looking and buying real estate. As we continue, the amateurs are going to be tempted to look for that bargain.

Obviously, those bargains can be found in various distress sales. Those distress sales come in three different flavors and have three very different levels of cloud risks associated with them.

Buying a Foreclosure or home that is has a Notice of Default filed against it.
Buying a Short Sale
Buying a REO or Bank Owned Property.

Buying a Foreclosure

This seller has been running behind for a long time now. There's a reason they are in default - they couldn't pay. If they couldn't pay the mortgage, they probably owe other people too. Some of those people have the ability to put a lien on their home. There's a cloud. This lien could be just a little light and fluffy cloud or it could be a thundercloud. Garbage liens - usually light and fluffy. Tax Liens or Mechanics Liens have the ability to seriously hamper a deal.

When you are buying a Foreclosure you are buying from the homeowner. Chances are they are not represented by a real estate professional (can't afford it). Are they going to initiate the title search prior to your contract? Not a chance. in a foreclosure purchase, the cloud is usually discovered after the contract. You can see how that just doesn't work, right?

Buying a Short Sale

This seller usually has a real estate professional guiding the way. They have brought the lender in on the deal. Usually they have had a title company complete a title search and discovered any liens that might be on that title. When you purchase a Short Sale, both parties will usually have a clearer picture of the deal. No surprises. That doesn't mean there won't be clouds. But those clouds will be known and can be dealt with prior to the contract. This is a big difference.

Buying a Bank Owned Property (REO)

The seller is the Lender. The property has been through the grinder. It may have started as a Short Sale. It didn't sell and so the owners fell behind to the point where it became a NOD. Once again, no sale. Finally the Trustee Auction came and due to the lack of equity it didn't sell and was turned over to the Lender.

Here's the bright and sunny on this picture. Chances are all clouds, all liens, all liabilities attached to this home were taken care of as it as it passed from the homeowner to the lender. Buying a REO? You'll probably have a clear day when it comes to title.

Wise Words

If you are looking for deal, no matter which flavor of distress you like, do yourself two favors.

Always use true real estate professionals who are familiar with the type of deal you are considering. As my friend Brian Brady says, "If you thought dealing with a professional was expensive, wait until you find out how much dealing with an amateur costs!"
Always buy the best title policy you can buy. This is not a place to try and save a few bucks. You did know that there were different levels of policies available, didn't you?

Now, just because the REO has the least chance of having a clouded title this doesn't mean you should look only at REOs. The title issue is just one piece of the puzzle. Each version has it's own specific Pro's and Cons. That REO also has the highest chance of being the most abused of the three as well. But that's an article for another day.

Technorati Tags: REO, Short Sale, Foreclosure Investing, Clouds on Title

Bank Owned Properties

2007-09-20T10:07:00.001-07:00

Or what is commonly called REOs. That stands for Real Estate Owned.

The other day I gave you the link to Countrywide REO listings.

Now here's a couple other banks.

One caveat that bears repeating; The Listing Agent has a fiduciary responsibility to the Seller in all real estate transactions.

What this means in plain english is that they are going to do the best for the Seller - not you, the Buyer. You should be represented by a professional real estate agent who is very familiar in the process of buying a REO. The Buyers Agent has a fiduciary responsibility to you, that's a good thing!

Technorati Tags: Buying REO, REO LIstings