I live in Monmouth County New Jersey and was hoping someone can provide me with information on understanding the pre foreclosure process and whether this is a good method for purchasing properties for flips.
Welcome to BP, Mindy!
The question is....how are you buying, are you paying cash or putting cask down and financing the property and taking title?
If not, no, it's an area full of land mines and legal issues trying anything else. :)
Google foreclosures in NJ and read the basic info. Then read up on the Fair Foreclosure Act of New Jersey to get specifics. Then read what the state as well as your county has to say on the foreclosure process. Basically foreclosure in NJ goes thru 3 steps.
1. Pre foreclosure - beginning of foreclosure and is handled by the state.
2. Sheriff sale - post foreclosure stage in which state hands it off to county whose sheriff auctions property to highest bidder.
3. Reo - if no one buys at auction then bank takes possession and (generally speaking) eventually sells it through a real estate broker.
Study all 3 phases. Especially the 1st two and feel free to come back here with specific questions. Good luck.
For the most part we are offering cash. What we are finding with REO's is that we are getting outbid? We've lost 3 houses already. So I was thinking we should change our strategy and look for homeowners who may be losing their properties in foreclosure and getting to them first. I guess my question is, being very new to this business, what are people finding is the best way to find buying opportunities. Bank owned doesn't seem to be working for us.
Pre foreclosure in NJ is a short sale unless you find property with equity that the owner can't pay the bills. In my experince these guys refuse to leave the property, until they are thrown out and enjoy the 2-3 years of living rent free! If you do find a seller willing to go though financialoscopy that the banks ask for the banks then take forever to approve the short sale.
Just had 3 short sales I've been negotiating for different investors forced to be put on auction.com to get a fair market value price of property according to the bank. Even though there were signed contracts by buyer and seller true owner of house. The banks put a high reserve and bid against the real bidders on that site to inflate the price.
I've had better luck with rundown houses and estate properties or buying at the sheriff's auction. Monday is Monmouth counties auction at 2pm in freehold Tuesdays is ocean county. My partner goes to them weekly and can show you the ropes if you like.
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