I am looking at a house in preforeclosure scheduled for auction in a couple weeks. I have access to some info, but not everything I need to know. It is listed on Auction.com and they provide a "title information" document showing there are 3 liens as follows:
07/24/2003 1st / Trust Deed/Mortgage $268,700 Cendant Mortgage Corp Conventional Fix /
12/02/2005 2nd / Trust Deed/Mortgage $35,000 Bank of America Conventional Var /
01/17/2006 3rd / Trust Deed/Mortgage $75,000 Bank of America Conventional Var /
on the property but it does not say how much they have been paid off. I also have access to data through an online software I have a subscription to, which says the following:
Original Loan Amount
Where do you find out if a preforeclosure has equity and what the loan/mortgage balance is? I know the software I use says there is $210,513 in equity but I would like to know where to VERIFY this information since it porbably isn't 100% accurate. It also says that the loan balance is $268,700, even though the judgement amount is $47,487. Does that mean I can't do anything with this property since the loan balance is higher than the equity/value? What exactly is the difference between the loan balance and the judgement amount?
Also, there is a lot of information out there and as a newbie it is difficult to put all the pieces together, so I would just like to recap my approach from start to finish in case anyone notices a flaw or has any pointers. I'm sure this will help lots of fellow newbies that are lost, wondering the same things.
Basically, I use this software that pulls public data and finds "leads" including pre foreclosures. I then narrow it down to pre foreclosures with 20% or more equity, and find the properties with auction dates coming up in a few weeks and contact the owner (By door knock- does anyone have a good script?). The data is not 100% accurate so I then look up the property on zillow/google and see what I can find (i.e. if its listed for sale on MLS, as a PF or just off market, and other basic info) but I don't know where to verify the IMPORTANT info, like the equity, mortgage info, etc. Title company? County Clerk Website?
Once I verify they have equity and I can make a deal work I would then approach the owner and offer a "win-win" solution by buying their property and making up their payments. They walk away with some equity, a not-so-damaged credit, and free moving expenses that I will cover... rather than just losing their house to foreclosure and walking away empty handed with a bad credit... and I walk away hopefully making some money by fixing up the property and selling it for top dollar. (I also send postcards and other things that may fish some leads but that is expensive and yields low results so I've kind of gotten fed up with wasting money on that stuff.)
Please let me know if I am missing anything or if someone can point me in the right direction in terms of learning the ins and outs of this niche. There is TONS of confusing info out there and I really just want to get a solid understanding of it all before I go and make large financial and/or embarrassing mistakes. If anyone knows of a comprehensive in depth source of education, whether it be a book, youtube video, or website that will help me master pre foreclosure investing and how foreclosures/auctions work, that would be great. Thank you for any and all help in advance!
Don’t know what software you are using, but it will be limited in ability. More importantly, it appears that either the 2nd or 3rd mtg is the one foreclosing, since the 1st mtg balance would likely be many times the $47k Judgment. If so, that 1st mtg will still be in place and it would be a sucker buy. Step 1, who is foreclosing!?
When all else fails, Read the foreclosure case file.
@Wayne Brooks That would make sense. Who would I contact to find out who is foreclosing? Also, where is the foreclosure case file kept?
Also the software is REIPro - www.myreipro.com
What Wayne Brooks said. Order an O&E from your title company to get a birds eye view of what all is in play. Here in Colorado, you'll be able to easily see which position is foreclosing with the NED. Illinois may be entirely different, but it's a quick, easy, cheap place to start. You should also be able to find the foreclosing attorney's contact info in there
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