Lessons Learned About Buying Foreclosures And Selling On Land Contract (Contract For Deed)!
Investing In Foreclosures
(EMAILWIRE.COM, July 17, 2006 ) Livonia, MI -- What are Pre-foreclosures?
A property enters into pre-foreclosure when the homeowner/s fail to submit their mortgage payments for two or more months. When the minimum time has been reached, a notice is issued with the County Clerk's office in the homeowners' state of residence. Depending on the state, the initial pre-foreclosure notice may be called Notice of Default, Notice of the Trustee's sale, or Lis Pendens.
How do I contact the homeowners?
Because homeowners in default are anxious to list and sell their home before foreclosure occurs, it is important to be assertive. You may benefit from traveling to their home and meeting with them personally. If you have a homeowner's phone, it is in your best interest to give them a call as soon as possible. You can also contact homeowners via the US Postal Service.
Today’s questions are several. Can you buy a house in foreclosure and resell it on a land contract (contract for deed) or lease option to the person losing it? Can you buy a home on a new mortgage and resell it on a land contract?
It is very common for someone in foreclosure to ask someone to buy their home out of foreclosure and resell it to them on a land contract or lease option. Does it seem ok to buy a house out of foreclosure for $100,000 and then give the person who was foreclosed on a one-year lease option for $130,000?? In my world, the answer is no! If you are in front of a judge, if it looks like a duck, walks like a duck, and acts like a duck, it is a duck. The interest earned on this transaction is 30%. If this is declared an equity loan, the Optionee can use usury as a defense against you. The result could be high legal fees, and a loan re-computed to zero interest. You are also subject to penalties by law. A better solution to the above situation would be to do a lease option for this person on a different property if you feel that he is credit worthy.
What is the proper way to resell a house in which you have purchased on a new mortgage? It has been a very common practice to sell the house on a land contract. The new owner then continues to make payments on the mortgage without the mortgage company knowing that there, as been a land contract sale. I recently attended a Continuing Education class for realtors and learned that this is in violation of Federal law. Rather then sell the property on a land contract you might consider doing a lease option on the home thus not being in violation of any law. You should be aware that mortgages generally have acceleration clauses that allow them the discretion to declare the mortgage balance due if you violate their prohibitions against re-selling or doing conveyances that look like a sale.
Disclaimer: Real estate investing by nature is risky. You can win, lose or break even. We cannot guarantee a profit or loss. We do not provide legal, accounting or contracting advice. Real estate investing by nature is risky. You can win, lose, or break even. I cannot guarantee a profit or loss. We do not provide legal, accounting, or contracting advice.
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Ralph Mark Maupin has purchased and sold in excess of 3,500 single-family homes and many multi family properties. Mark teaches real estate investing seminars, and has real estate mentoring program. www.detroitinvestmenthomes.com
www.mrleaseoption.com
www.megaeveningevent.com
A property enters into pre-foreclosure when the homeowner/s fail to submit their mortgage payments for two or more months. When the minimum time has been reached, a notice is issued with the County Clerk's office in the homeowners' state of residence. Depending on the state, the initial pre-foreclosure notice may be called Notice of Default, Notice of the Trustee's sale, or Lis Pendens.
How do I contact the homeowners?
Because homeowners in default are anxious to list and sell their home before foreclosure occurs, it is important to be assertive. You may benefit from traveling to their home and meeting with them personally. If you have a homeowner's phone, it is in your best interest to give them a call as soon as possible. You can also contact homeowners via the US Postal Service.
Today’s questions are several. Can you buy a house in foreclosure and resell it on a land contract (contract for deed) or lease option to the person losing it? Can you buy a home on a new mortgage and resell it on a land contract?
It is very common for someone in foreclosure to ask someone to buy their home out of foreclosure and resell it to them on a land contract or lease option. Does it seem ok to buy a house out of foreclosure for $100,000 and then give the person who was foreclosed on a one-year lease option for $130,000?? In my world, the answer is no! If you are in front of a judge, if it looks like a duck, walks like a duck, and acts like a duck, it is a duck. The interest earned on this transaction is 30%. If this is declared an equity loan, the Optionee can use usury as a defense against you. The result could be high legal fees, and a loan re-computed to zero interest. You are also subject to penalties by law. A better solution to the above situation would be to do a lease option for this person on a different property if you feel that he is credit worthy.
What is the proper way to resell a house in which you have purchased on a new mortgage? It has been a very common practice to sell the house on a land contract. The new owner then continues to make payments on the mortgage without the mortgage company knowing that there, as been a land contract sale. I recently attended a Continuing Education class for realtors and learned that this is in violation of Federal law. Rather then sell the property on a land contract you might consider doing a lease option on the home thus not being in violation of any law. You should be aware that mortgages generally have acceleration clauses that allow them the discretion to declare the mortgage balance due if you violate their prohibitions against re-selling or doing conveyances that look like a sale.
Disclaimer: Real estate investing by nature is risky. You can win, lose or break even. We cannot guarantee a profit or loss. We do not provide legal, accounting or contracting advice. Real estate investing by nature is risky. You can win, lose, or break even. I cannot guarantee a profit or loss. We do not provide legal, accounting, or contracting advice.
------------------------
Ralph Mark Maupin has purchased and sold in excess of 3,500 single-family homes and many multi family properties. Mark teaches real estate investing seminars, and has real estate mentoring program. www.detroitinvestmenthomes.com
www.mrleaseoption.com
www.megaeveningevent.com
Contact Information:
National Real Estate Investors Network
Mark Maupin
Tel:
Email us
This is a press release. Press release distribution and press release services by EmailWire.Com: http://www.emailwire.com/us-press-release-distribution.php.
National Real Estate Investors Network
Mark Maupin
Tel:
Email us
This is a press release. Press release distribution and press release services by EmailWire.Com: http://www.emailwire.com/us-press-release-distribution.php.
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