fannie mae foreclosures

One of the quickest ways to real estate profits is throughpreforeclosures. What is a preforeclosure, exactly? Apreforeclosure takes place from the time the bank gives noticeof default to the time the house sells at auction. Typically,this is around the time of 90 days into default, depending onstate law.

The key to preforeclosure investing is equity - the differencebetween what a house will sell for and what is owed on thehouse. Preforeclosures allow you to buy a house for less thanfair market value, creating immediate equity for yourself.

Preforeclosures are your opportunity to buy low and sell high,maximizing your profit quickly. How can you cash in onpreforeclosures and exit with the maximum profit?

Here's how to do it.

Step 1. Find and Secure the Preforeclosure

You must submit a written contract directly to the owners inorder to buy a preforeclosure, since the property still belongsto them during this stage. Ads in newspapers and subscriptionsto preforeclosure listings will help you locate the properties.(See more about this in article 1.) Once you've located aproperty, you'll need to do the following to screen them andprequalify your homeowners:

· Find out all you can about the physical and financial detailsof the property. (Are there liens? Loan balances? Major repairsneeded?)

· Gather correspondence from the lender(s) that will fill in thedetails the owners may not be fully aware of or may not fullunderstand.

· Meet with the homeowner at their property and have them signthe documents that place you complete control of the house.*Make sure that you know who ALL the owners are, and that areserious about selling before you start negotiating a deal.

* Note: Do this quickly once you have decided you are interestedin the property as a solid real estate investment. This willhelp you turn around your equity quickly!

Step 2: Begin Your Pre-Sale Marketing

One of the most important steps in securing your preforeclosureis to begin marketing as soon as you have your paperwork inorder. It's time to cash in on your equity.

Here's how to get started:

Stake your claim - literally.

You're going to need a heavy supply of signs. Once yourpaperwork is in order, take a picture of the front of theproperty. You'll want to keep some “For Sale by Owner” signs inthe back of your car and have them ready once you have finishedyour meeting with the owner. You may want to put out a “Rent toOwn,” sign as well. Play real estate agent - put signs aroundthe neighborhood with arrows leading to the property for sale.

Place your ads -- begin prospecting.

Place ads similar to the signs in local newspapers. Expect agood influx of phone calls. When the phone rings, find out ifthe prospective buyer is an investor or a prospective occupant.Collect the caller's email address, phone number, and fax number.

You'll begin your own list of investors this way, and you cannotify them of properties you're selling in the future as well.Real estate agents will also call in based on your newspaper ads.

Step 3: Screen your buyers - and make the sale.

Be carefully when you screen potential buyers for yourpreforeclosure. Let them know that they'll need to be flexible,patient, and, of course, financially qualified! Make certainthey know the home is being sold as-is condition. Once thepaperwork has been approved, they'll have to close quickly,usually within 30 days.

If you haven't received an offer that meets your standards, it'stime to move forward with the auction.

Many preforeclosures reenter the market through auctions. Youcan hold the auction yourself or use a professional company toauction the property for you. It's best when starting out to getthe advice of two different auction companies. They'll be happyto give you advice on whether the property would be a goodproperty to auction off or not, based on the asking price.

The main advantage of professional auctions is the fact thatthey will do all of the marketing and auction announcements. Youcan let them handle the auction details, including screening ofthe buyers. If you don't get the reserve price you're seeking,you simply pay a fee to them to help cover their cost.

If your property doesn't sell on the first try, you can retrythe auction again at a later time while you work on unloadingother properties.

Just remember to keep your prospect list growing as youadvertise other properties, and soon enough, you'll have ahealthy list of prospects vying for your investments. Onceyou've sold enough preforeclosures, investors will begin tocontact you based on past sales and word of mouth. All of yourhard work can help you increase your investments and quicklycash in on your newfound wealth - equity!