The Next Real Estate Boom – Foreclosures

Real Estate BoomAs the real estate market continues to slow down foreclosures are already reaching an all-time high. This is only going to get worse in the next couple of years and it’s all because of the real estate boom in the previous three to five years.

Why is this happening?
It’s because home buyers were spending more money on new properties than they can afford and because loan brokers and mortgage companies were allowing them to overextend themselves. These brokers (in my opinion) were taking advantage of home buyers by giving them great deals on 3-5 year ARM loans or interest-only loans which allowed them to buy bigger houses they couldn’t really afford. Brokers of course get paid commissions from lenders they match you up with but that’s a different story.

So what’s happening now?
All those 3-5 year ARM loans are now starting to adjust and homeowners are unable to cope with their mortgage increase and have to foreclose on the property. This is even more so true for homeowners who took out an interest-only loan. So in my opinion the next few years is going to be prime time to pick up deals on foreclosures. So what I am studying now is how to take advantage of this cycle in the real estate world by examining how to find houses in the pre-foreclosure stage. So pre-foreclosure real estate investing could mean lots of opportunity and moneymaking potential. At the same time, it requires that investors be on their toes and careful in their decision-making. It also takes a lot of time since real estate investments take longer to liquidate that and other investments meaning you cannot always get your money back quickly.

Pre-foreclosures are beneficial to the seller and to the buyer. It means the seller doesn’t have to go into foreclosure with the banks and their credit doesn’t get affected. The buyer essentially bails out the seller and takes over the property. The seller will most likely lose all equity built up (if any) and will have to sell their home usually at a discount which is all good news for the buyer.

I will talk more in detail as I learn about pre-foreclosure real estate. Once you understand the foreclosure process, you can take advantage of a situation that you did not create and one in which the homeowner cannot fix. It will allow you to build a wealthy future for yourself by investing in this type of real estate.

16 thoughts on “The Next Real Estate Boom – Foreclosures”

  1. In the past few years I’ve been researching who are the successful agents, tried to figure out why top agents are top agents.
    Do they have a common educational background? No. Good ones have high school diplomas, masters and doctorates. No correlation.
    Similar previous careers? No. One of the best agents I know used to teach baton twirling. I doubt if I could find a lot of those if I tried! I’ve had waiters, teachers, high powered executives and stay-at-home Moms who were all very successful.
    Common interests? No. Other than eating, (which we Realtor-types seem to do exceptional well) the interests are widely diverse.
    After 13 years in real estate sales and management, I’ve only found a few constants.
    1. Successful agents treat the real estate business as a business. They actually have a business plan and a budget. They understand that you have to spend money to make money. They know how many sales they need to make the income they require and then they figure how they’ll get from here to there. They plan in advance and execute the plan.
    2. They actually work when they work and play when they play and take a day or two off every week. (Just like a “real job!”)
    3. They have fun and enjoy selling real estate but know that it won’t be forever.
    4. They buy a lot of real estate for investment when they see good deals because they know that no one gets rich selling the stuff. You get rich owning it! Financial independence gives one a lot of freedom, autonomy and a certain air of confidence that smells like success.
    . . . And people like to do business with successful people so they do more business!
    That’s why I choose this realtor for my future

  2. For those investors who are smart, the next few years will be a very good time. Don’t forget to look at REO properties as well. I follow Williams Auctions and have found some great deals. Basically, the banks held the foreclosures for a few months and then needed to get them off their books. So, Williams Auctions auctions them off, often very cheaply. I believe their Web site address is

  3. This is great if there is equity in the transaction but how is a buyer going to help a seller out if their property is worth thousands less than what they paid for it and they did 100% financing>?

  4. Good point No Ca Realtor. If there’s no equity built up then you’d be trying to get the house more for the discount and sit on it until the market recovers. That’s also something to take into consideration when evaluating a foreclosure.

  5. When going to buy or sell a home, your first step should be finding a honest and hard-working realtor.

    When going to buy or sell a home, your first step should be finding an honest and hard-working realtor. You can find a real estate agent by keeping an eye out for advertisements, calling your local real estate broker, or through the internet.

    The role of a real estate agent is to represent your best interests in a real estate transaction. They work off of a commission, normally 6% of the sales price of the home. In most cases, that commission is split equally between the realtor representing the buyer and the realtor representing the seller. For a person buying a home, the service of the real estate agent is free, because commission is paid by the seller. The buyer, however, is responsible for most of the closing costs. The closing costs will be explained to you by your realtor and will be on the documents you sign when you go to the title company. Closing costs can also be negotiated on during the contract process.

    The real estate agent, through their broker, has access to all of the MLS (Multiple Listing Service) listed homes in your area of interest. If you are a home buyer, the realtor can provide you with information about homes for sale that meet your criteria. They will then bring you to these homes and let you inside to see them. If you are selling a home, the realtor will list your home in the MLS, post a “For Sale” sign in your yard, and hold open houses to attract buyers. Be wary of discount realtors that offer to list your home for a lower commission. Studies show that, in most cases, your home will stay on the market longer and you end up selling it for a lower price than what you intended.

    A real estate transaction is a complicated process that involves many steps and is best done with the help of a trained, licensed professional. A realtor can save you the headache of dealing with the other party in the sale, getting together the contract, and submitting all the documents to the title company. So when you are ready to buy or sell a house, contact the local real estate agent.
    I had come to know these kind of information through the realtor site which I have recently visited

    This site shows much useful information about the real estate business

  6. It is because of the greater demand for housing created by these new questionable mortgages that prices went up so fast. There are also so many foreclosures because people don’t understand finances, and they do not know how to save money. They get so excited when they hear offers of “nothing down” yet, don’t make the connection that that means they’ll have high monthly payments.. Its a sad society and we’re in for some interesting real estate times.

    1. yeah, education and having the right information is very important before you invest in a property. this way, you can avoid, or at least, lessen chances for a foreclosure. one should really be responsible in terms of financing when buying a home.

  7. Very true Logan. Buyers need to be better educated before purchasing a home. All these brokers virtually offer loans like a credit card with high limits which eventually come back to haunt you.

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