Cashing Out of Preforeclosures - Exit Strategies for Maximum Profit

One of the quickest ways to real estate profits is through preforeclosures. What is a preforeclosure, exactly? A preforeclosure takes place from the time the bank gives notice of default to the time the house sells at auction. Typically, this is around the time of 90 days into default, depending on state law.

The key to preforeclosure investing is equity - the difference between what a house will sell for and what is owed on the house. Preforeclosures allow you to buy a house for less than fair 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 on preforeclosures 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 in order to buy a preforeclosure, since the property still belongs to them during this stage. Ads in newspapers and subscriptions to preforeclosure listings will help you locate the properties. (See more about this in article 1.) Once you've located a property, you'll need to do the following to screen them and prequalify your homeowners:

· Find out all you can about the physical and financial details of the property. (Are there liens? Loan balances? Major repairs needed?)

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

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

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

Once you establish that you are there to help the homeowners, you can make a reasonable offer that will that will help you achieve the profit you're looking for.

Step 2: Begin Your Pre-Sale Marketing

One of the most important steps in securing your preforeclosure is to begin marketing as soon as you have your paperwork in order. 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 your paperwork is in order, take a picture of the front of the property. You'll want to keep some "For Sale by Owner" signs in the back of your car and have them ready once you have finished your meeting with the owner. You may want to put out a "Rent to Own," sign as well. Play real estate agent - put signs around the neighborhood with arrows leading to the property for sale.

Place your ads -- begin prospecting.

Place ads similar to the signs in local newspapers. Expect a good influx of phone calls. When the phone rings, find out if the 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 can notify 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 your preforeclosure. Let them know that they'll need to be flexible, patient, and, of course, financially qualified! Make certain they know the home is being sold as-is condition. Once the paperwork 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's time to move forward with the auction.

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

The main advantage of professional auctions is the fact that they will do all of the marketing and auction announcements. You can let them handle the auction details, including screening of the 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 retry the auction again at a later time while you work on unloading other properties.

Just remember to keep your prospect list growing as you advertise other properties, and soon enough, you'll have a healthy list of prospects vying for your investments. Once you've sold enough preforeclosures, investors will begin to contact you based on past sales and word of mouth. All of your hard work can help you increase your investments and quickly cash in on your newfound wealth - equity!

Richard Odessey along with his wife Michelle are founders of the premier site on the internet - http://www.InvestorWealth.com for training and teaching real estate investors to do high profit deals. They offer regular Free Teleseminars by the top real estate investors in the country and offer how-to tools and kits like the Deal Evaluation Tool (http://www.1shoppingcart.com/app/adtrack.asp?AdID=143414) to help investors to faster and greater real estate success. They also offer 4-8 hands-on training seminars with personal advice from experts that investors can take from the comfort of their home. Richard and Michelle have been investing for over 5 years and personally teach and mentor other investors.

This article may be reproduced in its entirety only if unaltered and the resource box is included.

There is something emotionally charged about the buying and selling of New York high-end real estate. How else to explain the juggernaut of reality TV shows about high-end brokers?

After 30 years of marriage, Sharon and Michael Newman decided it was finally time to move from the Catskills to New York City.

On blocks near Kissena Park streets are quiet, houses are small, and the electricity that charges the atmosphere in downtown Flushing is nowhere to be found.

A five-story, seven-bedroom house in Brooklyn Heights has sweeping views of New York Harbor and the Manhattan skyline.

Demand is so intense that there are waiting lists in some buildings, and a few landlords report that eager renters are even bidding up rents.

Sales at the very high end of the market barely missed a beat in the recession. But that prosperity hasn’t yet trickled down.

A Flatiron condo, a Midtown South co-op and a Brooklyn Heights carriage house.

A four-bedroom ranch in Montclair, N.J., and a four-bedroom colonial Cape in Babylon, N.Y.

For a century, Roosevelt Island housed a grim penitentiary. It was demolished in the 1930s.

More borrowers are opting for fixed-rate loans with terms other than the standard 30 or 15 years, especially when it comes to refinancings.

Two more glass skyscrapers are added to a group of towers on the waterfront of Long Island City.

Insurance coverage for a co-op unit; when a tenant is ‘blacklisted’; a co-op is smaller than estimated.

The market for $500,000-to-$600,000 houses in Westchester has become especially active.

A shaky real estate market means more sellers are providing buyer concessions, from gift cards to help with paying property taxes.

Houses of worship are adaptable to residential and other uses as congregations dwindle.

The settlement reached last week over questionable mortgage practices by major American banks hardly cracks the iceberg that is the foreclosure mess.

Under the settlement, nearly two million Americans could benefit from mortgage relief from the nation’s biggest banks.

A cold war-era satellite relay station is for sale in California after a Silicon Valley mogul gave up on plans to turn it into a weekend home.

How can I make my front porch more appealing to buyers?

Court hearings meant to protect New York homeowners from foreclosure are hopelessly slowed by endless paperwork and requests for additional information.

The Bay Area and Silicon Valley expect the windfall from the Facebook stock offering to make their in-demand region even hotter.

The house, designed by the architect Eric Fisher, looms over the street like a big industrial arm.

A town house in Dallas, a midcentury modern in Rhode Island and a Tudor in Denver.

Prices in some parts of the country are still off by as much as 25 percent from their 2007 peak.

Trinity Church is the largest landlord in Hudson Square and is part of the effort to rezone the area to residential from manufacturing.

Rising oil prices and a boom in shale exploration are leading companies to add office space in the Houston area, most notably Exxon Mobil.

Ms. de França is the president and chief executive of Douglas Elliman Development Marketing, which focuses on new residential developments.

Meet the real estate broker’s interns: an ambitious group willing to do anything, earn nothing and wake up early on a Sunday to fluff the couch cushions at open houses.

A Flatiron condo, a Midtown South co-op and a Brooklyn Heights carriage house.

A four-bedroom ranch in Montclair, N.J., and a four-bedroom colonial Cape in Babylon, N.Y.

Homes in Dallas, Rhode Island and Denver.

Compare the cost of renting and buying equivalent homes.

For recently divorced men, a new breed of decorators offers help navigating a strange new world.

Plants that light up the winter garden can be found at Broken Arrow Nursery in Connecticut, which has long been a favorite of gardening geeks.

A sister in need drew the painter Beverly McIver back home to North Carolina, unaware that a new beginning was in store for both of them.

A jewelry designer finds striking new objects for storage.

Timothy Sakamoto and Jochen Repolust are part of the small but growing niche making mobile apps focused on specific works of architecture.

To promote an auction of 20th- and 21st-century design, the interior designer Stephen Sills has created a preview exhibition in an apartment at the Apthorp.

Fishs Eddy now sells plates acquired from the archives of the now-defunct Syracuse China Corporation, many more than 100 years old.

The designer Russell Greenberg creates custom baby rattles with ends shaped like profiles of mom and dad.