Idaho Data Providers General FAQ’s
What are foreclosures and how do I learn more about buying foreclosures?
If a property is in pre-foreclosure, how do I buy before the foreclosure auction?
How can I buy an auction property?
How do I contact the lender to buy a bank-owned property (REO)?
How do I find the market value for a home?
Who uses our service?
What are the guidelines or rules for Inspecting Properties?
Why choose Idaho Data Providers?
Where does our information come from?
What does the dollar amounts listed on IDP mean?
Why does Idaho Data Providers Charge different subscription amounts for different regions?
Q What are foreclosures and how do I learn more about buying foreclosures?
You have three opportunities to buy foreclosed properties:
~from the owner in foreclosure before the auction
~at the auction (foreclosure sale)
~from the lender after the auction
Foreclosure is a legal process that allows a lender/bank to sell or take possession of a property due to non-payment of a loan that is secured by that property. Idaho Data Providers posts properties that are in the foreclosure process. Buyers have three opportunities to purchase property during foreclosure. Buying Pre-Foreclosure’s, buying at the auction or trustee’s sale, and buying the property from the lender or bank after the auction (REO’s)
Q If a property is in pre-foreclosure, how do I buy before the foreclosure auction?
Your first step should be to try and contact the owners. Since 9 out of 10 foreclosures are single family residences, most of the owners can be found at the properties. There are several ways to reach owners. The most obvious is the telephone; however, some properties in default will be disconnected or not listed at all.
Knocking on doors is probably your least efficient way to reach owners, however some professionals will tell you it is the best method of all. The most common approach is by mail. Keep in mind that it may take numerous letters before you can attract the attention of an owner in foreclosure. A unique letter will be helpful.
Generally, your most efficient method will be a letter writing campaign. You will find that more than 70% of properties in foreclosure will have equity at some level. You should send letters to all of these people. If your strategy is short sales you will want to target properties with little or no equity. You will need to send several letters to each homeowner. This is not as expensive as it sounds. You should have a campaign of sending 200-300 letters per month.
Every month, a number of people may contact you asking whether you can assist them. Spending a few hundred dollars per month is well worth it when you can make thousands of dollars for every foreclosure purchased, especially when you consider there is no other overhead.
Experience has shown that a low key approach, whether in person or by mail, is the best course. Letting the person know that you occasionally buy foreclosures and that you may be able to help them after evaluating their situation is really the essence of your communication with them.
Your goal is to have a meeting in which you can discuss their problem and how to resolve it. If you purchase property “subject to” existing financing, the usual approach is to offer a sum of money in addition to paying the existing arrearages. You have to leave a significant profit for yourself, and the best way to explain this is that if you take over the mortgage, pay the owner money, fix up the property for sale, and wait for it to sell, you have to receive a profit for your efforts and risk.
Unless you can make a profit, you must move on to other properties. But, what if there's no equity? There is a way to make money with properties that have no equity. That is to do a short sale with the lender. This means the lender agrees to accept amount lower than the existing balance. In a hot retail market this is extremely difficult because the lender has no motivation to reduce their loan. But in a soft market, some lenders may be interested in receiving a lower sum and walking away from the foreclosure.
Remember, foreclosures usually take about six months, causing the lender a significant loss. Lenders have to pay large expenses to repair and sell properties. You will also need the cooperation of the buyer in a short sale and normally he will receive nothing, except relief from the foreclosure. For many this is enough, because of the extreme pressure they have been under.
When a property is in pre-foreclosure the owner still has a chance to stop the foreclosure process by paying off what is owed or by selling the property. The pre-foreclosure period can last several months, so you may need to be patient when trying to contact the owner in default.
After first calling the Trustee listed on Idaho Data Providers and confirming the property is still in default, you should contact the owner and let them know of your interest in the property and try to arrange a meeting with the owner to discuss a possible sale and to get a better look at the property.
To determine how much you will pay the seller for the home, you should subtract all your costs as a buyer (loan balance, additional liens, and repair costs) from the estimated market value of the property. Additionally, you can subtract other costs the owner will incur by holding the property longer or trying to sell it on the market. These include the real estate commissions, closing costs and additional loan payments that will become due while the property is for sale. You then use the final net number as a basis for your negotiations with the owner. If you reach an agreement with the owner, you will need to make sure you can cure the loan that is in default and satisfy any other liens.
Keep in mind that a property in a pre-foreclosure status is not necessarily for sale. The owner may be pursuing other options to cure the default; however, an offer from a pre-qualified cash buyer may be the best solution to get the owner out from under the impending foreclosure.
Q How can I buy an auction property?
If no one is successful in buying a property from the owner in foreclosure, it will go to sale. You need cash to participate in foreclosure sales.
Many investors use a combination of their own capital and a line of credit. The day before the sale, they borrow the amount they believe they will need. If they don't use the money they return it to the lender or use it for the next sale.
Since there is no title insurance available at foreclosure sales, you will need to know precisely what is on the title to the property before you make a purchase. You can order a title commitment from a title company so you will know what the liens are, but beware of last minute filings by creditors. You can check with the title company the day before the sale, preferably in the late afternoon. It is critical that you know the position in the chain of title of the foreclosing lender before you bid. If the property is still scheduled for auction, you should check the title of the property either by using a local real estate agent or title company. This is recommended because the winning bid may be subject to other liens in some cases. A lien is a legal filing by someone owed money by the owner of the property.
If the loan in default is the senior lien, then any other junior liens will typically be removed from the title at the auction (confirm this with a local real estate attorney or the trustee). If the loan in default is a junior lien, then the highest bidder will buy the property.
Make every effort to inspect property before the sale, as foreclosure properties are often in disrepair. You may have to buy property without inspecting the interior. All sales are final and there is no recourse.
It is sometime said that foreclosure delivers the clearest title available because it nullifies all liens after the one in default. But remember, notes and liens ahead of the note in default will remain on the property and become your responsibility.
As a general rule, you will not want to buy properties for more than 75% of the retail value at any point in foreclosure. Be kind to yourself, always leaving sufficient profit to make your business worthwhile. Don't fall into the trap of believing that any property purchased at a foreclosure sale is a bargain.
If the property has been scheduled for public auction, you could still contact the owner for a possible last-minute sale at this point, but if the owner isn't willing to sell, the property will be sold at the auction.
We recommend you always call the trustee listed on the property or the county clerk to confirm the auction date, because it can be postponed or canceled. If the trustee sale has been scheduled when we list the property, Idaho Data Providers will post the date, time and location of the trustee sale.
In many states, bidders are required to pay in cash -- usually in the form of a cashier's check -- at the auction. You can call the foreclosing trustee and ask them what type of funds they will accept If you're not experienced buying at auction, we recommend that you first attend an auction just to observe or consult a local real estate agent or attorney.
Q How do I contact the lender to buy a bank-owned property (REO)?
Sometimes a property does not sell at the auction. It then reverts to the lender. Lenders are generally not happy to receive property out of foreclosure since they are in the lending business and not in the real estate business.
REO means "Real Estate Owned" by the lender. It's another way to say the property has already gone through the foreclosure process and has now been repossessed by the foreclosing lender.
If the property is Bank Owned (REO), your first step is to contact the bank, called the lender on Idaho Data Providers Property Details page. The lender now owns the property. You should ask for the lender's REO department or bank-owned property department to proceed with possibly buying the property. Idaho Data Providers usually has the name of the lender listed on the property, but if you have trouble finding a phone number or address for them through the Internet or other means, below are some suggestions for tracking down the lender.
1. First, if the lender has listed the property with a real estate agent, you can simply contact the listing agent.
2. Contact the local property assessor or title company (either through county or city government) and ask who is listed as the owner of the property after the trustees sale. The assessor should also have the owner's mailing address. Go to statelocalgov.net to find the local property assessor in your area.
Tracking down and finally contacting a lender can feel frustrating and take time. The main purpose of a lender is to lend money, not to sell property. Even though lenders may have an REO officer, or even an REO department that handles bank-owned property for sale, that department may still be hard to track down.
You will have to be very persistent with lenders. They will say paperwork is needed before they can sell the property or that it has not been released for sale, but it is important for you to make contact with the lender early and for you to submit a written offer as soon as possible. The truth is they can sell you the property at any time.
As to price, lenders are obviously going to be less negotiable in a hot retail market, however since you are going to cash them out above their loan in most cases they are being made whole, even though your offer is below retail, so your offer should be interesting at the least. You will also be relieving them of the necessity for reports, paperwork, inspections, repairs, and other time-consuming procedures.
Try to pay no more than 75% of retail when buying foreclosures. A common rule is that you will need 1-5% for fix up and 8% for selling, leaving you with about 10 to 15% profit. If you follow this rule you will always have a healthy profit in the foreclosure business.
If you think you have found a good deal but don’t know how to put it together go to our affiliates section and click on Partner for Deals to find a local real estate agent in the Idaho Data Providers affiliates section who can help you buy a property.
Q How do I find the market value for a home?
The foreclosure data we provide to our subscribers will usually include the County Assessors value (land and improvements) for reference. While this information is helpful in determining the value of a property, in many cases this amount does not accurately reflect the value of the property. County Assessors use formulas for determining the current taxable value of each property, with small adjustments made each year by a predetermined formula. When significant improvements are made to a property, thereby causing a building permit to be issued; or when the property is sold, most Assessors will adjust their valuation based on either the actual sale price, or local sold comparables.
Market value is an estimate of what the property will sell for on the current real estate market. Keep in mind, when determining the final offer you want to make on the property; you will need to balance the market value with any liens against the property and estimated repairs.
A key in determining whether to buy a property is the investment to Value Ratio (ITV). This is calculated by the total investment you will have to make in a property (purchase price, repairs, interest expense, etc.) divided by its market value. The resulting number is the ITV ratio. The best deals are those with a ITV ratio of less than 75%. This means the property has 25% equity still in it.
Some investors say they don't care what the ITV ratio is, so long as they can make $10,000 to $15,000 on each deal. That's fine if the investment is under $100,000. But what if the total investment is over $250,000 or even $400,000, then, your return on investment is very low, and your risk is very high. You must look to the ITV ratio for each property, and each potential deal.
Q Who uses our service?
Our timely pre-foreclosure information has been used by:
• Attorneys
• Loss Mitigation Specialists
• Individuals looking to buy their own home at significantly discounted rates
• Investors who wish to achieve the best buy at below market prices in order to increase their profits
• Real estate agents interested in reaching the seller quickly in order to be the first to list their home
• Lenders seeking new borrowers, as homeowners in default need a new loan program
• Consumer credit counseling agencies looking for new customers
If the property you are interested in is vacant you do not have any legal right to enter the property for purposes of inspection. If you cross property boundaries or enter a home or other structure you may be civilly or criminally liable for trespassing or breaking and entering. If a property is occupied by the owner or a tenant, it is strongly recommended that you do not attempt to gain access to the property. Any contact with the current occupant of the property would be at your own risk as it is impossible to determine your safety because of the risks and hazards involved in contacting an occupant of a property who is involuntarily losing ownership of the property. Many times it is more prudent to try to contact an owner through the mail or by telephone.
Q Why choose Idaho Data Providers?
Timeliness
• Our data is the newest available, and is entered into our system daily.
• On many occasions you will know who is in pre-foreclosure before the owners themselves know it.
• Our data is accurate and detailed.
• Idaho Data Providers has additional recourses to give you the edge you need to be on top of the foreclosure market.
Q Where does our information come from?
Our information is collected from the County Clerk's (or equivalent) office in the county where the property is located. This data is then verified using tax records. We also collect data from every newspaper that publishes Notices of Trustee Sales in every county.
Q What does the dollar amounts listed on IDP mean?
The amounts listed on IDP are based on the defaulted lien information. When available, IDP lists all available details of the subject lien. These include the original loan amount, interest rate, and the principle balance.
This is not the purchase price for the property; it's a starting place for you to begin your negotiations with the seller. The goal is to get a good bargain, but you shouldn't necessarily expect to buy the property for just the loan balance.
If you work with a real estate agent, recommended for first-time foreclosure buyers, the agent can provide professional advice on the value of the property and how much you should offer. Click on Real Estate Agents to find a local real estate agent in the Idaho Data Providers Agent Network who can help you buy or sell a property.
The Default Amount is the amount the owner in default is behind on mortgage payments. This can range from 3-4 months worth of back-owed payments to the lender/bank up to a year or more in missed payments.
If the amount in any of the fields is blank, N/A or TBD, it means Idaho Data Providers was unable to find information on that property to fill in those fields.
Q Why does Idaho Data Providers Charge different subscription amounts for different regions?
Idaho Data Providers monthly subscription charge is based on the population base for each region. The population base for any given area is a good estimate of how many properties will actually enter into default in any given month. We have grouped particular counties together to form our regions, based on the population base for each county. Thus, the subscription fees for some regions will be more or less than others. You will notice that our southwest region is only $24.95 a month while the Ada County region is $49.95 a month.
