July 2011

Investment Exchange

An educational real estate newsletter

WORKING WITH TITLES

When it comes to distressed real estate, a clean title is your ace in the hole.

Title searches become especially critical for short sale and foreclosure transactions because financial distress in one area makes the likelihood of financial distress in another area that much higher.

In other words, if a homeowner can't make his or her monthly mortgage payments, perhaps he or she also hasn't been paying his or her income taxes, renovation bills, property taxes, etc.

Liens on a property transfer with property ownership and do not stay with the person who caused the lien to occur in the first place. That means that any encumbrances incurred by the previous owner could become the next owner's problem.

And if that next owner is you, you may be in for a very unwelcome shock.

To mitigate this risk, a title search is essential. Unpleasant surprises that turn up will be, well, unpleasant, but it's better to find out now than before you sink lots of money into a bad deal.

This month's newsletter is all about familiarizing yourself with title searches and how to get them done as painlessly as possible. Your success as an investor depends on it.

This is one step you definitely don't want to skip, so please keep reading.

Site feature spotlight

BRAND NEW ARTICLE SECTION

Foreclosure.com is famous for its first-class distressed property listings, but it has also built a reputation on another claim to fame:

Excellent real estate investment education.

Whether you're a seasoned distressed property investor or a total rookie, Foreclosure.com has everything you need to teach you all about the exciting and lucrative world of distressed real estate.

And now, our Article Center is better than ever.

The new Foreclosure.com Article Center features concise, comprehensive and timely content designed to make your investment experience rewarding — both personally and financially.

There you'll find everything you need, from the difference between a foreclosure and a short sale to rehabbing tips and tricks from the pros. It truly is a must-read resource for those who are serious about watching their real estate profits snowball.

Just in time for this month's newsletter, which is all about property titles, is brand new content from Realtor?? and Foreclosure.com educator Peter Mosca.

Peter talks about the importance of title insurance and what to watch for when it comes time for you to do your due diligence.

The new Foreclosure.com Article Center features expert authors from every facet of the distressed real estate business, so you know you're getting the best advice possible. Our article database is growing all the time, so be sure to bookmark this valuable resource and come back often.

The content is free, but the value is priceless!

Check out Peter Mosca's article explaining title insurance right here.

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WEBSITE SEARCH TIPS

QUICK AND EASY TITLE SEARCHES

Property titles are a critical aspect of any foreclosure investment strategy.

It's imperative that you look into any given property's title history to ensure there aren't any hidden surprises that could throw your budget way off track.

Title issues become all the more likely with distressed properties because the owners (or previous owners) had financial issues that caused them to default on their mortgage - so it's very possible that those same financial issues negatively affected their property taxes, income tax, etc. Any of those types of defaults will end up on a property title in the form of a lien, judgment or other encumbrance.

Before you invest in a distressed property, check the title records. You may especially want to watch for the following:

• Unpaid property taxes
• Zoning restrictions
• Liens (e.g. for unpaid income taxes, child support, renovations, etc.)

Performing a title search doesn't have to be complicated or overwhelming. Just use Foreclosure.com's affiliate, ForeclosureTitleSearch.com, to make it happen. You can get results in as few as 12 hours, so there is very little waiting and you totally sidestep the headache of trying to do it yourself.

A word of caution: Be wary of people who encourage you to perform a title search on your own. Although all of this information is technically public, in practice it's very difficult to ensure you have all the data you need and leave no stone unturned. A professional title search is a comparatively small expense that you absolutely will not regret.

Interested in a property? Start your title search now — CLICK HERE.

Learn more about property titles and title searches in the Foreclosure.com Document Center, too.

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Hot off the press

$300 BILLION IN PROPERTIES TO HIT THE MARKET

Wondering when the short sale and foreclosure opportunities will dry up?

Not any time soon, according to some real estate experts.

An astonishing $304 billion in U.S. mortgages were foreclosed on in 2010 and it appears that the number is continuing to rise through 2011.

All the more reason for you to get in on the distressed real estate game now. Inventory is high, prices are low and mortgage rates are still very attractive. It's an absolute buyers' paradise and smart investors are capitalizing on this opportunity before it's gone.

It really is a very exciting time in the market for real estate investors, but just because the time is right doesn't mean the stakes aren't high.

Avoid the rookie mistake of getting swept away by the excitement and forgetting to cross your t's and dot your i's.

Title searches are an absolutely essential component of your real estate decisions, especially if you plan to capitalize on the abundant short sale and foreclosure opportunities in your neighborhood.

The goal is to find out as much as you can about a property before you make any decisions. A house that looks like a good deal on the outside may not be worth your while if there are tens of thousands of unpaid taxes attached to the title.

Better to find out if there are any skeletons in a property's closet before you put pen to paper.

Foreclosure.com has the most up-to-date distressed listings available and makes conducting a title search as easy as a few clicks of the mouse. Simply visit any listing you love on Foreclosure.com and scroll down to the "Get a Title Search" link to get started.

It's that simple.

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Our success stories

RENEE UNGAR ON TITLE INSURANCE

We've said it before and we'll say it again: Title insurance is a very important safety measure in any real estate transaction.

Renee Ungar agrees. She is the President of TOMA Services, a title insurance firm in Lakewood, New Jersey.

"Purchasing a home or a real estate investment may be one of the purchases one makes in a lifetime," said Renee. "Any cloud that may be on the title can be a small minor paperwork issue or can seriously cause a financial downfall for a family."

"Securing clear title and insurance is a minor hedge against a very large bet. We have seen cases with serious negative affect because of title issues from actual fraud to bounty seekers and family feuds".

Renee started her business in 2004 with a desire to serve her clients honestly and protect their interests during real estate purchases. She always recommends starting with a thorough title search.

"For a relatively nominal fee, you can obtain title search information," she said. "You can either agree to a straightforward 'Report on Title' fee per file or work out a dedicated working relationship with deep discounts on your searches (namely actual cost plus a small service fee) for your due diligence period."

She also emphasizes that when it comes to titles, time is of the essence.

"Time is always the critical factor — not leaving title review or reports for the last minute will usually be your smartest decision," she noted.

It just makes good business sense. The more quickly you can get your hands on title information, the safer you'll be. Add title insurance on top of that and you'll be able to rest easy knowing that you don't have any ugly surprises lurking around the corner.

Thanks for your insight, Renee!

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Real estate tips

KNOW BEFORE YOU BUY

Buying real estate is not like buying a pair of shoes. Once it's purchased, you can't take it back.

To avoid buyer's remorse, do your homework on any property that catches your eye. Then, once you're done, do some more.

The lesson is to learn as much as you possibly can about a property before you commit to the transaction. Scope out the neighborhood, do a walk-through (or at least a walk-around) of the property and definitely conduct a thorough title search.

Conducting a title search on your own is not for the novice investor. In fact, most distressed property experts swear by getting it done professionally. Not only is it faster and easier, but it also is much more comprehensive and often comes with a guarantee.

Imagine how you would feel if you accidentally missed one aspect of a title search, only to discover you now owe the government $20,000 in unpaid income taxes.

Or if you didn't read the notices thoroughly enough to realize the property backs onto a sewage treatment plant. Or if you ended up buying a second mortgage unaware that you aren't even dealing with the primary lien holder.

There are 100 reasons to have a professional property title search done before you buy, but the most important reason is the one that you haven't thought of yet.

A thorough title search helps ensure there are no unpleasant surprises on the other side of that real estate deal, which frees up your hard-earned money to invest elsewhere as you see fit.

Remember, a successful real estate purchase isn't a "get rich quick" scheme. It's a well-planned, carefully executed transaction. Exercise caution so you don't get caught by surprise.

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Deals of the Month

HOT FORECLOSURE DEALS!

Goodlettsville, TN
$75,000
2 beds/1 bath
1,453 sq. ft.

Grand Rapids, MI
$55,000
4 beds/2 baths
1,693 sq. ft.

Forest Lake, MN
$104,500
3 beds/3 baths
1,405 sq. ft.

Linda's Learning Lane

Looking for skeletons

We all have our strengths and weaknesses. Some of you may have the strength of being a sleuth and enjoy digging for answers like a forensic detective.

If that's the case, then you may have a good match (and challenge) in the title search business.

Here are some helpful title search tips should you decide to go it alone:

1. Start with the present and go back to the past — Work backward, not forward.
2. Use the legal description and NOT the address when searching.
3. Pinpoint the last time the property was sold (not the sale at auction if it is foreclosure).
4. Specific liens are known as mortgages, code enforcements, homeowner association and constructions liens. They only effect the property that is listed in the legal description.
5. General liens are any court judgments, state tax and federal tax liens. These are liens against any of the property owned by the person listed on the lien.
6. A lien is removed with what is commonly known as a "Release of Lien."

If you are serious about a particular property and you are new to buying real estate, we strongly encourage you to have a title search done. Once you become savvier with the process then these tips will help you along your way. Always secure title insurance. It will give you peace of mind.

Doing your homework and taking your time will put dollars in your wallet rather than costing you after the fact.

Happy searching!