Many consumers are baffled by the onslaught of foreclosure reporting, listing or information services. Many are confused about the different types of information available or even the kind of information they need. Even some industry professionals aren't sure what to make of many of these services.

Unfortunately, there is too much misinformation regarding lists of foreclosed properties, whether bank owned or government owned, pre-foreclosure or post-foreclosure, statewide, nationwide or local.

Some History

The original listing service was born from those who did actual courthouse research for attorneys, title or search companies. The information was accurate and reliable. After all, it was used by industry professionals. Recognizing the demand for such information, many firms expanded their services making the data available to consumers, specifically those who wanted the data most: investors.

Today there are several top-notch organizations that strive to deliver accurate information to their customers, whether they are home buyers or investors. They understand the foreclosure process, the opportunities that are available and the type of data their customers need.

There are, however, way too many organizations that do minimal research, pay little attention to detail, and make false claims and/or deliver useless information with the promise that you will get rich from having purchased their materials. Can you become financially independent investing in real estate? Absolutely! Thousands of investors are doing it everyday. However, not in the way suggested by some of these services' telemarketers.

Some Realities

The industry is not what it was several years ago. The economy has improved substantially. Inventories of bank owned and government owned properties are down. The banks no longer just give the properties away. True, bank owned opportunities were more abundant in the past. Today, several lenders enjoy selling their properties at market value. Opportunities will always be available however, for those who take the time to learn and understand the process.

Some Absurdities

The following is our Top Ten List of the most absurd claims, promises and/or sales pitches we've ever heard.

'"'Government agent will come to your residence to explain to you, one on one, how to buy their properties.'"'

If a government agent ever comes to your residence, he's going to be from the DEA, FBI, CIA or IRS, which means that you are either a major drug dealer, leader of a threatening militia group, an international spy, a terrorist or a tax evader, and buying a foreclosed property should be the least of your concerns. There are not now, nor have there ever been, representatives of our national government that will come to your home to explain to you one on one how to buy their properties.

'"'Just take over the low, low monthly mortgage payments.'"'

The process involved regarding the repossession of one's home stems from the borrower defaulting on the loan agreement. The mortgage document along with the loan agreement gives the lender the right to pursue this repossession through court action (in states where this method is applicable).

The lender forecloses the mortgage, not the home owner or property. If the lender is the successful bidder at the auction and wins the property, 99.9% of the time the mortgage is foreclosed and the property is now owned by the lender free and clear. There is no mortgage attached to the property because the mortgage has been foreclosed, it ceases to exist. You can't take over the monthly mortgage payments because there is no mortgage or payments to take over.

If an investor bought the property at auction, then the property is not bank owned and would not appear on any list of bank owned properties.

We brought up these objections to the telemarketer who made the above claim, and he explained that this is what he was told to tell all callers and that he was quite certain that his bosses knew a lot more about foreclosures than we did.

'"'For only 29.99, we'll send you foreclosure lists for the rest of your life.'"'

This company sends you a list of contact sources at HUD and VA that you must call to order a list of their properties. They do not produce any original data themselves. You want lists for the rest of your life? You'll have to call regularly... for the rest of your life.

'"'Every property in our listings sells for 60% off market value.'"'

'"'Every single one,'"' we asked twice. '"'Yes, every single one,'"' the telemarketer replied. We know that lender owned properties can sell for market price or at discounted prices. The average discount on REO properties is less than the average discount achieved through other investing methods and much less than the claims of this salesperson.

'"'30,000 government properties must be given away.'"'

Government agencies usually take title to real property through the foreclosure process. They dispose of the properties through sales agents, brokers, bid sales and auctions. Some will resell directly.

Some of these and other quasi-governmental agencies have great first time home buyers programs and/or financing programs. But none of these agencies, governmental or other, give away anything for free.

'"'Most of our customers buy a property in 30 days or less.'"'

Then why do most REO list publishers only sell annual subscriptions? Statistics show the average home buying process takes 3-4 months. Perhaps the answer lies in the 349 to 499 dollar annual subscription rates charged by these providers. Which leads us to...

'"'Just purchase a property from our listings during your subscription period and we will refund the prorated, unused portion of the subscription.'"'

Why is the refund of a product contingent upon the purchaser's ability to use it? Our research indicates that this makes an effective sales tool for the company offering it, but we only found 3 customers out of 10,000 who were able to take advantage of it.

'"'We are networked with over 4,000 banks.'"'

At last count we couldn't even find 4,000 banks. There is no national network that banks or other lenders subscribe to for the purpose of listing their real assets. Some institutions aren't even networked with their smaller branches. If there were such a network, why is it that all of us in this business list different properties, and a significantly different number of properties in the same states we produce these lists for? Why wouldn't all the lists be identical? Further, if the information these services provide consists of bank owned properties, why do they call all the local real estate agents for their lists of bank owned properties?

Why then would they tell you to deal directly with the bank, when the information they sell you comes from the real estate agents who are selling the properties? One firm sent us a list that they admit was retrieved from someone else's listings of foreclosures, right here on the net.

The only true database of foreclosed properties reported directly by the banks and lenders themselves is our very own Foreclosures Online. We never use secondary sources, only pure original research. Our database includes every type of property. The information comes from banks, mortgage companies, credit unions, insurance companies, government agencies, consumer finance organizations and state housing authorities. Please visit Bankhomes.Net to learn more about how we accumulate our foreclosure information.

'"'Make tens of thousands of dollars buying premium foreclosed properties directly from the banks.'"' '"'Premium'"' foreclosed properties generally never make it to the level where consumers can reach them, as they are gobbled up by insiders and industry professionals or are purchased at auction by seasoned investors. Everyone wants a nice property at a low price. The demand for the product keeps premium prices on '"'premium foreclosures.'"'

'"'Value 145,000, Sold for 53,000... or Market Value 125,000, Start bank offer at 39,000.'"'

None of the professional investors we know achieve the percentage discounts depicted in several advertisements of attractive properties '"'sold'"' at unbelievable savings.

Several publishers and their copy-cat competitors invent these '"'value'"' and '"'sold for'"' prices to wet your appetite. Most don't even use real pictures of foreclosures. They use stock photos or even take pictures themselves.

We question the advice offered by one listing service to '"'start bank offer at'"' an invented price. This information provider, like most, has little or none of the information needed to determine the property's current value, market value or comparable sales prices. REO list providers, including ourselves, do not perform inspections, appraisals, damage and repair estimations or market analyses on the properties listed in our databases. Therefore, even we don't know which properties have the potential of being good deals or not. The only way to know is to do the investigative research.

The Price Debate

How much is too much? Is it worth it to pay 195 dollars for a list of properties? What if you saved 8,000 dollars on the house you just bought? What if you just made 15,000 dollars flipping a foreclosure? Is it worth it? What if you just paid 300 to 400 dollars for a list of properties and found that they were all sold by the time you got it?

True investors will pay just about any price for quality data. The cost has little significance, as they will make thousands in profits buying and selling the properties. The type and quality of the data you need should help in determining the service you use. The integrity and reputation of the service provider must be considered.

Answers to Your FAQ's

Following are the answers to your most frequently asked questions.

Why do I have to pay for a list of properties, isn't this public information?

The answer is yes and no. The transfer of real property is always recorded in the county courthouse where the property is located. That makes it public information.

A list publisher or consumer for that matter, must request a list of foreclosed properties from participating lending institutions. Why request? Because there is no law stating that the lender must make this information widely available, just as there is no law requiring you to make public a list of your personal possessions for anyone who may demand it. You can, if you so choose, visit your county courthouse, go through all the deed and mortgage books and locate one property at a time, those that have been transferred to the lender. An arduous process at best. An alternative would be to go to every single auction, in every county you have interest in, and watch which properties go back to the lenders. So in buying a list, what you're paying for is content and convenience. By yourself, it would take hundreds of hours and a lot of money to compile the data you need.

Can't I just call the bank and get a list for free?

Again, yes and no. Most consumers have a difficult time trying to reach the right party at the bank in an attempt to get a list. Some lenders are more cooperative than others. Citibank for example, now charges 50 dollars for a list of their properties. While we disagree with this policy, we understand their reason. Too many uniformed buyers call the banks in an attempt to buy properties for 30 cents to 50 cents on the dollar. This charge is most likely an effort to separate the know-nothings from the serious investor. The bank does not want to be bothered by those who do not understand the process or by those who make absurd offers ultimately wasting the banker's time.

Why are some properties sold or not available from the list I just received?

In fairness to all list publishers, many lenders do not update their lists frequently enough. Some properties may be sold. Some may have been off the market for quite some time. NO list of REO properties, even ours, can be 100% accurate.

Remember, there is no national network. The proper accumulation and recording of this data is an imperfect science. Data quality and integrity is dependent on the source and the method of reproduction used by the provider.

Are there any good listing services out there?



Yes, several. Daily Default InfoService is just one example of a superior organization that we have endorsed for years. We highly recommend them for pre-foreclosure data in Northern California. You can reach them at 1-800-310-7730.

Do your research. Buy the type of information that most closely matches your investing criteria. If you are skeptical, ask for a sample. Always compare quality and prices. It is up to you to protect yourself from the scam artists.

Source: the Real Estate Library