Utah Foreclosures for Sale

Posted in Foreclosures For Sale, September 12th, 2008 |

Once the investor has determined the status of the property owner in a Utah foreclosures for sale and he wants to make an offer in the pre-foreclosure phase. He has to determine what the net equity in the property is. This is calculated by taking the market value of the property and deducting liens, the default amount and any repairs required.

It is possible for the investor to negotiate with lien holders and they are generally willing to settle the lien for a lesser amount than is owed. This is often as low as 20% of the value of the lien and is due to the fact that if the Utah foreclosures for sale was sold on auction the lien holder would probably not recoup any losses as the lender is the major lien holder and this wipes out all other liens. You might then ask why bother settling the homeowners liens? The reason is simple; this will place more equity in the property and more money in the investors pocket.

All costs have to be factored into the investors’ calculations; this means both purchase, and sale values, carrying or holding costs, the mortgage repayments, insurance, taxes, repairs and even sellers commission if a real estate agent is used to sell the property. Every legitimate expense involved with the purchase of the property has to be taken into consideration. If a big enough amount remains, it could mean that the investor has a really nice deal on his hands. The bottom line is that the amount has to be able to pay the homeowner for the Utah foreclosures for sale and allow a profit for the investor.

The big question I suppose is, how much do you actually offer the homeowner? Many investors will draw up a list of expenses and show them to the homeowner, then offer to split the profits. Others will make an offer that is relative to the bottom line and continue from there while others will itemize expenses and pay the owner the remainder. The investor will make his profits by obtaining discounts on the liens and making repairs himself at discounted prices.

Once the homeowner has made the decision to sell, the investor will draw up an Equity Purchase contract and they will both be required to sign this, and all of the other parties mentioned in the contract will also be required to sign. Before signing any contract the investor has to check it by his attorney, the attorney should be aux fait with estate equity purchases.

All terms of the agreement must be included in the contract in writing, nothing should be left to verbal agreement. This is the only defense against any problems in the future. One of the most important clauses to include in the equity purchase contract is the “contingency” or “subject to” clause. This has to be well thought out and cover every contingency.