Keeping Your Money.
There is nothing wrong with spending money in exchange for worthwhile goods or services, but this page is dedicated to pointing out some examples of things to be cautious about.
Courses, Seminars and Bootcamps
There are many of them out there, some will have worthwhile information, some are predominately sales pitches to get you to spend more money. If you are going to attend a seminar, leave the credit cards at home. What sounds great during the presentation might not seem so great a week later. Valuable information isn't going to disappear, you will certainly be able to buy it later on. An excellent resource for information on courses and seminars can be located at John T. Reed's Guru Ratings. While our opinions may differ in some instances, it's the most complete resource available with a guru rating and well worth a look.
Foreclosed Homes Data Sources
There's a huge variety in the types of services offered, so let's look at common threads. A company charging a large up-front or sign-up fee with low monthly payments is going to have a greater interest in signing you up than keeping you as a customer. If all they charge is a one-time fee, it's fairly obvious they make more money the sooner you go away. Companies charging a reasonable monthly fee with a low or no sign-up fee will have a greater interest in keeping you as a satisfied customer. Current monthly rates for compiled lists of bank REOs seem to average right around $40.00-$50.00 a month . This will provide you with older information than many of the pre-foreclosure information companies, but it is significantly cheaper. Companies providing information at a cost lower than this are most likely pulling information from the free REO websites. When you're thinking about subscribing to a company, ask for some samples of complete property information first. Note when the company entered the property into their system, then go to your County Recorders office and look up the date when the bank took the property back. You'll get an idea as to the freshness of the data and if you request samples from different companies, you'll get an idea about completeness of the information from each. If a company is unwilling to provide 5-10 samples, you be the judge as to whether you want to be a customer of theirs.
Pre-Foreclosure Data Sources
Pre-foreclosure data providers are usually pretty reliable. You can obtain very current REO properties from many of them, but the monthly fees start around $80.00 per county and can be significantly higher. The biggest concern here is completeness and timeliness of data. Again, ask for samples, compare the data from different companies and balance price vs speed and accuracy. Most of these companies want you as an ongoing customer and provide service accordingly.
In Foreclosure Scams
People in foreclosure are vulnerable. Think twice before embarking on a plan and think very long and hard before signing anything. Read our Foreclosure Help section to get an understanding of some of your options. If you are considering selling your property, get 3 agents from different offices to do a Comparative Market Analysis. It's free, and you'll have a good idea of the value of your property. The following statements in bold are common statements heard over the years by those in foreclosure.
1. We'll save your credit. Pay us a fee and sign the house over to us. The foreclosure will be recorded against us, not you.
The foreclosure will be reported against the borrowers on the note and possibly against others on the property title, not anyone else.
2. We'll give you some money, just sign the house over, we'll cure the default
There really isn't a problem with it, IF you know how much equity you are selling and IF the purchaser really will cure the default and IF the purchaser will really make the payments and IF you want to still be responsible for the loan. Too many IFs to be able to say this is either a good or bad option, just be careful with it.
3. We'll buy the property, lease it to you, you have the option to buy it back.
It might have happened, but the reality is, to buy it back you'll need a new loan that's larger than the loan you have with an interest rate greater than what you currently have. The payments will be higher and it's going to be very difficult to qualify. You can learn more at our page discussing Foreclosure Lease Buybacks. Explore a small hard money loan if you have the equity or consider an open market sale, you'll probably end up with more money in your pocket.
4. We'll get you a new loan and solve all these difficulties.
Every time you refinance, unless you are paying fees out of pocket, your loan balance is going up which is using up your equity. Lenders can make a lot of money churning loans, you need to consider total loan amounts also, not just the monthly payments. Try to solve the problem, not just extend the time frame.
5. I'm an agent specializing in pre-foreclosures and I'll get your property sold quickly for top dollar.
Some agents have a relationship with an investor and work from published Default notices. You'll get an offer, but is the the best? We've seen listed properties in foreclosure receive higher offers with no contingencies and the capability for quick closing that aren't always accepted by sellers. Why? Most likely, because they are never presented to the seller. Use local agents, get three Comparative Market Analysis and be cautious.
6. Stop Foreclosure with Bankruptcy
Bankruptcy does NOT STOP foreclosure. It puts a hold on foreclosure which can allow you time to reorganize your finances possibly allowing you to stop foreclosure. Every area has reputable attorneys who handle bankruptcies. Spend the time to find one and spend the time to know what you have to do and when. Mistakes, like missing filing dates, can cause things to get very bad very fast. Do you want it done right, or do you want it cheap?
Real Estate Scams
The most common scam happens either during or after the foreclosure. Person breaks in to a vacant house, changes the locks and then rents the property out. When a property is advertised at significantly below market rent, the phone number is voice mail and the meeting location isn't the property but a public place such as a restaurant or coffee shop, you really want to think carefully about what you are doing.
There is one person in this world who has your best interest at heart. It's you. You have to be careful, think about the services promised, and determine whether the promises are real or just another way of separating you from your money. Think, compare, research and you should be fine. Good Luck.