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ForeclosureInvestingFORDUMmIES‰by Ralph R. Roberts with Joe Kraynak

Foreclosure Investing For Dummies Published byWiley Publishing, Inc.111 River St.Hoboken, NJ 07030-5774www.wiley.comCopyright 2007 by Wiley Publishing, Inc., Indianapolis, IndianaPublished simultaneously in CanadaNo part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form orby any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without either the prior writtenpermission of the Publisher, or authorization through payment of the appropriate per-copy fee to theCopyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400, fax 978-646-8600.Requests to the Publisher for permission should be addressed to the Legal Department, Wiley Publishing,Inc., 10475 Crosspoint Blvd., Indianapolis, IN 46256, 317-572-3447, fax 317-572-4355, or online at http://www.wiley.com/go/permissions.Trademarks: Wiley, the Wiley Publishing logo, For Dummies, the Dummies Man logo, A Reference for theRest of Us!, The Dummies Way, Dummies Daily, The Fun and Easy Way, Dummies.com and related tradedress are trademarks or registered trademarks of John Wiley & Sons, Inc. and/or its affiliates in the UnitedStates and other countries, and may not be used without written permission. All other trademarks are theproperty of their respective owners. Wiley Publishing, Inc., is not associated with any product or vendormentioned in this book.LIMIT OF LIABILITY/DISCLAIMER OF WARRANTY: THE PUBLISHER AND THE AUTHOR MAKE NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE ACCURACY OR COMPLETENESS OF THE CONTENTS OF THIS WORK AND SPECIFICALLY DISCLAIM ALL WARRANTIES, INCLUDING WITHOUTLIMITATION WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE. NO WARRANTY MAY BE CREATED OR EXTENDED BY SALES OR PROMOTIONAL MATERIALS. THE ADVICE AND STRATEGIES CONTAINED HEREIN MAY NOT BE SUITABLE FOR EVERY SITUATION. THIS WORK IS SOLD WITH THEUNDERSTANDING THAT THE PUBLISHER IS NOT ENGAGED IN RENDERING LEGAL, ACCOUNTING, OROTHER PROFESSIONAL SERVICES. IF PROFESSIONAL ASSISTANCE IS REQUIRED, THE SERVICES OF ACOMPETENT PROFESSIONAL PERSON SHOULD BE SOUGHT. NEITHER THE PUBLISHER NOR THEAUTHOR SHALL BE LIABLE FOR DAMAGES ARISING HEREFROM. THE FACT THAT AN ORGANIZATIONOR WEBSITE IS REFERRED TO IN THIS WORK AS A CITATION AND/OR A POTENTIAL SOURCE OF FURTHER INFORMATION DOES NOT MEAN THAT THE AUTHOR OR THE PUBLISHER ENDORSES THE INFORMATION THE ORGANIZATION OR WEBSITE MAY PROVIDE OR RECOMMENDATIONS IT MAY MAKE.FURTHER, READERS SHOULD BE AWARE THAT INTERNET WEBSITES LISTED IN THIS WORK MAY HAVECHANGED OR DISAPPEARED BETWEEN WHEN THIS WORK WAS WRITTEN AND WHEN IT IS READ.For general information on our other products and services, please contact our Customer CareDepartment within the U.S. at 800-762-2974, outside the U.S. at 317-572-3993, or fax 317-572-4002.For technical support, please visit www.wiley.com/techsupport.Wiley also publishes its books in a variety of electronic formats. Some content that appears in print maynot be available in electronic books.Library of Congress Control Number: 2007925990ISBN: 978-0-470-12218-1Manufactured in the United States of America10 9 8 7 6 5 4 3

About the AuthorsRalph R. Roberts’ success in real estate sales is legendary. He has beenprofiled by the Associated Press, CNN, and Time magazine, and has donehundreds of radio interviews. Ralph is a seasoned professional in all areas ofhouse flipping, including buying homes, rehabbing, and reselling them quicklyand at a handsome profit. He has penned several successful titles, includingFlipping Houses For Dummies (Wiley), Sell It Yourself: Sell Your Home Faster andfor More Money Without Using a Broker (Adams Media Corporation), Walk Likea Giant, Sell Like a Madman: America’s #1 Salesman Shows You How To SellAnything (Collins), 52 Weeks of Sales Success: America’s #1 Salesman Shows YouHow To Close Every Deal! (Collins), REAL WEALTH by Investing in REAL ESTATE(Prentice Hall), and Protect Yourself Against Real Estate and Mortgage Fraud(Kaplan).Foreclosure investing is one of Ralph’s many specialties. For over 25 years, hehas personally worked in the foreclosure arena, purchasing preforeclosuresdirectly from homeowners, buying foreclosure properties at auction, andoften helping homeowners dodge the foreclosure bullet and retain possession of their homes. In Foreclosure Investing For Dummies, Ralph reveals hisunique win-win approach to investing in foreclosures.Ralph also serves as Official Spokesman for Guthy-Renker Home, a companydedicated to equipping home buyers, sellers, and real estate professionalswith the tools, information, and community setting they need to achievemutual success. Visit www.HurryHome.com and www.GuthyRenkerHome.comto experience the exciting innovations that Guthy-Renker Home offers nowand is planning for the future.To find out more about Ralph Roberts, visit www.AboutRalph.com.Joe Kraynak is a freelance author who has written and co-authored dozensof books on topics ranging from slam poetry to computer basics. Joe teamedup with Dr. Candida Fink to write his first book in the For Dummies series,Bipolar Disorder For Dummies, where he showcased his talent for translatingthe complexities of a topic into plain-spoken practical advice. He thenteamed up with Ralph to write the ultimate guide to flipping houses —Flipping Houses For Dummies. In Foreclosure Investing For Dummies, Joe andRalph join forces once again to deliver the definitive guide to profitablyinvesting in foreclosures . . . without selling your soul.

DedicationFrom Ralph: To the many investors and Realtors I’ve worked with, trained,consulted, and coached who have made investing in foreclosures both successful and rewarding.From Joe: To the investors who use our book not only to build wealth inreal estate, but also to assist distressed homeowners and build strongercommunities.Special thanks to Paul Doroh, sheriff-sale and cash buyer for Ralph RobertsRealty, whose priceless insights and real-world experiences transformedour silver into pure platinum. Paul is a mighty fine writer, even by Joe’sstandards, and without his late inning relief, this book would not have beenpossible.Authors’ AcknowledgmentsAlthough we wrote the book, dozens of other talented individuals contributed to its conception, development, and perfection. Special thanks go toacquisitions editor Lindsay Lefevere, who chose us to author this book andguided us through the tough part of getting started. Jennifer Connolly, ourproject editor, deserves a loud cheer for acting as a very patient collaboratorand gifted editor — shuffling chapters back and forth, shepherding the textand photos through production, making sure any technical issues were properly resolved, and serving as unofficial quality control manager. We also tipour hats to the production crew for doing such an outstanding job of transforming a loose collection of text and illustrations into such an attractivebound book.Throughout the writing of this book, we relied heavily on a knowledgeableand dedicated support staff, who provided expert advice, tips, and research,so we could deliver the most comprehensive and useful information. LoisMaljak proved invaluable not only as a resource person but also as the communications hub for the flurry of files and e-mail messages flying back andforth on a daily basis. Thanks also to Ralph’s number-one virtual assistantKandra Hamric, who helped us tie up all the loose ends and put the appendixtogether.We owe special thanks to our technical editor, accomplished real estate proBlanche Evans, for ferreting out technical errors in the manuscript, helpingguide its content, and offering her own tips and tricks.

Publisher’s AcknowledgmentsWe’re proud of this book; please send us your comments through our Dummies online registrationform located at www.dummies.com/register/.Some of the people who helped bring this book to market include the following:Acquisitions, Editorial, andMedia DevelopmentProject Editor: Jennifer ConnollyComposition ServicesProject Coordinator: Erin SmithCopy Editor: Jennifer ConnollyLayout and Graphics: Claudia Bell, Carl Byers,Brooke Graczyk, Joyce Haughey,Stephanie D. Jumper, Heather RyanTechnical Editor: Blanche EvansAnniversary Logo Design: Richard PacificoEditorial Manager: Michelle HackerProofreader: AptaraEditorial Supervisor: Carmen KrikorianIndexer: AptaraAcquisitions Editor: Lindsay LefevereEditorial Assistants: Erin Calligan Mooney,Joe Niesen, Leeann HarneyCartoons: Rich Tennant(www.the5thwave.com)Publishing and Editorial for Consumer DummiesDiane Graves Steele, Vice President and Publisher, Consumer DummiesJoyce Pepple, Acquisitions Director, Consumer DummiesKristin A. Cocks, Product Development Director, Consumer DummiesMichael Spring, Vice President and Publisher, TravelKelly Regan, Editorial Director, TravelPublishing for Technology DummiesAndy Cummings, Vice President and Publisher, Dummies Technology/General UserComposition ServicesGerry Fahey, Vice President of Production ServicesDebbie Stailey, Director of Composition Services

Contents at a GlanceIntroduction .1Part I: Prepping Yourself for Foreclosure Success .9Chapter 1: Wrapping Your Brain around Foreclosure Investing .11Chapter 2: Getting Up to Speed on the Foreclosure Process.29Chapter 3: Picking Your Point of Entry in the Foreclosure Process .39Part II: Laying the Groundwork for Maximized Profitand Minimized Risk .55Chapter 4: Building a Powerful Foreclosure Investment Team .57Chapter 5: Filling Your Foreclosure Tank with Financial Fuel.73Chapter 6: Networking Your Way to Foreclosure Success .89Part III: Creating Win-Win Situationsin Pre-Foreclosure (Prior to Auction).101Chapter 7: Discovering Homeowners Facing Foreclosure .103Chapter 8: Building a Property Dossier.113Chapter 9: Contacting the Homeowners and Lenders.133Chapter 10: Analyzing the Deal and Presenting Your Offer .161Part IV: Finding and Buying Foreclosureand Bankruptcy Properties .175Chapter 11: Bidding for Properties at a Foreclosure Sale .177Chapter 12: Buying Repos: Bank Foreclosures and REO Properties .193Chapter 13: Finding and Buying Government Repos .211Chapter 14: Banking on Bankruptcies .225Chapter 15: Sampling Some Other Foreclosure Strategies .237Part V: Cashing Out Your Profit . . . after the Sale .257Chapter 16: Assisting the Previous Homeowners Out the Door .259Chapter 17: Repairing and Renovating Your Investment Property.269Chapter 18: Cashing Out: Selling or Leasing Your Property .281Chapter 19: Checking Out Other Cash-Out Strategies .295

Part VI: The Part of Tens .305Chapter 20: Ten Common Beginner Blunders .307Chapter 21: Ten Ways to Maximize Future Leads by Acting with Integrity .313Chapter 22: Ten Tips for Avoiding Common Foreclosure Minefields .321Appendix: Foreclosure Rules andRegulations for the 50 States .327Index .349