InvestorLoft Real Estate Investing Blog

The Key to Unlocking REO and Foreclosure Values

On a cozy side street in the suburbs outside of Chicago, a white house with black shutters and roof is tucked back on a side street of Naperville, Il. A neighborhood of homes built when luxury and coziness blended together in new subdivisions during the 1960s, Greenwich Court seems like a time capsule from better years.

But even this gem in the western reaches of Chicago’s urban sprawl hasn’t been immune to the current financial hardships. The homes are beautiful, well cared for with beautiful lots, but two of the eight along the lane have been touched by the housing bubble bust.

While one of the two foreclosed, the second had a Cinderella-like ending. David Field, business owner and managing broker for Home Field Realtors in Naperville, noticed the house when relocating back to Illinois from Seattle. “Every 15 to 20 days the price would drop again,” Field said. “I thought it was definitely going to be a short sale.” A four bedroom, 2,800 square-foot gem, Field decided he didn’t want to wait any longer. He arranged a showing with the listing broker, Jean-Paul Eskenazi.

A casualty of a drawn out divorce and on the market for over a year, the house was quickly headed towards foreclosure. The owners had relocated, the husband to France and the wife to Florida. With a notice of default filed with the Illinois courts, Field had 90 days to negotiate and keep the property out of foreclosure and out of the hands of the bank.

The Illinois courts give homeowners 90 days to bring mortgages up to date with back-owed payments, then three to seven months grace period for the mortgage balance to be paid in full. “David had to decide if he thought it was worth it to pay part of the old owners’ closing costs to get the house,” said Field’s lawyer, Mark Rodriguez. “In his mind, it was.” They liked the home and didn’t want to see it torn down by an investor for new construction.

“I wanted to make sure that everyone got the deal they wanted. And I knew, after being in the business for five years, I was going to have to negotiate (and) not give up,” Field said. A tidy $425,000 later, the home was his – at 22.7% under the starting list price.

While the property needed a number of repairs after a year of vacancy, the Fields are happy with their new home sweet home. “Our children have a good home to grow up in, and with a little bit of work it is a really beautiful house,” Field says. Looks like this Cinderella house found her Prince Charming.

The main role that a title company plays in a 1031 exchange is that they are the last line of defense for the client. Often clients don’t know about 1031 and if their escrow officer does not bring it up, then they most likely will be looking at a tax liability. Escrow officers can be heroes to their clients just by simply asking if their client is going to be doing a 1031 exchange. Escrow officers that are not familiar with 1031 could be costing their clients money that they could be deferring and using to purchase higher valued assets.

In the 1031 arena, there is little to no question that if you are not working with a 1031 exchange group, you are doing yourself a disservice as an investor. It is imperative that you are working with a group that has loads of escrow experience and their specialty is 1031 exchanges.

With that being said, you also want to make sure the group you are working with is part of a larger entity with money in the back and a diversified transaction portfolio. Why? Because when investors are looking to employ a 1031 exchange close title on a sale property, they must place the money with a qualified intermediary such as a bank or title company. You want this company to have money in the bank, and a company like ours (Fidelity National Title) has over $2.8 billion in reserve.

Having the right title company in place will help you succeed in a 1031 Exchange transaction. Plus, since hiring an in-house consulting can cost a fortune, having a good partner such as an experienced title company in the deal can make all the difference.

For more on the Fidelity National Title “Difference” go to www.fntarizona.com or send an email to
info-fntarizona@fnf.com.

The content in this blog is not affiliated with nor is it endorsed by InvestorLoft.com and contributors receive no compensation for submitted articles. All articles submitted to InvestorLoft are subject to editorial review. Please seek the advice of qualified real estate, tax and financial professionals before investing in any project or opportunity. InvestorLoft does not provide tax or legal advice and any and all content herein is provided for informational and educational purposes only.

Not all rates are created equal.  Rates for a residential resale for a first-time home buyer are not the same rates that apply to an investor that will be purchasing multiply properties with cash.  Nor should they be.

The question that an investor should ask when it comes to rates is, “Will the rate I get today benefit me when I go to sell this property and purchase another property?” This is where your title company comes in.  The title company you chose will be your biggest ally in the fight to get the best rate and return on your investment.

For example, at Fidelity National Title (www.fntarizona.com) there is a hold open rate that is 125% of the owner’s policy. This allows the policy to stay open for up to 2 years awaiting a resale and the net will be a substantial reduction in the owner’s policy.

For example: say you have a $100k property and the title is $730, 125% of $730 = $182.50.  This is what the investor (as a buyer) pays.  If you sell the property within the time allotment and the policy is $1,020, you will then pay the difference of the two policies $1,020-$730 = $290.

To learn more about Fidelity National Title’s and the 30% investor rates available, send an email to info-fntarizona@fnf.com or call 480-214-4540.

The content in this blog is not affiliated with nor is it endorsed by InvestorLoft.com and contributors receive no compensation for submitted articles. All articles submitted to InvestorLoft are subject to editorial review. Please seek the advice of qualified real estate, tax and financial professionals before investing in any project or opportunity. InvestorLoft does not provide tax or legal advice and any and all content herein is provided for informational and educational purposes only.

We thought it was important to note the great strides that NAR has taken in actively engaging with the government on housing-related issues. The past four months have been wrought with challenges, yet the diligence of the NAR has paid off as the U.S. government has implemented their recommendations to stimulate housing with the signing of the American Recovery and Reinvestment Act of 2009.

For more information, read-up on NAR’s views on Unlocking America’s Economy.