Newark, NJ has always been a town that recognizes hustle. That’s been true of my entire career in real estate investing: hard work is how you get the job done. But that doesn’t mean you should always try to do things the hardest possible way.—especially, when there are ways to get things done the right way without spending too much energy.
This is particularly pertinent when it comes to finding foreclosed homes in Newark, NJ. There are a lot of foreclosures in Newark. But there are also a lot of obstacles between getting those leads and closing them, which means you could waste a lot of time if you don’t have the right strategy.
There are a lot of good ways to find and buy real estate foreclosures, but some are better than others. Doing things the smart way isn’t the opposite of hustle. It’s how you make your Newark hustle even more effective.
Finding Foreclosed Homes in Newark, NJ
Anyone who’s looked into the Newark real estate market knows that it’s been going through a hard time as of late. With the eviction moratorium expiring soon, it’s clear that even more foreclosures will hit the market next year.
Because there are no foreclosures right now, we need to look at the delinquency rate. The national average in Q1 2020 was just under 5%. At the same time, in Newark, it was over 14%.
This signals a wave of houses that are going to be on the market in the next couple of quarters. And while that may be tough to think about for homeowners, for real estate investors it means a lot of opportunities. Real estate investors may have the chance to make a positive change in the community by fixing up houses and providing new opportunities for ownership and building their businesses.
When these foreclosures hit the market, you need to be prepared.
Navigating the Essex County Sheriff Auction
Here’s what happens when a house here in Newark is foreclosed upon. The property is reclaimed by the owner of the mortgage and, most of the time, turned over to the Essex County Sheriff’s Office to sell at the auction. The auction is currently suspended, due to COVID, but it will be coming back soon.
When it does come back, it will follow a regular routine.
- Listings will be posted four weeks in advance in the Star-Ledger, as well as in smaller local papers.
- The foreclosure sales are held every Tuesday at 1:30 PM at the Essex County Sheriff’s Office in the Veteran’s Courthouse, room 216-I
- Properties are auctioned off and sold to the highest bidder.
One thing you might notice is that these are live auctions. And that brings up some of the pros and cons of navigating foreclosure auctions in Jersey.
- There are a lot of properties. For better or worse, there likely always will be in Newark. But after the ban is lifted, the market will be basically flooded.
- Prices start pretty low. The beginning of the auction always represents a great deal.
- You can walk out with a property.
If you’re lucky, you can take advantage of these pros and walk away with a property for pretty cheap but of course, that doesn’t always happen. And even it does, it doesn’t always go as planned.
- There’s a lot of competition. Just about everyone who invests in Newark, NJ property is going to be there.
- That means it will be harder to get a house. There are a lot of deep pockets, and a lot of investors. Prices are going to shoot up on every property.
- So you might not end up with a property. And that means you’ve wasted a lot of time.
But maybe you get a house. What then?
- You may have paid more than you wanted for the property. I’ve done it. I’ve gotten into a bidding war before and ended up paying much more than I anticipated.
- You don’t have a chance to inspect the property. There could be a lot of major issues with it that are really going to cost you. So you are blowing through your margin of budget before you’re even out the door.
- You’re on the hook for all liens, taxes, and loans. And you don’t always know what those are.
Getting a house from an auction is risky and potentially costly. And don’t forget, according to New Jersey laws, you have to turn over a cashier’s check for 20% of the house as soon as you win. Following that, you have 30 days to pay the rest, and you start paying interest after 11 days. So you’ll have to have capital right away, and then get a loan for the rest really quickly.
Frankly, I find it stressful. But, thankfully, there are better ways to find foreclosed homes in Newark.
Distressed Is Better Than Foreclosure
Right now, there are a lot of homeowners in Newark who know that as soon as that moratorium is lifted, they’ll be facing the purgatory of foreclosure. They want to avoid that. So they’ll likely want to sell their distressed property.
That’s where you can come in. It is far better for the seller to sell before foreclosure (or before preforeclosure), and it is easier for you as a buyer and investor to talk to people before then.
If you talk to a homeowner before they are foreclosed upon, you have a chance to inspect the house. You can actually establish a rapport and build a relationship. You can work out a price that fits your investment goals while offering them a fair way to get out of a challenging situation. You know what you are getting into. And, you avoid getting drowned by too much competition.
In addition, you’ll likely be able to get a New Jersey hard money loan without having to struggle to put down 20% like you would at an auction. That gives you a lot more freedom while reducing your risk of accidentally stumbling into a money pit.
So how do you get these leads? I’ll tell you how.
Getting Quality Leads in Newark NJ
This might seem like it is easier said than done. After all, it isn’t easy to find distressed homeowners and talk to them without coming across as pushy. And while we like pushy here in Newark, we also care about trust. And I’ve been able to establish that trust much more effectively after I invested in an independently owned and operated HomeVestors® franchise.
Everyone in Newark knows HomeVestors®. They’ve seen the national “We Buy Ugly Houses®” ads for decades. So when they need to sell fast, for cash—which many will—they call HomeVestors®. As a franchisee, I can get the lead with little to no competition and built-in trust.
I still need to hustle and do the work to close the deal. But I feel better knowing that I’m investing my time and effort in a quality lead from a motivated seller. If you ask me, that’s the best way to run your business.
If you’re considering investing in foreclosed homes in Newark, NJ, request information about becoming a franchisee today.
Each franchise office is independently owned and operated.