In order to achieve maximum profit on a pre-foreclosure property, you have to market it well so you can sell it quickly, ideally within one to two months. This is a key step, and one you should pursue aggressively. Once you've cleaned up a property, you just can't put a For Sale sign up in the yard and expect buyers to come flocking. They have to know what and where the property is before they can take a look at it. There are several guidelines you can follow to market your newly acquired property.

The worst mistake you can make in marketing is to advertise willy-nilly, hoping this "shotgun" method will bring buyers in. The best approach to take is to aim all your efforts at a market appropriate for the particular property. For example, if the property is close to a college or university, then you'd likely target professors, administrators or employees of that institution of higher learning. You could advertise in university publications, send direct mail to the target audience, post flyers, etc. Or, if the property is near a commercial/industrial park with many corporate employees, then you'd want to target that audience. Many corporations offer relocation services for their employees so you could contact them, advertise in local newspapers, etc. With this targeted marketing strategy, you automatically have an audience interested in your property.

Earlier in the book, I discussed the comparison method of determining value; that is, find the value of several homes in the neighborhood that are comparable in value to your property. You can do this by requesting listings from real estate agents or doing an online search for the neighborhood properties. Once you've done this, you'll have a good idea of your property's resale value and can set the price accordingly. Some investors price their foreclosure properties slightly below the market value to increase its appeal as a bargain; others price their properties at market value and throw in amenities to increase appeal. Whichever approach you use, be sure to include the cost of your time and efforts for the acquiring the property, increasing its curb appeal, and marketing it.

Your property information sheet should contain all the necessary contact information and details about the property such as the following:

•Your name, telephone number, e-mail address, web site address, etc.

•The address of the property

•A good photograph of the property, if possible.

•A description of the property (i.e., the year it was built, architectural style, construction type, square footage, number of bedrooms and bathrooms, garage, basement, etc.)

•A description of the HVAC system

•A description of any of the "amenities" (e.g., swimming pool, patios, decks, great landscaping, fences, etc.)

•Asking price, sales terms, loan information

I recommend that you think of a property information sheet as more than a recitation of the property's features. Think of it as a sales document that clearly describes the benefits of the property. For example, you can describe the living room as "spacious with a great view of the park." Or, you can describe the heating or AC system as "fully modern and energy-saving." Don't forget to describe the neighborhood as well. For example, if the property is close to a college or university, add "Located within easy walking distance of XYZ University on a lovely tree-shaded low-traffic street." In short, your property information sheet should paint an inviting picture for any potential buyers.

Why restrict your marketing effort to local or regional markets? Now, you can go global by using the Internet! Many foreign investors seek out American real estate. Also, potential buyers like military personnel and corporate employees are often transferred from one location to another, and they use the Internet to find places to live. You can tap into global market in three ways:

•Create a web page-you can create your own "properties for sale" web page if you have the knowledge. If you don't, hire a professional to create one for you. Just make sure that it loads fast. Slow-loading web pages cause viewers to get impatient and move on quickly to other sites, and that could mean business lost. The pages should include photographs (interior and exterior) of the property, its location, directions to the property, the site plan, features (and benefits!), the sale price, terms, appointment information, etc. Maps for your web pages can be found at online mapping services like:

o Google (http://maps.google.com/) o MapQuest (http://maps.google.com/)

o Yahoo (http://maps.yahoo.com/)

•Use online ads-there are many web sites on which you can advertise your properties. Do a Google search to find out which ones fit your objectives and budget best. I recommend two sites:

o Craigslist.com

o Backpage.com

•Use URL forwarding---this is an inexpensive service you can include on your web page. It allows you to have your property for sale domain name forwarded to a specific web page on your web site. The benefit is that it eliminates the necessity of having to build an entirely new web site for your property sale domain name.

Remember, good marketing doesn't limit itself to just one method; instead, it uses a mix of methods. That's because there's so much marketing and advertising out there, it creates "noise." That is, today's customers are bombarded with so much advertising, it can be difficult to make yourself visible if you simply limit yourself to one method. So, be sure to include traditional methods in your mix like the following: For Sale Signs It definitely pays to have a For Sale sign placed in a highly visible spot on the property. For bargain properties, you may want to use handwritten signs to attract attention to the fact that they are bargains. In the sign's message, be sure to include your telephone number. A typical sign might look like this:

Classified Ads You can place ads in your local daily and weekly newspapers to reach a larger local audience. Depending on the particular situation, you can include information beyond the phone number and email address; e.g., if you're willing to finance, the amount of money required for a down payment, total down payment, etc. A reader will be able to quickly read the ad and know if they're qualified or not qualified. So, in effect, your ad pre-qualifies buyers and reduces calls from non-qualified buyers. Finally, don't forget to have your ad placed in the newspaper's online classification section as well.

Telephone Answering System Why not use your answering system as a marketing device when you're not available? Record a message describing the property, directions to find the location, the sale price and terms, and any other pertinent information. It could be something similar to this:

Hi, you've reached John Smith, Inc. Thanks for calling. We have a great home for sale at 12345 Maple Street in Jordan, (state). It's a two-story Tudor-style home with durable, low-maintenance stucco construction. It has two bedrooms and two thorough modern bathrooms. The total living space is 1,800 square feet. All appliances and HVAC are modern as well, so utility costs are low. Fully carpeted. Two-car garage and big lot-90 ft. by 130 ft. with a fenced-in back yard and garden and tool shed.....This home is priced low for a quick sale at $150,000. If you have pre-approval for a mortgage loan by a state-approved lender in the $130,000 range, then call (xxx) xxx-xxxx and leave a message to arrange a viewing....

The key here is to a have a participating broker agreement that allows you to pay a sales commission only if that broker's registered prospect buys the foreclosure property. Don't sign an exclusive listing agreement; this will only tie the property up and limit your opportunities to sell. Work with an experienced full-time broker who's handled foreclosures before. It's a waste of time and effort to work with "newbies" or part-time amateurs.

Now that I've covered the basic guidelines for marketing, let's turn to the subject of pre-qualifying buyers. This is an extremely important part of your sales effort because you don't want to waste value time and money on people who can't afford the property.

Pre-Qualify Your Buyers!

Nothing is more annoying than working with prospects and then finding out they're not qualified to purchase the property. But, if you do this, you have no one but yourself to blame because you haven't put enough effort into pre-qualifying them! The best way to pre-qualify callers is to be direct: Ask them if they have enough cash on hand for the down payment. Ask them if they can afford the monthly down payment. Ask them for their credit rating. Ask them if they can close on the property within 30 days. If the answer is no to any one of these questions or their credit rating doesn't meet your standards, then they're not qualified. Inform them politely of this fact and move on to the next prospect.

Another way to pre-qualify buyers is work with lenders. Build good relationships with several local lenders so you have a variety of loan programs to work with. That way, when you run into potential buyers who need financing, you can send them to one of the lenders. He or she will then let you know if these buyers are qualified or not.

Alternatives to Selling Directly to Buyers

One alternative strategy is to sell your purchase agreements on pre-foreclosure properties to other investors. These are individuals who are looking for properties to rent to create ongoing income. Or they may be looking to resell such properties for profit. Often, these are professionals (doctors, lawyers, etc.) who work with wholesalers to find investment properties.

For you, this strategy can mean quick turnarounds and quick profits. It also means low startup capital as well as less risk since you'll be limiting your investment to the earnest money deposit and the charge for a title report. Of course, work only with honest individuals who have the financial wherewithal and good credit ratings to ensure that the deal will go through.

Another alternative is to assign or sell your purchase agreement to third parties. In effect, this transfers the ownership of the agreement through "assignment." What this means is that you've sold your exclusive right to purchase the contracted property for a specific price within a defined period of time. With this alternative, you can also turn a quick profit.

Additional Information

I've saved the unpleasant fact of taxes for the last. Here's what you need to know about taxes on the sale of pre-foreclosure properties: Follow the Internal Revenue Service (IRS) guidelines to minimize those taxes. It's best to hire a tax professional to handle the IRS' complicated rules and to avoid being labeled as a real estate dealer rather than an investor.

In general, you should know that if you re-sell a pre-foreclosure property within one year (12 months) of the purchase date, your profit will be taxed as ordinary income. Of course, you can reduce that tax by deducting many costs-repair costs, cost of purchasing the property, insurance costs, real estate taxes paid, cost of reselling the property, mortgage interest paid, etc.

To gain knowledge on IRS rules and regulations and download forms, go to their web site at http://www.irs.gov/formspubs/lists/0,,id=97819,00.html. On that site, the IRS lists all publications, and you can scroll through that list to find the ones you need. I recommend Publication 537: Installment Sales; Publication 550: Investment Income and Expenses; and Publication 946: How to Depreciate Property. To navigate through other tax information, go the IRS' home page at http://www.irs.gov/index.html.

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