Begin by talking to a NM Real Estate attorney who can draft an assignment of redemption rights for you.
Once you have your documents, you need to make an offer to the debtors for their redemption rights. This may be difficult since many people in a foreclosure situation move on and they no longer live there anymore. We recommend using Intelius or People Finder in order to try and find the debtors.
Don’t be surprised if they treat you like you’re a scam artist. Let’s face it, there are a lot of scams out there and most people have never heard of redemption rights. As a member of NM Lists, please utilize ethical business practices. There are plenty of deals out there for everyone to capitalize on. Don’t create a bad name for the industry.
Speaking of scams … please utilize the Bernalillo Clerks website to check for recorded rights before you give anyone money for their rights. Desperate times can cause people to see dollar signs. You want to make sure that they’re not double dipping. If you’re the second person to record your redemption rights, you are the unfortunate person who accidentally threw their money away.
To record your rights, go to the County Clerk’s Office. They will require that your redemption rights be notarized before recording them.
Before purchasing redemption rights, and especially before purchasing a property, make sure you check who the Plaintiff is on the foreclosure. Are they a first or secondary lien holder?
This makes a big difference! For example, a house may seem discounted at auction, let’s say it sells for $45,000 and you know the house is worth $130,000. You might pay $10,000 cash for the redemption rights, but when you go to redeem find out that you have to pay off the first mortgage of $100,000. The house that looked like it had a ton of equity just became an investment in which you will lose thousands of dollars.
Typically as little as possible. With that said, investments of any sort always comes with risk. With any foreclosure you are investing in, you don’t have the opportunity to have a full inspection of a property, which means you should be prepared for surprises. If you pay too much for the redemption rights and are required to put more into the rehab than you thought, you may find that you make little or no profit.
One rule of thumb is to pay 1% of the market value of the home for redemption rights. However, if you find yourself in a bidding war with another competitor, you may not have that luxury. Also, don’t be surprised if the homeowner makes a counter offer. This is another reason to start your bids off conservatively. In the event that you’ve made your highest and best, and they counter, you may find yourself in a pinch.
Websites used when researching redemption rights: