pre-foreclosure

[Ryan Dula]

Hi all, newbie to the forums.  You all seem very knowledgeable and I'm happy to be here.  I would be happy to help anyone with the little knowledge I have.  I have been renting one unit for 6 years and I'm looking to expand.  

Can someone please help me out?  I'm interested in reaching out to pre-forclosure properties and helping the current owners out of their ordeal.  What is the advantage to the owner to sell at cheaper than market value?  How do people get these properties so cheap?  If the owner owes 50k and the property is worth 100k and they are behind on their payments, why can't they just put it at the market for 100k and sell it?  Even if they only got 90k for it they could still pay the loan off and have 40k left over.  Am I missing something?  I don't understand how people get stuck unless they owe way more than the property is worth.  In other words, how do you acquire properties under market value?  I just don't see why anyone (bank included) would let it go for under what you can get for it on the open market.  Sorry for the long question.  Thanks!

Ryan.

[Rich O'Neill]

Hi @Ryan Dula Welcome to the forums! 

The key to marketing to pre-foreclosures is true empathy. Think about the situations they may be in. Lost a job. Lost an income earning spouse. Emergency medical costs. The list goes on and on. If you were in their shoes, would you be thinking about finding an investor to buy your house? Most don't. They do not have time to deal with finding an agent they like and hoping the house sells. If you find someone in this situation, you are providing them a tremendous service by giving them a real cash offer that they can take and be out in the next week. Ideally you can leave a little meat on the bone for them to pay for moving expenses and the like. In your example, I would hope to offer at least $60k in order to give them some moving money while still making a hefty profit. 

When you talk and market to these people you have to remember that you are offering a service to them, not buying their property and making a ton of money. If you can constantly remember that and internalize it then you will have much better luck closing deals. 

Hope this helps!