Preforeclosure - Next Steps!?

Question

Hello BP'ers!

I found a house that I am very interested in buying for the right price. We just found out its in preforeclosure. I have never ventured down this path and have only done a small amount of research on it. It sounds like my only option at this stage is to reach out to the homeowner direct with a phone call, drop in or letter(s) to see if we can strike a deal and get them out of their mortgage. Can anyone provide some feedback on how this goes? I am not completely on the up and up on what the conversation is except that I want to buy that house for what they owe or a little more. Do I tell them its just like a typical home sale and it gets them out of their mortgage quickly? If they are 8 months behind on payments, do I pay that up and then the balance of their loan?

If there is a book a should be buying to teach me about it, feel free to suggest. I searched the forums a bit and found writing a letter seems to be the most common. Any suggestions or advice is welcome! Thank you!!

Tanya Rooney · Answer

@Ned Carey Thanks for the feedback! I know its a sensitive team and I also don't want to show I don't know what I'm doing, so I appreciate the info :)

@Tchaka Owen Thank you! That is helpful. I will touch base with them to figure out where they are sitting and the best way to give them something to walk away with. The last item I saw was the house was purchased for a lot less than the ARV, I now just need to confirm if they took out any additional loans against it to figure out the best price to come to them with.

Tchaka Owen · Answer

@Tanya Rooney - I'm going to be picky and say the home is in foreclosure. To me, pre-foreclosure is every home that is not yet in foreclosure. Hopefully, they all stay that way! :-)

Agree that you should reach out to the homeowner directly. Your next step depends on how much is owed compared to market value. If they owe much less, you'll need to make an offer that pays off what they owe as well as give them some profits to move on, yet leave yourself an amount of equity that makes the deal worthwhile.

If they owe more than the value, you're looking at a short sale.

Ned Carey · Answer

@Tanya Rooney Just talk to them like you would anyone else. They are probably getting a ton of mail so you might want to talk to them directly.

The mortgage will get paid off at settlement. However you need to make sure the deal gets done before the foreclosure is finished.

Tanya Rooney · Answer

@Brian Mackey

So far I have gotten MLS deals. I am working on off market ones. I have a few lined up right now but haven’t closed any.

I have gotten some private money and have been trying to utilize seller financing but haven’t gone through with one yet. I mainly use hard money.

You?

Brian Mackey · Answer

@Tanya Rooney

So you’ve been pretty successful getting off market deals?

Are you doing any creative financing to acquire them?

Tanya Rooney · Answer

@Brian Mackey

Must not have pursued because I don’t remember which house this was!! I haven’t done any foreclosures yet but have been sending direct mail to get some off market deals so those may be in my future! :)

Brian Mackey · Answer

Hello Tanya...How did this work out for you? @Tanya Rooney

Preforeclosure - Next Steps!?

Preforeclosure - Next Steps!?

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