Possible Deal or Not

[Eric Mitchell]

Happy Holidays to all. There is a pre-foreclosure that I am going to on Friday. Here is the data that I have so far

Foreclosed amount : $ 169,400 ( with no junior liens )

Delinquent amount : $ 6,000

Delinquent property tax amount : $ 3,2000

Comps avg of 4 homes sold within a 1/2 mile radius in the last 4 months : $ 386,000

I was thinking about actually living in this home because it is beautiful. I still have to get an appraisal and inspection but that's standard procedure. Here is what my offer is going to be

Starting @ $386,000 , I'm going to subtract all of the above numbers ( 169k - 6k - 3.2k ) which will equal $ 207,400. Then I'm going to add $75,000 to give the owner some cash for a fresh start which will bring my total offer to $282,400.

I can knock 2 birds out with one stone by helping the home owner avoid foreclosure and possibly filing a BK to keep the home. Give the homeowner $75,000 for a fresh start. Getting the home that I want to live in along with $103,600 of instant equity. Please let me know what you think since this will be my first deal. I made the decision to get my feet wet. Thank you all in advance for all responses.

[Roy Schauer]

The problem with most people in pre-foreclosure is because their credit is slightly damaged now, the banks are less inclined to refinance or work with the homeowner. I just finished a deal where there was $90k of equity. A major bank, one of the five named in the nationwide attorney generals settlement, would not work with the homeowners in any fashion. And once they were in the pre-foreclosure process wouldn't even take payments unless it was to reinstate the complete loan. This severely limits the homeowners options, and they get frustrated. I'm not saying all banks will behave this way. And maybe its something only in our area, but I have seen and heard similar responses throughout this past year.

Eric, the best approach I use before even making an offer is to ask them what they are wanting and what they see as the best deal for them. And sit back and really listen. They may not come right out and say what they need or are looking for at first. Just let them know you are trying to find the best solution for them but you need to know what they are looking for. Don't be in a hurry, take the time to listen and put yourself in their position. Then ask a few "what if" questions to narrow down the options. I usually tell them I will get back to them by the next day with at least a couple of options and let them pick what works best for them. Create a win/win situation and they will feel less like your there to take advantage of their misfortune. If you are seriously interested in their home to live in, use that as your bridge to build a bond with them. Ask genuine questions about what's been done to the home. Notice their efforts. This goes a long way to them listening to what you have to offer without having to fight against preconceived reservations they might already have about what they are considering.

Good luck and hope this has helped!