Buying A House in Pre-Foreclosure

[Kendall Bryant]

Hey Guys and Gals!

This is my first post on BP after watching so many videos. I've heard about how helpful the forums are and wanted to try posting my situation on here for some tips and guidance.

I'm just starting my investing journey and my friend informed me of a house in my area that is about to go to Foreclosure. 

As an investor, what are my options in which I could possible acquire the home before it goes to auction. My friend does not know the owner personally, but has a friend that does. It might be possible for me to talk with the owner 1 on 1 and put in an offer before the auction.

My issue is that I don't have much capital myself to make a decent offer on a house myself. I also am not sure what the owner owes that would be the opening bid. My first thought would be seller financing, but I'm not sure if that would delay the foreclosure process. Also the owner still lives in the residence, so its unlikely he wants to leave (my assumption). I've heard of a deal where maybe I buy the house from the owner and then the owner then becomes a tenant.

I've watched so many BP and Real Estate Rookie videos, all the information is swirling in my head and I just don't want to miss out on a good deal.

[Abel Curiel]

Hello @Kendall Bryant & welcome to the BP forum!

Getting 1 on 1 with the owner is a huge advantage for any investor. Oftentimes, a direct line to the owner is the biggest challenge.

I'd be prepared to make an offer on the spot BUT I'd also be prepared to take things 1 step at a time. Think about it as dating... you want to be prepared to propose but don't want to take the ring out of your pocket too soon! 

Many property owners in this financial situation do not know who to trust since they're being told different things by attorneys, the bank, investors, and Realtors. Ask discovery questions, genuinely care about the answers, and seek to find a solution that falls in line with what is important to the owner.

Aim to first establish trust with the owner. Play the 'friend in common' card if possible.

Regarding seller financing, I don't see this being a viable option since they are in default on their current loan.

If funding could be an issue for you, take a step back and work on that first. Speak with lenders about your options and begin speaking with possible partners or co-signers. Although your initiative is commendable, I don't recommend submitting offers without first determining how you can fund the deal.

Lastly, I do not recommend keeping the owner on as a tenant. They aren't paying the bank and I'd take that as a strong indicator that at some point in the near future, they'd stop paying you too.

All the best!

Abel