How can I buy a foreclosure before the auction date?

Question

There's an auction on a single family in 3 weeks and it has a clean title. However, I have the funds to buy it now and would rather strike a deal before the price goes up at the auction. Does anyone have any experience with contacting the homeowners to strike a deal? I've done some research and see some suggesting randomly showing up at the house (don't want to do that) or sending a letter/mailer (those things are usually thrown out). If there's an alternative method that has worked for you, please share.

Kevin Sobilo · Answer

2. I am not talking about an assumable mortgage. I'm talking about a "Subject-To" deal where you take over the loan but the loan stays in the current owner's name. Basically they give you power of attorney over the loan only. 3. The attorney isn't doing business for the owner. They are doing business for the LENDER. I suggested you buy the debt and become the bank/lender. Then you could finish the foreclosure and many times the lender gets the property back because they are willing to bid the most or at least bluff that they are and scare off other bidders depending on how the process works where you are. If someone else is willing to outbid you you could win as well because debt is often sold BELOW face value when its not being paid. So, if the payoff is $100k, you might buy the debt for $60k or something. If you are considering something like this get a lawyer involved to help guide you as this isn't entry level stuff.

Mark Fries · Answer

Call them. Do some Google recon and find the number. Personally, I would just knock on door.

Jessica Cole · Answer

Got it. It sounded like another term for assumable mortgage, but I appreciate the clarification. Will definitely look into that as it would be a better option than assumable. And yes, I meant "lender" instead of "owner". Owner was just on the brain as I was typing, but my point was I didn't know that the attorney could do business at all. I was previously told that only the owner could make any sort of deal before auction, since the attorney doesn't represent them.I find this all very fascinating. Really glad I asked and received all these tidbits. I've been to a few auctions and have been outbid, and it now makes sense that lenders could bluff. I have a real estate attorney I work with, and will get them involved if a deal is made. Thanks so much!

Kevin Sobilo · Answer

A few thoughts:1. If the owner could sell the house and pay off the mortgage, they probably would have done so already. The lender tacks on a lot of costs as the mortgage becomes delinquent and goes to foreclosure. So, the payoff may be more than you are guessing. 2. The opportunity to buy from the seller might be doing a Subject-To deal where you take over paying the existing loan. You can afford to take on that debt which might be higher than the home is worth as it stands because the payment is possibly LOWER because they may have a LOW interest rate you cannot get anywhere near today. 3. If you cannot, reach the owner, you may be able to reach the lawyer representing the lender and offer to buy the debt (at a discount). In that way, you could have the inside track to buy the property back at auction yourself or to benefit from a good sale price at auction.

Jessica Cole · Answer

If I had access to someone who I could've talked with, I wouldn't have posted. I've asked around in my circle and no one has done this before. I'm glad this forum exists for that reason. I needed something beyond my research. Glad to hear you made your first mil this way - inspiring!

Jessica Cole · Answer

Thanks so much for this info! Replies to each point below:1. I'm confident about the payoff amount as I've been watching this for a month, but only recently came up with the funds. The payoff amount was updated by $10K, but I always planned to offer about $10K more than what was listed to cover my bases. That now means $10K more than I planned. I will flip this, so I have wiggle room for other expenses.2. I knew about this option, but I didn't plan on this since I want to flip the property. I'm unsure of how that would work since I would need the current owner to vacate. Does this assumable mortgage still work if I would ask the owner to vacate within 30 days after we close? Not sure if that part matters or not - let me know!3. I do have the attorney's #, but didn't know they could possibly do business on behalf of the owner in that way. My research suggested that only the owner could make a deal. Nice to have in my back pocket, thanks!

Jessica Cole · Answer

Thanks, will try finding their number then.