All Forum Posts by: Fernando Alonso

Hi Duncan,

So just to clarify: a short sale is a very specific situation that only applies when the homeowner owes more on the mortgage than the property is worth—what we call being “underwater.” In this case, the sale proceeds wouldn’t be enough to fully pay off the mortgage, so the bank has to pre-approve the offer before the sale can go through. That’s actually what defines a short sale: it’s not the discount or distress—it’s the fact that the lender must approve the deal, since they’re agreeing to take less than what they’re owed.

The bank usually agrees to this to avoid the longer, riskier, and more expensive foreclosure process. They’re basically cutting their losses. But if the homeowner still has equity—meaning the property is worth more than what they owe—they can sell it just like any other property, even if it’s already in preforeclosure. In that case, no bank approval is needed, and it’s not considered a short sale—it’s just a regular sale before the foreclosure auction.

And yes—even in a short sale, as long as the process is handled correctly and goes through a formal closing, the buyer typically receives a Warranty Deed free of liens, just like in a standard transaction. The lender releases the lien at closing once the approved amount is paid.

As for the resources you mentioned—definitely focus on ones that are specific to your state. Foreclosure laws, timelines, and even terminology can vary widely across states. You’ll find tons of general videos and books out there on general foreclosure investing, but they might not reflect your local process and may not be useful for you. Try searching for "NY preforeclosure process" or check your county court’s website—some even offer guides or step-by-step overviews that are surprisingly helpful.

Hola Santiago

Using an SBLOC—or any other pre-approved line of credit—is definitely a smart move in your situation. It lets you leverage your stock portfolio without liquidating, which makes sense if you're not sure you’ll win the bid. Just keep in mind: in most sheriff sales, you’re required to deposit the full amount (or at least a significant portion) within 24 hours of winning. So make absolutely sure the funds from your SBLOC can be drawn and transferred immediately—some lenders take longer than expected to release the funds, and that could put you in a tight spot if the auction terms are strict.

One more thing to consider: you mentioned the comps are around $500K, which sounds promising. But just a heads-up—the current real estate market is behaving a little oddly. Inventory is building up in a lot of areas, and many homes are sitting longer than usual. So if your plan involves flipping, you might want to think twice. It's not the best time to rely on a quick resale. Instead of looking only at listing prices, take a close look at actual closing prices and pay special attention to days on market, both for active and recently sold properties. That’ll give you a much clearer picture of what kind of exit strategy makes sense.

Mucha Suerte!!

Fernando

Hi Duncan,

Great to see your interest in preforeclosures—and you're right, it's an area that requires a bit of customization, which is why you won’t find too many calculators or tools that cover every scenario.

The reason is pretty straightforward: there are just too many variables involved. State laws and foreclosure processes vary widely, plus the foreclosure stage makes a big difference (preforeclosure, auction, REO, tax deed, etc.), not to mention property type. For example, condos often come with hidden HOA liens, while vacant lots or single-family homes may have city code violations or maintenance issues. A one-size-fits-all calculator would need to account for all of that, and realistically, if such a tool existed that could truly handle every situation, everyone would be investing in distressed properties instead of sticking with conventional deals.

Also, from a software developer’s point of view, creating a tool that works specifically for preforeclosures—just in a limited area like Westchester County, NY—probably isn’t commercially viable. The market’s just too niche for that level of specificity.

That said, in most preforeclosure situations, you're still dealing with a fairly standard real estate transaction. If you're buying directly from the owner before the auction, it's typically a conventional purchase involving a HUD-1 settlement statement and a Warranty Deed, where all liens and debts are settled at closing. So unless you're negotiating something unconventional—like a short sale or a Quit Claim Deed—there's not really much that needs to be "calculated" in the typical sense.

Hope it helps.

Fernando

Hi Aaron, great question.

The truth is, it’s not as straightforward as a 1-2-3 checklist—and that’s exactly why there’s such strong potential for returns in this space. You’ve got to understand a range of concepts that don’t apply in traditional real estate deals, and those can vary a lot depending on a few key things: which state you’re operating in (since laws and procedures differ), what stage of distress you're targeting (pre-foreclosure, auction, REO, tax deed, private sale), and even the type of property (condos tend to carry HOA risks, while single-family homes and vacant lots are more exposed to city code violations).

It might seem complicated at first glance, but once you wrap your head around the basics, it becomes much more manageable. I’ve actually written a short, plain-language book breaking it all down, specifically to make these concepts more accessible. I’m not here to promote anything publicly, but if you’re interested, feel free to send me a private message and I’d be happy to send you a free ebook version to help you get started.

Hi Aaron

Hi Ian, great question—and honestly, looking into pre-foreclosure is a smart move. It’s often one of the safest and most strategic ways to get a great deal, especially if you're aiming for a primary residence.

1) You’ve got a few viable routes here. Hard money is definitely one option, especially for short-term needs like this. You can use it to close on the property quickly, and then refinance into a conventional loan once the title is clean and everything is in your name. That’s a pretty common play.

Another option is to work directly with the current owner: sometimes, you can structure the deal where you cover just the foreclosure payoff with hard money, and have the seller carry the rest through short-term owner financing. If they’re in a tight spot and motivated to avoid foreclosure, they may be open to creative terms.

A third, lesser-known approach is to contact the foreclosing lender directly. In some cases, you can request to step in as the new borrower, basically asking them to rewrite the loan in your name. It’s not common, but it’s not unheard of—especially if the lender sees it as a clean exit from a problem asset.

2) This is something I’ve done for years—and with the right approach, it can work incredibly well. I've even written a book on it. The key is how you present yourself when dealing with the current owners.

Start by building a connection. Most people in foreclosure are already stressed and exhausted, and the last thing they want is another person in a suit trying to "offer help." Dress casually and blend in. Avoid coming off as wealthy or overly polished—no flashy cars, no big talk. Your goal is to be approachable and genuine.

When you meet the owner, listen more than you talk. Let them vent. It gives you insight, and more importantly, it helps them feel heard. Find something in common. If they’re Latino, speaking Spanish (if you're able) makes a big difference—it builds trust fast. And in some cases, it helps to have a woman initiate contact, especially if you’re aiming to present yourselves as a family looking for a home rather than investors. That often lowers their guard and creates a sense of comfort.

Body language matters too. Smile. Use their name. Make eye contact. Keep your posture relaxed and open—people pick up on those subtle cues, and it helps you come across as sincere and trustworthy.

When it comes to the actual negotiation, lead with empathy. Agree with their frustrations—about the bank, the system, whatever. Be someone who “gets it.” That alone can shift their whole attitude toward working with you. And when you make an offer, present yourself as someone who genuinely wants to help but has limited means. This justifies your price point and softens the negotiation. People are often more flexible when they believe you’re not trying to take advantage of them.

Best of luck, Ian. It really does work!

Hi Annastasia,

To start off, no—it’s not exactly the same process as a foreclosure or sheriff sale. In Florida, the process begins with the sale of a tax certificate, not the property itself. When someone doesn’t pay their property taxes, the county sells that tax debt to investors in the form of a certificate. That certificate accrues interest, which is repaid either when the property owner redeems the debt or, if they don’t, when the property eventually goes to a tax deed auction. After a certain redemption period -two years- the certificate holder can apply for the property to be auctioned off at a tax deed sale.

Now, if you win a property at a tax deed auction, you're not just paying for the property—you're also stepping into the government's position in enforcing that municipal lien. Regarding liens being wiped: it's mostly true. Most common liens like mortgages, HOA liens, and mechanic's liens are extinguished because the tax deed is a superior lien in Florida. But not everything goes away. Certain municipal liens, like unpaid utility bills, city code enforcement violations, or even local business taxes, may survive the sale if they are senior (Older) to your auctioned tax lien, because they hold the same legal priority as the tax lien itself. Since they're not subordinate, they won't get wiped out automatically.

State and federal liens—like IRS liens or child support claims—can also technically survive a tax deed sale. They’re relatively rare, but still possible, so it’s smart to check all city, county, and clerk records thoroughly. That’s something you’re already doing for foreclosure auctions, so you’re on the right track. With tax deeds, just make sure you’re also pulling records from departments like Code Enforcement and the Utilities Department, since they hold many of the liens that tend to stick.

As for title status: when you purchase through a tax deed, your title isn’t considered clean. It’s what’s called a clouded title, meaning there’s some legal uncertainty. Because of that, most title insurance companies won’t insure the property until that cloud is removed. The standard way to do that is by filing a quiet title action—a civil court process where you legally confirm your ownership and wipe out any potential leftover claims. Once that’s complete, you’ll be able to get title insurance and treat the property like any other piece of real estate. The quiet title process usually takes about 3 to 6 months, depending on how clean the situation is and how busy the courts are.

Now, here’s where your rental strategy really works in your favor. If you’re planning to hold and rent the property long-term, not flip it right away, you may not need to rush into clearing the title. In fact, Florida law includes certain statutes of limitations that, over time, help clear old, unclaimed, or unresolved lien claims from the title. So if you're not in a hurry to sell or refinance, some of those older issues can expire naturally over the years. This makes the long-term buy-and-hold strategy especially attractive for tax deed investors, since you can renovate, rent, and cash flow the property while the legal clock works in your favor.