Best way to contract on preforeclosure - Posted by AJ - AL

Posted by Terry (IN) on February 12, 2000 at 09:50:55:

Hi Allen,

I tried to send you a personal email this morning , but I just received a message that it was undeliverable.

A shortened version of what I said in the email:

Get the owner to sign a Purchase agreement with a closing date in 45 days. (It shouldn’t take that long, but just to give yourself some breathing room.)That should also stop the foreclosure proceedings. Next, have the owner agree to allow you to hold an “Open House” next weekend. Advertise in the local paper all week, “Owner Financing”. Potential buyers will call you from the ad. You’ll pre screen the callers and only invite qualified buyers to your open house.

You’ll tell each prospect that you are accepting full price offers through the weekend and will notify the lucky winner early next week. Create a note and sell it to an investor. By selecting the offer with the best combination of credit and down payment, it is possible to get an investor to finance 90% of appraised value with a 6% to 7% discount. The buyers interest rate would be in the 10% to 12% range.

This is a quick snap shot of how the deal could work. If you need finer details or assistance in locating a note buyer, email me direct.


Best way to contract on preforeclosure - Posted by AJ - AL

Posted by AJ - AL on February 12, 2000 at 05:48:13:

I found a property that I can get at 75 percent of FMV that will go into foreclosure next month. It is in an area where the market is strong so I don’t want to pass this one up. My credit is not good at the time because of entering a debt counseling program a few months ago. So I can’t go to the bank to get a quick short term note on this one. The owner is $2100.00 behind on the mortgage payments, the loan is VA. Owner does not want any profit on the house, he simply does not want the foreclosure on his record.

My question is how should I contract the property? Should I offer “subject to existing mortgage”, bring the mortgage current so as to stop the foreclosure and then try to find a buyer or should I offer to “lease option” the property, give him an option consideration sufficient to bring the mortgage current (hoping he will actually apply it to the mortgage).

My concern is time. It goes to auction next month so I need to do something quickly that will prevent that from happening and be able get the property on the market.

Thanks for any suggestions you may have. I meet with this guy at 2:00 today.


Re: Best way to contract on preforeclosure - Posted by JPiper

Posted by JPiper on February 12, 2000 at 22:26:01:

The easy way would be to do just as you said… get the deed, taking title subject to the loan, bringing the loan current. At the time you pay the $2100 it will stop the foreclosure.

Now you implement your exit strategy, whatever that may be.

If you want to complicate your life, try out Terry’s strategy.