foreclosures - Posted by Bob(Ma)

Posted by John (TX) on March 28, 1999 at 22:40:54:

Kellie wrote:

>… No one can figure out why the owner didn’t sell it him- or herself and avoid foreclosure. No telling
> what makes people ruin their credit when one ad in the paper would have brought a hundred offers. …


Very often people take the ostrich approach. They seem to think if they bury their head in the sand there problem will go away. I’ve actually heard people say, “They can’t take my house away!”

I decided a long time ago to quit trying to figure out just what’s going on inside someone’s head during any particular deal, even though it’s fun to guess, I was never right. Besides if you did know what was rattling around up there it would probably be scary :slight_smile:


foreclosures - Posted by Bob(Ma)

Posted by Bob(Ma) on March 28, 1999 at 10:24:04:

I have found an opportunity to find out which houses are scheduled for forclosure auctions. sometimes 2 to 3 months in advance. Is there a way to approach these homeowmers and make a deal with them before the auction takes place? if anyone has some type of pre-approach letter, that would be great. Also, what is the best creative appraoach with these people? Thanks for the help.

Re: foreclosures - Posted by Rob FL

Posted by Rob FL on March 28, 1999 at 16:12:25:

May I ask, how you know which ones are getting ready for foreclousre other than public records and notices?

Re: foreclosures - Posted by Bill K. (AZ)

Posted by Bill K. (AZ) on March 28, 1999 at 11:47:28:


I am in the process of wrapping up my first deal, and it’s a foreclosure opportunity. Here’s what I did.

I happened to reach this “out-of-state” seller with a mailing to all out-of-state owners of property in my community, not specifically foreclosures. It sounds like you’ll have an easier time finding your prospective owners.

Once notice of foreclosure was public, my seller received many offers on his property. But, as he put it, “the buzzards were circling”. Essentially, they offered to take his deed, and that’s it. They left their offers open, they let the clock tick, and they made the seller lose sleep. I can’t say that I blame these investors. Let’s face it. A seller in foreclosure isn’t in a really good bargaining position. However, even sellers in foreclosure still have their pride.

My mailing explained lease/option to the potential sellers, and this guy saw that as his answer. He called me. I wasn’t interested in “stealing” his property, and he might be able to avoid a foreclosure on his credit record. So, I talked with the seller daily always letting him know that I was interested in keeping his credit record clean. That was his motivation.

It turns out that lease/option won’t work for this seller since he has no way to bring the loan current. He needs to come up with about $5,000 in 20 days. With a little help from me, he came to that conclusion “on his own”. After realizing this, he said that he would just give me the deed.

Now, why do you think he decided to do that for me, but not the other investors?

You see, I took an interest in solving the seller’s problem through other avenues FIRST. I recognized the need for him to “save face”, and explored many other options for this guy until he realized that he had no other options. He realized that he had to give the deed away.

Now, if we had been able to work out any other options, I might certainly have decided to purchase his property another way. I’m interested in being known as a fair and professional investor; not someone trying to make a quick buck.

With all of that said, here’s what I recommend that you do since you have a 2-3 month advance notice of the trustee/foreclosure sale.

  1. Your pre-approach letter should contain different purchase options that will allow the seller to “save face”. If you offer to take over the deed, you’ll just be one of 25, or more, “circling buzzards”. If your options show an interest in his well-being, your offer goes to the top of the pile.

  2. Talk to the seller DAILY. Assure the seller that you are interested in solving their problem, and that you’ll continue to explore options with them until you find one that both of you can agree on.

As you go through each option, you might quickly find yourself at the least desirable option for the seller (e.g.: He just gives you the deed.) But, because you took the time to explore these other avenues, you will have established a bond with the seller that the other investors don’t have.

Hence, in the end, you may get the property for exactly the same price as offered by those other 25 investors. But, your desire to help the seller, and not “steal” his property, gives you the advantage no matter what agreement you and the seller finally reach.

I hope this helps. Good luck with your investing.

Bill K. (AZ)

Re: foreclosures - Posted by BarryCa

Posted by BarryCa on March 28, 1999 at 13:29:30:


Very good post. I like your style. I’m wondering didn’t the seller have eough equity to come up with $5ooo? Was this a pretty house situation? or Was his credit allready so bad he couldn’t come up with the money?
Just trying to get a handle on what puts a seller in this situation.

Bill, would you post a sample of you letter for the rest of us to use as a guide?

Good Luck in Real Estate


Re: foreclosures - Posted by Kellie

Posted by Kellie on March 28, 1999 at 17:07:55:

We recently looked at a house in perfect condition in foreclosure in one of the most desirable areas around Dallas. The house had five bids on it before it was even listed. (Ours was one, and we didn’t get it. :frowning: ) No one can figure out why the owner didn’t sell it him- or herself and avoid foreclosure. No telling what makes people ruin their credit when one ad in the paper would have brought a hundred offers. The person who got the house offered $70,000 above the asking price, so you KNOW someone would have covered even a large deficit on the loan if they had put it on the market.

Re: foreclosures - Posted by Bill K. (AZ)

Posted by Bill K. (AZ) on March 28, 1999 at 13:53:15:


This is a “pretty” house. It’s about 12 years old. Nice neighborhood. I haven’t been inside yet as the tenants are moving out. They were receiving offers from investors, put two and two together, got scared, understandably, and are moving.

I will be sending him a formal offer on Monday. We talked yesterday, and he has agreed to the terms I’ll be sending him. I expect access Monday or Tuesday, and a close in about 10 days.

The seller got himself into some financial difficulties. I suggested that he refinance this property, or one of the other 11 he owns. But after a few days, he couldn’t come up with a lender who could provide the money before his home was to be sold at auction.

His credit is good, according to him, and he wants to keep it that way. Hence, he’ll sell to me to keep from having to provide a “Deed in Lieu of Foreclosure” to the lender.

I haven’t been able to determine exactly how the seller got to this point, and I didn’t want to pry. He’s deperate to keep his credit record clean, and he’s about to have a blemish. That’s all I know.

Finally, the “letter” I use isn’t really a letter. It’s a 3-page flyer that introduces the seller to lease/option. It tells them what it is, how it works for them and ME, how they get paid and how they exit within a year. All of the words I use came from ideas I picked up in Bill Bronchick’s “Lease/Option Workshop” course.

Regards posting it on the site, I’m not sure how we could do that.

I hope this helps.