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.
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.
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)