Posted by Equity Hunter on March 11, 2006 at 20:39:23:
I think most of these newer seconds have some kind of mtg inurance protecting them. How else can they loan 125% of market value CLTV?
And now that we are ALL entering a buyers market because of maxed out prices and interest rates climbing, I like selling with owner financing. Let em get a new 80% first and sell to the one with the biggest down for full retail.
I don’t call anyone now, but when I did, I wasn’t afraid of the do not call list because I am “buying”, not selling them anything. I don’t think that’s a problem. And even if it technically is… they have more problems to worry about than turning in a solicitor. Never had a problem with literally hundreds of calls by myself and my staff.
Preforeclosure Marketing and Retention - Posted by Bill Lingo
Posted by Bill Lingo on March 10, 2006 at 05:02:35:
Hi,
I have seen two different styles of preforeclosures out there and I am trying to decide on which one to pursue.
Some people do mailers to “ALL” of their newly defualted homes in certian geographical areas, looking to do shortsales, even on overencumbered 1st mortgages.]
Other systems seem to follow equity spreads, looking for deals with at least 20%-30 percent equity or 70% or better LTV.
When using the equity spread method, more leads are weeded out, the logic being that a 1st is harder to get discounted than a 2nd mortgage or no mortgage at all.
When using the mail to “ALL” method, it is looked as a numbers game, with more of a opprotunity of landing a deal, the mindset being that you can work a 1st mortgage as easy as a 2nd mortgage. You will usually have more preforeclosures to follow, when using this method, since most of them are not being weeded out.
Which one is better? Or is there a better way?
Also, how do you keep track of all of those mailers and when the deals get old, when do you boot them out of your database or system?? Some people seem to follow deals all the way to the sale, while others seem to focus on lots of marketing in the beginning, giving up after 5-7 mailers and perhaps cherry picking some drive byes.
What seems to be the most successful way of doing this?
Re: Preforeclosure Marketing and Retention - Posted by Equity Hunter
Posted by Equity Hunter on March 10, 2006 at 16:46:37:
If you are really serious I would pick up the phone and call them. Mailers to buy, get very, very, very few responses. Remember 95% don’t want to sell. They have no convenient place to go. They’ll file BK as a last resort to stay. Which is what most of them do.
Look up my previous posts on short sales before you decide to go that route. Be advised those with equity get hammered by every investor in town. Good Luck.
Re: Preforeclosure Marketing and Retention - Posted by Bill Lingo
Posted by Bill Lingo on March 10, 2006 at 20:31:38:
Equity Huner,
Thanks for your input. I am very aware of the low response rate on mailers and I know that sending out serious of mailers is only a portion of a marketing campaign. We plan on calling everyone we can get in contact with and I would agree that this is also an effective tool, combined with drive byes etc.
I was trying to get some information on what system seems to work better for most people or ‘why’ they believe their particular system works for them.
In my previous post, I described two different systems of working preforeclosures.
1In the first preforeclosure system, we market to everyone in a geographical location of our choosing, not worrying about equity spreads or large 2nd mortgages. The objective is to discount the paper, no matter what the situation. We don’t focus on anyting except willing home owners. We may cherry pick a few deals, to drive bye, but the majority of our efforts are spend on mailers and phone calls, voice blasting etc. In this method, we stop chasing the foreclosure after the mailing campaign is finished.
System II, is a little different than system I. We take our preforeclosure data and we focus on propreties that have equity or a large 2nd mortgage. We eliminata everthing else. This line of thought says that discount 1st mortgage is a pain and that 2nd mortgages are way more likely to work with investors, since they stand more chance of losing at the foreclosure sale. Since there are fewer deals to look at that fit this criteria, a drive by is critical to each house, along with a door knock. In this method, we follow the house all the way to the foreclosure sale, where if we want it, we can buy it.
Re: Preforeclosure Marketing and Retention - Posted by Equity Hunter
Posted by Equity Hunter on March 11, 2006 at 07:58:48:
You can tell by my handle I prefer something akin to plan 2. I’ll be glad to send you my treatise on short sales. That said, I would work the price range/areas/property types that are easiest to resell. When you start, you’ll find out quickly if you’re dealing in a high or low equity environment.
Concerning discounts, the first will not short as long as there is a second for any amount. Some say it’s ok to lie to the first about that. I call that fraud. Normally those firsts are at a low LTV anyway precluding a discount.
I would figure no more than a 50% discount off a second otherwise you could be chasing your tail. If you want equity and a 50% discount of the second isn’t enough I would not pursue it if there are better possibilities around.
Knocking on doors is very time consuming and has an element of risk esp. for females. I can’t remember getting any deals by knocking on doors. Well maybe a couple when I had “others” do it for me. They don’t answer or they are not there or they are not interested. It will tell you if the house is vacant. That’s worth something. But there are better ways to find out if the owners have moved than by driving to each property.
Buying at the auction has its own pitfalls if you haven’t been inside the house and have not checked title. And then there is the competition from rookies who overpay, pros and bidding rings as well.
So take your pick, nothing is perfect. The best advice I could give you is don’t spend all your time on preforeclosures unless it’s a hobby and you don’t need the income. Don’t put all your eggs… Good Luck
Re: Preforeclosure Marketing and Retention - Posted by Dell Webb
Posted by Dell Webb on March 11, 2006 at 17:16:30:
AMEN TO EQUITY HUNTER. Foreclosures are being sold by the gurus as some easy, quick way to get rich. Reality is this. Many first’s don’t discount, especially if the loan is less than three years old. Seconds, do. Figure you should get seconds down to about 10%, with the exception of one company which demands 30%. Of course, they DO seem to wind up getting nothing a lot too, ha, ha. HOwever, with easy loan money out there in the past few years, a LOT of homeowners are maxed out. They owe $300K and the home is worth $300K. You better be look at getting that property cheap enough to attract a seller right away rather than trying to compete with all the other retail properties out there. You need to price your’s 20% below market value for a quick sale or the holding costs will kill you quick.
Another thing…be careful about making unsolicited calls. Remember that thing called a “do not call” list the Feds instituted two years ago? You could get slapped with a fine, since you are soliciting business with someone you have no prior relationship with. Personally, I do not make calls because of that.
Foreclosures are nice, but frankly, there are much EASIER ways to make money in real estate. My experience (despite what the Jeff Kallers claim) with myself and other investors is that for every contract you get signed on a foreclosure, you’ll wind up closing on 2-3 of those 10 and that’s after I’ve done about 65 deals and compared with others in our investing area. Differing areas of the country are no doubt different, but use foreclosures as a tool and NOT the sole approach to making money in real estate.