Do Homeowners In Foreclosure Lie?
Do any of you find that homeowners in foreclosure lie about the "offers" and "prospects" they have about selling their house? Tonight, I met with 2 different homeowners whose homes will be auctioned in the next 1-2 weeks. One listed their home with a Realtor last week and claims they have an offer at close to asking price. I told them that the offer would not close since the conventional buyer will not be able to get the loan approved in a week. They said that their lawyer is trying to postpone the auction. Shouldn’t they be more eager to work with me, since I am offering cash and do not need a mortgage?
The second homeowner seems not at all worried, and that the pending auction will be delayed. He said that he also had a close to full price offer, and that an investor before me also offered close to asking price (he owes 200K on the mortgage; I offered to pay off the 200K mortgage, give him 20K cash; the home is worth 320K, but my holding, selling and repair costs will be over 40K.). It does not make any sense that he has close to a full price offer from both a homebuyer and investor, or else why would he be talking to me. What investor would even make a close to full asking price offer? That is not even investing!!! To top it off, he also said that he would refinance his mortgage if all else fails. Who would refinance him while he is in debt and is being foreclosed?
Do you think both homeowners are lying, and if so, why would they? Are these scenarios common?
I havent had similar expiriences but they sure sound like liars. The thing to do is let them ride. I would call them a few days later and ask if they "were able to sell to that buyer". That way you give them an easy way out of their lie (without embarrassing them) and you might pick one up as the day gets closer.
You should also ask why they didn't accept those offers when they tell you about them. Remind them that it takes time to close. They would be foolish to not take an offer for close to FMV 2 weeks before the sale. But you cant give them that. so if they arn't willing to give you a good deal then just walk. If theyed rather lose it than take a low ball let them learn from their own expirience.
Josh
[addsig]
I think you are witness to a study in human nature. The homeowners may be in denial, and they may be embarassed to find theirselves in this situation. So, they do what comes naturally... they act like normal people -- normal people who are not facing foreclosure, just selling their house. Maybe the real estate agent told them there would be no problem getting their asking price, and wouldn't be surprised if an offer came any day now. That's what their ears heard. What their hearts heard was, "This guy (lady) is going to sell my house and save the day, and nobody will ever know how bad it really was. In fact, he's probably got an offer right now and is going to call tonight."
Or, a ton of other things may be going through their minds. People in financial distress will behave differently -- feel differently, think differently -- than those who do not have that burden. They may even lie -- all the while telling themselves they aren't lying (they are just protecting their egos, reputations and families).
Just act with compassion. Try to put yourself in their place and give them a little more slack than you feel like giving them. They've got it tough. They are facing losing their home. They are facing failure, pressure, probably lack of sleep and they are all the while trying to appear "normal." That can be exhausting!
As for the ones you say don't seem worried at all -- I've seen that too! Serious denial! I had one couple even tell me they weren't in foreclosure (ad was in the paper a few days before) that it must be a mistake because they got all that cleared up with the bank months ago! This, they said with a straight face while a U-Haul was parked in the driveway.
I could only say, "Wow, that's great. I hope everything is working out for you, but if you ever need my help, I hope you feel you can give me a call and we'll talk. Here's my card. " Sometimes they call back. Sometimes they don't. These guys didn't... and they still own the house three years later, courtesy of three sale-stopping bankruptcy filings (the third BK was dismissed last week, and the fourth attempt at a foreclosure sale by the bank will be set in two weeks, though)
I don't know that much about REI, I'm still learning. But in my "other" job, I work with people and have learned a lot about human behavior. Thanks for giving me the opportunity to share a little bit about what I know (because I get so much from reading the questions and answers posted by others who know more about REI!)
Hope my insight helps! Good luck
I have found that people feel that they should get MORE. For some reason they feel that they were wronged, lied to, and some just don't think someone will take their house. I even believe THEY BELIEVE what they are saying. I even seen one woman tell the sheriff there was a mistake and it was going to be cleared up shortly. If you can figure out what goes on in some people's brains. You will become a millionaire overnight. Some have no concept of reality.
Lori
[addsig]
Stapler,
This is all par for the course.
Denial, delusion, halftruths, hostility are just some of the reactions you encounter when you knock on someone's door in a pre-foreclosure.
There are even those who prefer to let it go to auction instead of "allowing anyone to profit" from their house!
Keep in mind that this is a game of averages though.
It gets easier as you gain experience, and sometimes they will invite you in despite their initial reaction at the door.
Knocking on doors is a great way to get deals; over time you may develop a strategy where you initially mail and after a few days follow up with a visit.
Personally I prefer mailing, as the owners who react are at least aware that they have to create a solution in order to avoid the sheriff sale.
I carry a seperate phone at all times that only rings when a prospect reacts to my letter.
Don't be put off by initial reactions. You will learn to distinguish from the body language and the choice of words at what "stage" the owner is.
Leave your businesscard behind, make notes of the visit in your file and follow up after a few days.
When and if they decide to sell, you'll stand a good chance that you will be the first one they will call.
You'll do just fine.
[addsig]
Most people in foreclosure are in denial that this is happening to them. They feel like a white knight will come and solve all their problems. You have to convince them you are their last chance! If not find someone in foreclosure who is not in denial and open to accept your solution for their problems.
It is a nice mixture of:
-5 parts - denial
-1 parts - lying
-2 parts - selective hearing on the homeowners part
-1 parts - stuff other investors are saying trying to set an appointment
I do not claim to be an expert but I can share some experiences I have had. As the many people before me have stated, these people are in denial. They think that a miracle might happen and they will save there home. whether there situation was caused by poor money management, unexpected death or other life tragedy, or they got suckered in to a refi w/out reading the fine print. So they are lying to protect themselves. they dont want anyone to know how stupid they might have been. I also know of noone who will refi someone who is already in the foreclosure stage. I spoke with a lady about two months ago who owned a 2 flat in chicago. she called me to see what I could do. She had already talked to about 3 other investor types who were offering to buy her flat and then lease it back to her. she also said she had an offer for 400K from her neightbor. Market value was about 465K. I told her that I could not offer 400K and that she should take that other offer. I dont know if it was a lie or not, that's not the point. The point is lay out all the options you can provide, be honest about what you can do and see what happens!!!
Do you know for sure what is their payoff amount? Even if you are offering what appears to be a good deal for you, it may not be enough to release the liens and they would have to come to closing with money.
Brenda
I had a similar situation a few weeks ago. I went to see a guy who was going to loose his house and he asked me what kind of deal I was going to offer him. and that was before I knew what he owed...well, as the conversation progressed he told me he owed 15K in payments and lawyer fees and then he told me he was behind 1500 in taxes and then he dropped the bomb on me and told me ther was an IRS lien on the property. When he finnaly told me what the house was appraised for and what he still owed. The bottom line was he owed far more than I would hav eoffered him and when I told him that, he told me he had ofers from 2 other investors and I wished him good luck and advised him to call them because I would not pay that for the property. On top of all the arrears and liens, there was aroung 25K in rehabs to be done... So, to answer your question Do they lie to us? Yes, some of them do! Not all , but some do. You gotta be able to figure out who is being honest with you and who isnt. Not easy, but it can be done. Good luck
I'm not really sure what type of people you guys have been dealing with, but all the people I've dealt with that are going into foreclosure are honest and upfront. The would never think about lying and they know they need to work with an investor. Okay, okay, that's not 100% true. Not even 10% true. Yep, people are funny and that's one of the things that keeps me amused. I've had people try to talk me OUT of buying their house house. I'm never surprised by what people say anymore, just amused. It's a riot...
Yeah, people are bizarre. They will lie, be in denial, just move out and leave a house, etc. Come to expect that sort of thing from people.
Ryan J. Schnabel
I am not sure that these people really think they are lying. I think they want to believe something so badly that they will let logic look the other way.
I learned a long time ago that greed will blind people to just about anything and let the unscrupulous take advantage of them.
I think that fear and denial are about the same thing.
I would try and get them to think I was the "white knight" and that what I was offering was "as good as it gets for them".
I have a realtor here in town that gets most of the listings, not because they are more competent than anyone else but that realtor has inflated the value of the seller's house, they say it is worth more than any other realtor has told them it was worth. The homeowner thinks that they will get more and go with this realtor. Then a few months later there is a price reduction and a sale for about what the other "honest" realtors told them it was worth in the first place.
Emotions are blinding..... <IMG SRC="images/forum/smilies/icon_cool.gif"> [ Edited by Stockpro99 on Date 02/11/2004 ]
DENIAL. They are in denial (please don't say that I told you- because I'll deny it).
I could write a book on the number of defautees who told me they had it "all taken care of" -only to tose their home at the steps of the courthouse.
I've seen defautees refuse a good offer-then go to the steps of the courthouse to watch their property sell. They knew, up to that moment that, "they had it taken care of".
One fellow called me to come over to discuss a sale. I checked his title. It had been sold at auction two weeks prior.
I: "I've got a question for you.
He: "I've also got one for you.
I: "OK, you go first".
He: "The Constable knocked a my
door yesterday & told my wife
we've got to get out. What can
you do for me??
A few weeks ago I got a call from a lady asking if I wanted to buy her house. She pauses and says "well actually the bank owns it but will you buy it back for me? "
Today I was talking with a lady about some land for sale... over 100 acres and she's asking 2.1 mill... this is in the boonies and from the road you can't see any dirt.. .just trash and underfed farm animals.
I ask her if that price includes the trash and she says of course...
click.
Reading all of these postings is like a memory book. I look back at all the years I have been doing this and everything posted is true. However the other day I took a day off from Containers to Houses I mean you can only take so much of the nonsense you go thru to obtain a building permit.
So I knock on the door of this dwelling which looks like it has recently left the pages of that cartoon strip called Lil Abner. But is on 2 acres of really lovely land. He is in foreclosure from the first an institution. There is a second on it which just about absorbs the true equity. Yes I have purchased it at a rather large discount and I am trying to make up my mind wether to bring the existing mortgage current and start my own foreclosure or just let it run and utilize my second to bid up thru it. I would be bidding with 10 cent dollars. Behind the second is a rather large collection of liens, judgements, a third trust deed to a bail bond company and a strange notice of intention to lien sometimes described as a Contractors Flatulance.
First off the Home Owner informs me that he has never been in jail, then relaxes and corrects himself, except a little while ago when he assaulted a police officer. The second trust deed was just helping out a friend, yeah he bought a car from him.
Of course the property is worth all kinds of money as the house is a historical monument. This I believe, as it does resemble something made out of mud prior to the introduction of concrete and stucco.
I take my leave and give him an address of a nice apartment house that has a single vacant. He is firm in the belief that a great bolt of lightening will descend from heaven and save him. He insists that he only owes two months in payments. The foreclosure is scheduled for the following week and the payments in default total over six.
I think I will just bid up utilizing the second that I have bought for that purpose. Of course I know that I will see him again. Probably furnish the truck that will carry his stuff to the new small apartment. There is no way to save him.
Unless of course you are a manufacture of lightning bolts. The Human Condition.
Sigh Sigh Lucius