What Am I Doing Wrong?
In the past week I have been contacted by 3 different sellers who are in foreclosure. Some are months from the sheriff sale others weeks. Any way my letters are working however everyone who has contacted me wants to keep their home.
They do not want to sell yet they do not want the foreclosure. I am at a loss. What can I do to help them and still make some money? Any help would be great. what do you guys do? 
Attempt a short sale with the bank. Say they owe 100k on the propery. Offer the bank 55-60 to buy out the loan and stop the foreclosure. They do a lease option, or resell the property to the owners/sellers (if they can afford it) If not, just rent it to them.
Eric
[addsig]
Hi James,
You're not doing anything wrong, except talking to people who are in denial. It is obvious that your marketing is working because your phone is ringing.
People who are facing foreclosure think that a pot of gold will fall out of the sky from the rainbow. They are not looking at the reality of what is going on in their life. They will think this way until the sheriff comes knocking on their door to throw them out into the street or they finally realize that their situation is hopeless and you are there only salvation.
The three sellers you listed above, may call you back later as time grows shorter before they are forced out. It'll be up to you to decide if you want to stay in contact with them or not. I would probably try to talk to more motivated individuals. There are a lot of people out there who need to sell, who are not facing foreclosure. There are people who are being transferred, need a bigger house or smaller house. The list goes on and on.
It is a lot easier to get to them before they are in foreclosure. But next time you get a call from a person who is losing their house make them see the reality of the situation and ask them if they plan on waiting for the sheriff to throw their furniture on the street in front of their neighbors or leave with dignity and a few bucks in their pocket.
Best of luck
John (LV)
You are doing something right. Think of yourself as a tough love parent. Explain to them what you do. Explain that if there was no problem they woul not be calling you. If there is a way to help them keep their home, explore it. If that is not an option, you help them the most by laying your cards on the table. You are not there to give them a hand out. If you truely help them and make them a good offer, they will trust you and work with you. It is a numbers game as well. Some will some won't move on.
[addsig]
another thing you want to explain to them, is what a foreclosure does to them. Not only does it mean you lose your home, but it will stay to haunt you for up to 7 years!!! That enough of motivation for the person to seek alternative solutions.
[addsig]
Thanks guys for the input. Had a new one. The courthouse gave out the wrong info. I sent my letter to them. This homeowner was very very upset. I did get him calmed down but was an eye opener.
Also had another one that was listed. The owner called said he had it all worked out with bank. I just told him it was listed in the paper so he better check on that.
I am still learning the ropes but I surely do love this.
Thanks again....
Hi JamesStreet,
Sounds like you had an interesting experience. Be alert because you will laugh at some of the ones to come.
The other day I took my NOD list and went door knocking. The husband opened the door and was shocked at the news. He knew nothing about it because his wife pays all the bills. The wife knew all about it and kept if from her husband.
This wasnt a very pleasant experience to be a part of. I told them that I would let them talk over things and that I would get back with them. There is a very good chance that they are headed to the BIG 'D". . . . and I dont mean Dallas!
BAMZ
I have to disagree with Birddog1 on his first post.
Never, never never lease option or rent back to people in foreclosure. They got there for a reason, what makes you think they are going to pay you from day one? They are in financial hardship, and if you were doing normal lease options or landlording, you would at the very least ensure they have good income and good payment history, whicih people in foreclosure likely do not.
Short saling the mortgage, and taking on that debt yourself and then trying to rent or lease option to the mortgagor in foreclosure is asking for trouble, in my opinion, and with respect to birddog1 for offering his.
I would contact DerrickAli on this site, as he has ways to help people stay in the house by doing loan modification, forbearance or negoations with a willing bank (keyword is willing). You can charge a fee for this, and $500-$1000 fee is better than just stepping over what you think is a non-deal.
The reality is, people in foreclosure are not in reality a lot of the time and want to stay, and you will not be able to logically convince everyone that they should sell their house to you, even if it is the smartest thing for them to do, and even if the sheriff or auction company is going to show up on their doorstep in 3 weeks.
Best of luck, sounds like you are doing good marketing, Dave
Bamz,
Wow and I thought I had seen it all in my short time. So you said you just knock on their door? How has that worked for you? My letter has been doing good. I have now started send post cards out to people who have not responded to the letter. Thanks again for the imput.
Davehays,
Thanks for your imput as well. I am with you I would have a hard time renting it back to them. I have talked with Derrick and have sent a few his way. I just think that the more people I can help the better I will do in CRI and in life. Thanks again
James
Hi James,
I do use an extensive marketing campaign that I use with every NOD. However, I door knock on the homes that have a significant spread. I dont another investor to beat me to it!
Keep moving forward!
BAMZ
James,
First, as John said above, you're dealing with people in denial about their position. You'll get that alot in Pre-Fore investing. It's just part of that business. Another problem here is that these people get slammed with letters like yours, you're simply just another drop in the bucket, so to speak. Pre-Fore investing is usually the easiest for newbies to understand and as such is loaded with new investors doing the same thing.
Second, you said you made 3 offers in a week. Good start, but most REI books/courses say that you'll make, on average, 50-100 offers for every one that you get. As you become more experienced, this number will drop, but as a beginner, fully expect this to happen.
Yes, I know that several will say something, "I got my first offer accepted." However, that is not the norm, the above number is only an average, and in most cases, those "great first deals" newbies get frequently aren't so great.
Roger
Roger,
Thanks for the reply. I am very new. I was just suprised at how many of these pre-forclosures are in denial. I am not worried. I am having luck. However, I can always use the advise and I am always learning. Thanks again
In regards to Dave's comment about never lease optioning or renting it back to the homeowner after a shortsale - HAVE TO DISAGREE. First of all in order to sell the homeowner this idea you will have to promise them the lower monthly payments and technically you will be able to do so because you got the property at a discount (your new mortgage payments will be lower than theirs and if you get an interest only loan they will be substantially lower, even cashflowing for you).
Second, you're on the title - if they don't pay their rent or lease payments (hence, voiding their option) you may evict them and end up posessing a house that was bought 20% or 30% below the market. Not that big of a disaster now, is it?
I haven't had much luck with preforeclosures, although there are a lot in my area. I've sent letters, personalized, got one call back, but couldn't do anything with the property.
What kind of letters do you guys send to get people to respond? Also, the door knocking, any negative experiences with that? What's your strategy?
Thanks guys,
Dee
narasland,
Everyone has an opinion, but I think you miss the big picture on why it's a bad idea to rent back to the original homeowner.
First, they couldn't make the payment when they owned it, why would they now?
Second, say for some reason they can. IF they had a $100K loan, you'd have to get a 20% discount JUST to about $150-200 spread over their current mortgage payment (depending on interest rates). The idea in investing is to create cashflow, so lowering their payment is a bad idea.
Third, say the owners' agree to your idea. They sign over the house, and rent it back from you. They stop paying. No big deal, you say, just evict. However, they don't leave. In fact, they sue you for fradulent lending practices. Why, you say. Because "they thought it was only a loan. They didn't understand what they were doing. They were in distress."
So now, you've got to go to court and plead your case. Do you win? Doesn't really matter. IF you win, you've losted months of rent. The house will be trashed, AND you'll still have to evict them. And if you lose (a possible outcome, since judges can be very understanding of the homeowners' case, whether or not your paperwork is legal and correct), you now don't have a home, but a $80K debt.
How's it look now?
Roger
Excellent advice on this post. I was actually considering the option of leaving the current owner in the house, til I read this! I am so glad this site is here! Won't be making that mistake! Thanks to all who posted here! I am currently working the Pre-forclosure market and weighing options to help people. That one is no longer one of my options, no matter what.
I'll add that one to the TABOO list of do's and dont's!
Hi Guys,
Hadn't checked this post in a while. Thanks to everyone who has posted. I have another thought. I have heard a lot about short sales.
1st Can anyone tell me how a short sale works? (I know that we offer to buy house at discount)
2nd Do you get a new mortgage in your name? Is it hard to get one. Do you do this before you present your offer?
Finally I have another appointment today and they know they can't keep the house. Big problem is amount owed and the intrest rate of 10.5% payments are way more than FMR or what I could resell but am meeting to see what I can do and for the practice.
Have a Merry Christmas and a happy new year.
James