What Options Do You Offer Homeowners In Foreclosure?
lets say you call or door knock a homeowner in foreclosure. you tell them you want to help them with their situation, what options do you mention??
depending on situation i can help by:
1. short sale
2. sell their home for them
3. forebearance
4. most important , put cash in their pocket.
what do you guys offer ?? and how??
thanks in advance
amynewbie
It depends on the situation. You need to get infront of the home owner and LISTEN. Let them do the talking, prompt them with a few questions and most home owners will tell you the world.
One word of caution, unless you are a liscensed real estate agent you NEVER offer to sell their home for them. You must first buy the home, lease & Option the home, or put it under contract.
You can then sell the home if you bought it, sell your option to buy the home or sell/assign your contract to someone else.
so in other words, listen to their situation first then spit out the solution.
but when i door knock them and tell them i am here to help and they reply "how can you help me?
what should i say to keep their attention.
amynewbie
Simply jumping out and saying you're there to help them will probably come off as cheap as you make it sound.
Although you are most likely interested in helping them; if your motivations are not to help yourself by helping them, you are either foolish or lying.
So to answer your question; I normally start by letting them know that i heard they might need to sell; and then you have to take it from there - either they'll open up with their story and from that you should be able to ID a few ways in which you can help yourself and them; or you may need to suggest how you have helped (or if you haven't yet, could help) somone in what you percieve their situation.
For the most part, they get enough cards and letters in the mail offering to help that you'l need to do more than talk to get a real deal. Trying to offer someone in serious financial trouble 4-5 differnt scenarios without understanding their situation will only make your initial contacts difficult.
Just try to get them to open up - if they open up, they should be able to trust you, then you can pursue solutions.
You must have an idea of what you can actually do for them... so, what can you do? No need to answer me, just be sure that you know what you can do... based upon their dilemma.
I've been doing this for 25 years... it's best to listen and listen and listen until they tell you what they want, or, more likely they'll tell you what they don't want.... oftentimes you won't be able to 'spit out a solution' on a moment's notice...
more often that not, those 'spitting out' a boilerplate
solution may appear disingenuous... and end up stepping on their own foot.
Once I am able to build a relationship with the property owner I ask them a few questions such as:
If I could make this all go away for you what would you do?
If you do not sell your home what would you do?
If you sell your home what do you plan to do?
When dealing with a pre foreclosed homeowner I negotiate based upon their need not a purchase price.
[addsig]
Amy, be very careful with "forebearance". You could be accused of Practicing Law Without a Licence. This a State offence and if you take money a Federal offence.
john, thank you for your response, i like that approach.
herbk, how is that practicing law?? i am calling on behalf of the homeowner with an authorization to release. its not illegal, the homeowner gave me permission to speak to the bank on their behalf. i mean isnt that why we get an authorization to release in the first place. so i am confused?? :-? (not being sarcastic)
i actualy read a post a couple of days ago that the investor put together a little brochure that he shows the homewwners so they can SEE what he is offering them. i had thought of that idea a while back but never got around to putting it together. if anyone finds that post let me know please.
thanks in advance
amynewbie
feltman and shortsalepro
thanks as well
amynewbie
My attorney told me that unless I am licensed, I may not negotiate on behalf of anyone.
amynewbie,
Also keep in mind that the person is not likely to know what a short sale or any other term common to our lingo. You have been given some good advice from other posts in that you want to listen so you can find a solution that is acceptable and will work for them.
The only suggestion I will add is to ask questions about "concern". This will get at the heart of what you can try to do. Example:
"I know this is a difficult time right now, but what is your greatest concern?"
"What have you tried to help remove the concern?"
"If I can come up with something that will alleviate or remove the concern, will you be willing to work with me?" ( This is a conditional close. You will either get a yes or an objection to deal with.)
If you get a response like "I am concerned that I might lose my house." You can explore the concern by asking "What is it about the possibility of needing to leave that causes you the most anxiety?"
You may get " I will have to move in with my sister" or "we will have to move into an apartment" etc.
You can continue exploring. Finally, you should paraphrase back. "I want to be sure that I understand your concern. You are afraid that if you need to move in with your sister it will add even more stress since you don't get along with her. Is this correct?"
When you get agreement that you understand the concern then you can try your conditional close. "If I can find a way where if you need to move you will not need to move in with your sister, would you be interested in working with me?"
Now you can offer a one year pre-paid lease somewhere away from the sister as part of your solution.
I hope this is of some help to you.
Regards,
Ed
I categorize the owner or property in foreclosure's problem two ways; short-term or long-term.
If their problem is a short-term problem that has been fixed (ex. out of work for a couple months but now back to work) but they're just having trouble catching back up then I suggest a bridge loan, give them a referral, and leave.
If it's a long-term problem that won't get solved in time for the sale (ex. unable to earn income) then I suggest selling the property and I may be able to buy it.
There are about 10 distinct suggestions I can give them but I assume they've already tried them and they're at the end of the line and a loan or sale is the only solution.
hi all thanks for the responses, they are all great.
nwms, i found an article in a magazine i subscribe to that mentions something to that affect.
not verbatim but close to it here goes,
"this law went into effect 10/1/04 in florida. if your helping a homeowner when involved in foreclosure litigation with filing, any motions, answers or pleadings your breaking the law. further more the article states
"even if you help with a forbearance agreement, loan modification or other "workout" plan with their lender and charge a fee or false advice you might be breaking the law."
i think the second part is interesting because it says if your charging a fee or offering false advice
so if you dont charge or lie to them your ok. also the license needed is an attorney license.
thought i share that. but the law is in florida, i live in NY,NY
amynewbie
[ Edited by amynewbie on Date 12/12/2004 ]
Greetings amynewbie,
Did you ever find that article with the brochure your referenced? Please post so we all can go to it.
Peace and Blessings,
Cuddley1228
no unfortunately, i have not found the post nor has the person read this post and step forward. but i will certainly do so. if you all do the same i will greatly appreciate that thank you.
i have recieved alot of great responses but i guess not what i wanted. i wanted maybe perhaps:
if owner in this situation, i offer forebearance
if owner in this situation, i offer to purchase house
if owner in this situation, i offer short sale ect. ect
or perhaps i already have all the answers and want confirmation. you know how new investors are always looking for the magic words or courses.
maybe i could be suffering from the dreaded analysis paralysis. what do you doctors think??
thanks all
happy holidays investors; may the new year bring you all alot of money in your stockings and blessed with health to you and your families.
amynewbie
Radio
John
These 10 things....Are you talking about how they can save money to allow them to bring their loan current?
Eg make the mortgage the #1 priority, trim all expenses, make minimum paymentson credit cards, sell things etc etc ...I'd appreciate seeing your ten things
"There are about 10 distinct suggestions I can give them but I assume they've already tried them and they're at the end of the line....."
hi
i too want to see the 10 things
amynewbie
Perhaps I'm the one you're talking about with the brochure. I'm not sure if I've posted about it before, but it is what I do. Of course I've only been doing this for a few months so I'm stlil critiquing what I do, but so far, as soon as I get the list from the courthouse, I mail out a 7 page spiral bound packet. It explains exactly what I do and the "four" solutions I offer. I do a quick explaination on each one and who they're good for, also. There are really only a few solutions in my mind, and if you sit and think about it they're not that complicated.
Option 1 - Short Sale
Option 2 - List & Sell(could mix with option 1, and I am a Realtor)
Option 3 - Sub-2
Option 4 - Wrap-around.
The biggest problem I run into is where are they going to go next. Typically they will have a problem even getting an apartment. Usually I'll pay a month or two rent somewhere so they can move out and the house can be saleable.
Quote:
On 2004-12-14 14:38, amynewbie wrote:
hi
i too want to see the 10 things
amynewbie
thanks ruman
I don't bring these up when I'm in front of the owner but I do have it on a brochure/mailer. These aren't mine so use at your own risk.
1. Contact your lender and let them know you're going to be late and ask if they have any programs for your situation.
2. Borrow the money from friends or family to make the missed payments and promise a rate of return on each payment.
3. Make arrangements with lender to make up missed payments in one lump sum at a specified date in the future.
4. Make arrangements with lender to delay payments for a short period with the understanding that another option will be used afterwards to bring the account current.
5. Setup a repayment plan such as adding the missed payments onto future payments.
6. Modify the mortgage by adding the amount overdue onto the existing mortgage as principal. This may or not require a change in other terms of the loan.
7. Refinance.
8. For FHA loans ask the lender for a one-time payment from the FHA insurance fund. Loan must be between 4 and 12 months past due and you can prove you are able to begin making payments again.
9. For VA loan call the local VA Regional loan center. For information call 1.800.827.1000.
10. Speak to a HUD approved counselor at 1.800.569.4287.
Then the other options which is where I start when face-to-face.
11. A bridge loan.
12. Sell the property.
thanks radio-52
amynewbie
I am learning the vocabulary of the trade. Could someone please define how each of these situations would be applicable to a pre-foreclosure situation? Thank you.
Option 1 - Short Sale
Option 2 - List & Sell(could mix with option 1, and I am a Realtor)
Option 3 - Sub-2
Option 4 - Wrap-around.