Pre-foreclosures

There are lots of opportunities out there to buy homes before they go into foreclosure. Foreclosure is what happens when a homeowner can no longer pay the mortgage and after missing 2 or more payments depending on the state they are in, the foreclosure process starts. The secured creditor, most likely a bank, then will attempt to get their money. The bank will issue a demand for payment in full based on the note terms. Most homeowners can't come up with the money and at this point we investors can help them out of their situation in some cases. If the homeowner is willing to sell before the foreclosure process gets to the bank sale/auction point we can save their credit from having a foreclosure on it. If we are dealing with a $200,000 home that has a $190,000 mortgage on it there isn't much room to make a profit even if the sellers sells us the house at $190,000. To make it work we must get the bank to short the mortgage. We can write a letter on the sellers behalf about the conditions in the sellers life that caused them to be unable to make payments and then have the seller sign it. Usually it's a job loss or health issue that got them to this point. If the house is not in great condition we point out to the bank any damage that makes the house worth less than the bank thinks it's worth. Typically we would try and get the bank to take $140-150k on their note. This gives us room to make a profit and save the sellers credit report from having a foreclosure on it. Sellers in this situation are going through a broad range of emotions and are challenging to deal with. It takes a special investor who is not looking to take advantage of them do deal with this situation. If you are going to work pre-foreclosures please handle these deals honestly and ethically.











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