Thread: approaching homes facing foreclosure that are listed with an open

Is that $194K loan the first or second mortgage? I don't seem to find too many properties with that much equity going to foreclosure --if it is the first lien.
The owner has only two weeks. Do you know how much they need to make the loan current? What is the "real" FMV of the property? Are they already giving any discount on the listing price or that is the FMV?

What is your plan for the property? Flip it? rent it? How much would you pay for it, that it actually makes sense for you?

great points andviv, i can get all that info for you.

for sake of this post, i guess i was just using that as an example. basically you can take my first post more as a general question. (i will post back once i get those details for you however)

I've used the "I'm an investor" approach and has not been successful for me. I think they saw me as a greedy guy ready to profit on their problems, or something like that. When I approach it from a perspective of a family guy looking for a house to live in I had better results, but I did it only once (I just needed one house to live in, after all).

Two words: HONESTY and EMPATHY. Be honest with them (which doesn't mean you HAVE to divulge everything) and empathize with their situation. The more they sense you are honest and care about THEIR needs the easier it will be. Just as in any business, it's about solving THEIR problem.

The one thing I do when talking with homeowners is to give them a lot of options to explore first (e.g., loan forbearance, mortgage reinstatement, refinance, bankruptcy, foreclosure) and only afterward tell them about what services I can provide. Again, the keys are to be HONEST and be empathetic to their situation, and never come across pushy, being "salesman"-like, or not caring.

Up front, let me say that I am not the one who typically handles the negotiations on these types of leads, for our company. It is my husband but I think he has come up with a very sensible approach.

He presents himself as a type of 'financial advisor' - who specializes in real estate. He will meet with the homeowner and present all of the possible options, which might help to resolve their issue. Examples, not limited to, following:

• work out a payment plan with the bank until you get back on your feet - if the financial issue is a temporary problem
• obtain a loan from a friend/family member
• list the house FSBO or with a realtor
• Accept a lower/cash offer
• Short Sale

Spend time with the home owner and walk through each of the possibilities - best to present them in order of the most favorable to the least favorable. Give the owner tips, as to how they might better market their house, set up a loan with a friend, etc. Finally, make it perfectly clear that if none of the more favorable options are viable - or if time simply does not permit - that you are a person who could possibly help him/her with a cash offer or the short sale negotiation. TIME is one of the most (if not the most) critical factor here and they need to understand this as well. Waiting around and doing nothing is the absolute worst thing they can do....so while a low cash offer or short sale may not be ideal, IT IS BETTER THAN THE ALTERNATIVE - which is someone coming, forcing them out of their house and ruining their credit, for years and years to come. You are simply there to assist them in making the best of a bad situation.

If they seem to be in denial, bring comps and show them what homes are selling for in the neighborhood (or more likely, how long these other homes have been on the market and have NOT SOLD) recently.

We beleive honesty is best. Everyone feels better about the situation and, often, a trust is built. My husband has examples where he helped a home owner out of a bad situation (not to our benefit) only to yield a referral from that same owner, to a friend/family who was also in a bad situation but had run out of time/options, resulting in a deal for our company.

Be compassionate but firm. They are going through a very rough time but they must face the reality, which is that if they do not make a decision/take action, the decision will be made by someone else and the end result will no longer be in their control.

Obviously, this is just one approach - there are many. Hope this helps.

phlgirl,

Thank you for your response. Ive been scratching my head about how to do this as well. From the books Ive read, they all basically say, "just go talk to the homeowner". There is obviously more to it then that. I like the idea of presenting options for them, even if sometimes it initially causes me to not process a deal.

Originally Posted by phlgirl

...
He presents himself as a type of 'financial advisor' - who specializes in real estate. He will meet with the homeowner and present all of the possible options, which might help to resolve their issue. Examples, not limited to, following:

• work out a payment plan with the bank until you get back on your feet - if the financial issue is a temporary problem
• obtain a loan from a friend/family member
• list the house FSBO or with a realtor
• Accept a lower/cash offer
• Short Sale

Spend time with the home owner and walk through each of the possibilities - best to present them in order of the most favorable to the least favorable. Give the owner tips, as to how they might better market their house, set up a loan with a friend, etc. Finally, make it perfectly clear that if none of the more favorable options are viable - or if time simply does not permit - that you are a person who could possibly help him/her with a cash offer or the short sale negotiation.

I want to issue a warning about this approach.
Several states (I'm familiar with Maryland as I live in the area) are working on laws to 'protect' homeowners.
MD already passed such law.


Please take a look at this, which is currently in effect in MD:

Do not do anything that will define you as a foreclosure consultant in the eyes of the law. You may not act as a foreclosure consultant and take title to the property. Below are the things that make you a foreclosure consultant:
Definition of Foreclosure Consultant: Anyone who advertises or solicits to or contracts homeowners in pre-foreclosure in writing or through any electronic or telecommunications medium and directly or indirectly makes a representation or offer to perform any service that the person represents will:

• • Stop, enjoin delay, void, set aside, annul, stay or postpone a foreclosure sale,
  • Obtain a forbearance from any servicer, beneficiary or mortgagee,
  • Assist the homeowner to exercise a right of reinstatement provided in the loan documents or to refinance a loan that is in foreclosure and for which notice of foreclosure proceedings has been published,
  • Obtain an extension of the period of time within which the homeowner may reinstate the homeowners obligation or extend the deadline to object to a ratification of the foreclosure,
  • Obtain a waiver of an acceleration clause contained in any promissory note or contract secured by a mortgage on a residence in foreclosure or contained in the mortgage.
  • Assist the homeowner to obtain a loan or advance of funds.
  • Avoid or ameliorate the impairment of the homeowner’s credit resulting from the filing of a petition to foreclose or the conduct of a foreclosure sale.
  • Save the homeowners residence from foreclosure,
  • Purchase or obtain an option to purchase the homeowners residence within twenty (20) days of a docketed, scheduled or advertised foreclosure sale.
  • Arrange for a homeowner to become a lessee or renter entitled to continue to reside in the homeowners residence,
  • Arrange for the homeowner to have an option to repurchase the homeowners residence,
  • Engage in any documentation, grant, conveyance, sale, lease, trust or gift by which the homeowner clogs the homeowners equity of redemption in the homeowners residence,
  • Systematically contacts owners of property that court records, newspaper advertisements, or electronic media show are in foreclosure or are in danger of foreclosure.

If you do any of the above, you are considered to be a foreclosure consultant and you may not have any interest in the property.

The rest of the article can be found here http://www.profitable-partnerships.c...ex.php?a_id=21


My suggestion is to get your self familiarized with this type of regulations as they may affect you and your business --I apologize for being "negative" but I think this is important for people to understand and know.

In the below quote it says 20 days before auction (I understand other states may be different or not even have this rule) Doesn't that hurt the homeowner more then help them? I'm slightly confused as the purpose of that portion. Btw. thank you for the link.

• Purchase or obtain an option to purchase the homeowners residence within twenty (20) days of a docketed, scheduled or advertised foreclosure sale.

Actually that is what has been happening in MD (or so say the investors). But, like any rule, you just need to find ways around it. I've heard of people that approach the owner as consultants, and do not take title on the house... but they happen to know people that could help them if the homeowner wants. But yes, when the law was being proposed many investors lobbied unsuccessfully against it, trying to explain to the lawmakers why this was a bad idea. What's happening a lot is that many investors are specializing in REOs and do not help homeowners anymore. It is just one more example of a good intention by the lawmakers, with a terrible implementation. Now they just created a way to guarantee that the homeowner's only 'solution' is foreclosure.

This is the second article:
http://www.profitable-partnerships.c...ex.php?a_id=22

We have bought a couple of deals from homeowner in foreclosure or other wise in distress. I don't tell them I am an investor or that the house is for me. Most people tell other people to much of their business unnecessarily. I simply say, Hi, I'm Janet and I have been looking for a home in this area. I have a very flexible lender so I can possibly purchase your home fast enough to help you with the situation you are dealling with. Would you like to talk?
They don't need to know that I am a investor or that the reason I have a flexible lender is that my bank has standing credit for me because of the number of deals I do. I am not lying, I am truthful, I have been looking for a home in that area, that's how I found them. If they approached me outright and asked me if I was an investor I would answer truthfully but I have never been asked. People don't care about you and what your plans are or what your needs are. People care about their own problems and what you can do to help them solve them. After all if you are looking for a loan do you want to hear about what the loan officer is getting out of helping you with your loan, or do you want to know what he is going to do for you?

Originally Posted by nomadjanet

We have bought a couple of deals from homeowner in foreclosure or other wise in distress. I don't tell them I am an investor or that the house is for me. Most people tell other people to much of their business unnecessarily. I simply say, Hi, I'm Janet and I have been looking for a home in this area. I have a very flexible lender so I can possibly purchase your home fast enough to help you with the situation you are dealling with. Would you like to talk?
They don't need to know that I am a investor or that the reason I have a flexible lender is that my bank has standing credit for me because of the number of deals I do. I am not lying, I am truthful, I have been looking for a home in that area, that's how I found them. If they approached me outright and asked me if I was an investor I would answer truthfully but I have never been asked. People don't care about you and what your plans are or what your needs are. People care about their own problems and what you can do to help them solve them. After all if you are looking for a loan do you want to hear about what the loan officer is getting out of helping you with your loan, or do you want to know what he is going to do for you?

Very good post.

I must have a "ask me if I'm an investor" sign on my forehead, I always got that question!!! oh well.

Originally Posted by nomadjanet

...People care about their own problems and what you can do to help them solve them...

As skeptical as people get, they are more concerned about themselves getting out of trouble... hopefully people realize this when they read your post, Janet...

the best and most decent sales ploy in the book is nothing more than basically identifying and giving what the consumer/client (or in this case, the homeowner) wants and needs.

a home owner facing foreclosure realistically has little room for negotiation


warp speed ++++

Originally Posted by NoMoneyDown

Two words: HONESTY and EMPATHY. Be honest with them (which doesn't mean you HAVE to divulge everything) and empathize with their situation. The more they sense you are honest and care about THEIR needs the easier it will be. Just as in any business, it's about solving THEIR problem.

The one thing I do when talking with homeowners is to give them a lot of options to explore first (e.g., loan forbearance, mortgage reinstatement, refinance, bankruptcy, foreclosure) and only afterward tell them about what services I can provide. Again, the keys are to be HONEST and be empathetic to their situation, and never come across pushy, being "salesman"-like, or not caring.

yes i agree with these statements and that is the approach i take when visiting people in preforeclosure. the situation is a little different due to a realtor involved. i believe they will shun investors because they feel it will hurt their commission.

Originally Posted by phlgirl

We beleive honesty is best. Everyone feels better about the situation and, often, a trust is built. My husband has examples where he helped a home owner out of a bad situation (not to our benefit) only to yield a referral from that same owner, to a friend/family who was also in a bad situation but had run out of time/options, resulting in a deal for our company.

Be compassionate but firm. They are going through a very rough time but they must face the reality, which is that if they do not make a decision/take action, the decision will be made by someone else and the end result will no longer be in their control.

Obviously, this is just one approach - there are many. Hope this helps.

Great to see that my business approach is also being done by others. I myself have also helped homeowners stay in their and received 0 compensation. Perhaps I should have requested a thank you letter or something similar to show other homeowners..hmm

hey everyone,

i'm glad this topic has been helpful to others as far as approaching people in preforeclosure/foreclosure.

i'd like to backtrack just a tad here and stress the fact that i'm looking for approaches in which the home is alread listed. i myself have the "im here to help" approach, but as ive mentioned above, i think having the home listed changes things slightly...or at least provides a situation where the approach should be modified a little.

Very good info, Andviv. Thank you Very important to know all of the regulations. I should have stated that we do not advertise ourselves as financial advisors..... we simply use the 'we buy houses' approach. It's more the behavior of an advisor, where the options are presented - educating the homeowner - and then allows the owner to make an informed decision.

while getting ready for my day job (hah!) this morning. i realized how this thread could have become confusing. I take blame for that.

I would use the same approach to homes that are listed. I guess I should really clarify that during my doorknocking the one home had an open house. This is where I feel my approach would be different. Sorry for the misunderstanding. On that note, would any of you approach open houses? While writing this, I feel as if I can answer my own question where it would probably be best to approach after