Real Estate Investing - Buying Pre-foreclosures?
By Lou Castillo, Wed Dec 7th
So you wanna buy pre-foreclosures? or at the courthouse steps?So many people ask us about this. Here's our '30 second seminar'on it. If you're going to buy PRE-foreclosures--after the selleris behind on her payments, but before the lender's auctiondate-then there are some pros and cons to consider.
Pros: 1) you've got a good possibility of buying the housesubject-to the loan from a very motivated seller who just wantsout. 2) you don't need to do any marketing, just read theforeclosure notices (more on this later), pull some comps and dodrive-bys. 3) There are several *thousand* foreclosurespublished each month, in the greater Atlanta area-plenty tochoose from.
Cons: 1) You've only got about 3 weeks (to beat the courthouseauction) to contact homeowners and get signed contracts, titlework, funding, etc. 2) Most pre-fc homeowners are in denialabout their situation and/or mad at the world due to all theirstress and debt collection calls they get. Soooo, they'reusually not very open or friendly to you and your offer. 3) Mostreally good deals are redeemed (caught up) by the homeowner, andthe foreclosure cancelled, just before the courthouse auction.
Say you decide to jump in and 'play the PRE-foreclosure game'.We'd recommend you subscribe to the Atlanta Foreclosure Reportat www.equisystems.com/default.htm (about $600/yr and we don'treceive any commission for recommending them), and get themonthly list online. Also, consider doing a lot of bold,
cutthrough the clutter mailings to the pre-foreclosures you'reconsidering, to get their attention and have them call you.Remember, their mailbox and answering machine is filled withdebt collection stuff. You need to stand out, and hit themoften. You might want to mail a different neon postcard or lumpymail (trash can, stick of dynamite, handcuffs, etc.) *every fewdays*, until they've grown to like you or are curious enough tocall you.
If you choose to skip pre-foreclosure and actually buyforeclosures at the courthouse steps-then you're dealing withthe foreclosing attorney and the lender, not the homeowner. Thebiggest things to keep in mind is you're expected to pay allcash by the END of the auction day; you'll have to run your owntitle exam in advance; and you'll probably have to guess whatcondition of home interior is since homeowner may not have letyou inside. Another option is to buy the note/mortgage for cashat a deep discount, direct from the lender, prior to thecourthouse auction. You don't have to deal with the homeownerthat way, but you do have to have access to funds, and you willstill have to do your own foreclosure after you buy the mortgage.
Best of success & abundance,