Real Estate Investing - Buying Pre-Foreclosures?
Written By Lou Castillo
So you wanna buy pre-foreclosures? or at the courthouse steps? So many people ask us about this. Heres our 30 second seminar on it. If youre going to buy PRE-foreclosures--after the seller is behind on her payments, but before the lenders auction date-then there are some pros and cons to consider.
Pros: 1) youve got a good possibility of buying the house subject-to the loan from a very motivated seller who just wants out. 2) you dont need to do any marketing, just read the foreclosure notices (more on this later), pull some comps and do drive-bys. 3) There are several *thousand* foreclosures published each month, in the greater Atlanta area-plenty to choose from.
Cons: 1) Youve only got about 3 weeks (to beat the courthouse auction) to contact homeowners and get signed contracts, title work, funding, etc. 2) Most pre-fc homeowners are in denial about their situation and/or mad at the world due to all their stress and debt collection calls they get. Soooo, theyre usually not very open or friendly to you and your offer. 3) Most really good deals are redeemed (caught up) by the homeowner, and the foreclosure cancelled, just before the courthouse auction.
Say you decide to jump in and play the PRE-foreclosure game. Wed recommend you subscribe to the Atlanta Foreclosure Report at http://www.equisystems.com/default.htm (about $600/yr and we dont receive any commission for recommending them), and get the monthly list online. Also, consider doing a lot of bold, cut through the clutter mailings to the pre-foreclosures youre considering, to get their attention and have them call you. Remember, their mailbox and answering machine is filled with debt collection stuff. You need to stand out, and hit them often. You might want to mail a different neon postcard or lumpy mail (trash can, stick of dynamite, handcuffs, etc.) *every few days*, until theyve grown to like you or are curious enough to call you.
If you choose to skip pre-foreclosure and actually buy foreclosures at the courthouse steps-then youre dealing with the foreclosing attorney and the lender, not the homeowner. The biggest things to keep in mind is youre expected to pay all cash by the END of the auction day; youll have to run your own title exam in advance; and youll probably have to guess what condition of home interior is since homeowner may not have let you inside. Another option is to buy the note/mortgage for cash at a deep discount, direct from the lender, prior to the courthouse auction. You dont have to deal with the homeowner that way, but you do have to have access to funds, and you will still have to do your own foreclosure after you buy the mortgage.
Best of success & abundance,
Lou Castillo