Hello, I saw a property in my part of the country (NY) that is now considered Lis Pendens property (Pre-Foreclosure) I would like to approach the owners and try to buy them out prior to it going into foreclosure. Is there anyone out there that does this for a living or did this in the past that would be willing to share the proper ettiquette in approaching the owner. I would assume if I was the owner I have many options to go get a buyer, so I’m not sure what my selling pitch is to them. Also I dont want to come off insulting them as if I’m saying to them that “I know your having a hard financial time”.
My many questions on this process are:
How do I approach the owner?
What form of correspondance do I start with? (Letter, Ring the bell, etc…)
What should I do prior to approaching the owner, as far as finding out all the title information on the property. (Can I get this information for free from a title company).
I’ve never done this, but if it were me, I don’t think I’d want anyone knocking on my door saying - even in the nicest way - hey, I hear you may lose your house. I would think a nice, short handwritten letter would be best. Maybe something along the lines of “I saw your name on the lis pendens list…even though a lot of people go throught this, I hope this doesn’t happen to you…I have purchased houses from others in this situation…why don’t you give me a call and we can help each other out before this gets too far.” I wouldn’t blatantly state you want to buy their house, but subtly suggest it so they think that it is their idea to sell it to you.
Follow-up with a short note a few weeks later to remind them you are still interested in speaking with them.
DONT listen to JUJUBEE!!! If you send letters you’ll be lucky if it even gets open…if gets open, so does 20 other investors letters. I’m in the pre-foreclosure biz as well as other forms of buying property and I can tell you from experience that knocking on the door is the best approach. Why? because it sets you apart from everyone else and your chances are much better. Title search should be done after the contract…and if the title comes back not good then I have escape clauses in the contract that allow me to back out the deal at anytime without any penalty. Remember your not a salesman your a savior…a hero! Your not there to sell them anything your there to HELP them. By getting them out of financial difficulty by restoring their credit, paying the loan off so they can get a bigger better home in the near future…All because you took the extra step by knocking on their door and showing them exactly how you can help them on paper. I just read a thread the other day where an invesor sent out 100-letters and got a “0” response…ouch! I see this all the time when I get inside and there’s a stack of unopened mail from lenders, bills, attorneys, utilities…you get the picture, if I was delinquent I wouldn’t open any mail either. One last piece of advice…I dress business casual when I knock on doors. Most people feel more comfortable when I dress like this rather than having them open the door to the business man in a boulder hat…then they tend to get
defensive and uncomfortable.
Best Regards!
Mel
Thanks Mel…I do need to ask what is the response you get, and most important what is your opening line. I know that fear has no place in business, but I used to do telemarketing and I hated the hangups and the not intersted. Now with this type of business I’m taking it the extra mile by actually approaching them face to face.
How did you start out?, how did you build your confidence with this line of work.
Responses vary, but see when I approach a homeowner most of the time it’s during the Lis Pendens stage of the foreclosure (very beginning) therefore they’re not very motivated…yet! They’ll try to refinance, get loans, talk to family and other means of coming up with the back payments. So at this point all you can do is lay down your offer and build a foundation of your services and let that marinate with the homeowner. Every situation is different but I usually tell them banks won’t give them loans because they know the homeowner is having trouble paying their current mortgage and is a big risk for the banks and mortgage companies. About 1-2 weeks after your first visit I will contact them and ask if they have resolved their situation and most of the time they will tell me no…so I will make an appointment to go and write the contract. The lesson here is even if you dont get them to sign the contract the first visit leave them your offer on paper and follow up a week or two, but never think it’s a lost sale. I offer homeowners alot so that allows me to close more deals even when other investors make offers. When I started I gave myself a 1-year goal to find at least one pre-foreclosure, after all one deal made is one years salary earned. My first month I found my first deal, a homeowner who owned 2-houses that were in foreclosure. My opening line is one from a course I bought and it reads "Hi my name is John Doe and a real estate agent gave me this address and said you might be interested in selling, are you selling this house?? At this point you’ve told them two important things 1. They think your gonna pay retail for the house and 2. They think you don’t know of their situation. Very rarely they’ll ask who is the agent that gave them their address and I give them a name of a friend who’s an agent and they never go beyond that point. Sometimes they’ll tell you there in foreclosure and thats your opportunity to tell them you know all about foreclosures and what you can do for them. If they say the house isn’t for sale then I would simply say "Well do you have any idea WHY they he gave me your address?..there are so many scenarios and I cant get into all of them maybe I should write a book like REOCONSULTANT…lol. The best practice is just doing it…so go knock on some doors and get a feel.
Best Regards!
Mel
I have bought several courses on different topics of REI but I started with Tony Youngs “Foreclosures” course and it really got me the boost I needed to startup.
Best Regards!
Mel
Hello Trwilliams,
Yes it will work if the redemption period is still in effect. Many deals can get revived by purchasing property using this method.
Best Regards!
Mel
Hey Ryanpal,
Your right on the money, business casual with a polo shirt or button down & casual slacks, I use dockers.
Best Regards!
Mel
