I know someone that works for a lawyer that represents banks when properties go into foreclosure. Now I am new in to the real estate world so please bear with me. This particular person works in a department where he has access to files that go pretty much in the following order:
Owner of property defaults on mortgage
Bank sends lawyer a referral to start paperwork to foreclose on property
They have to set a hearing to the judge so that the client (bank) can explain how defendant defaulted on the mortgage
When the judge grants it, the foreclosure process starts and the property goes to sell
They then do a notice to sell in the news paper for a certain date that the judge sets the sell
When sell day arrives, its like an auction in the courthouse, and client (bank) shows up, person that defaulted may show up to bid, and any third parties interested in the property.
My question is, is there anyway I can take advantage of this type of connection when in the wholesaling business? If this particular person tells me a particular property is about to go into foreclosure for example, sounds like a distressed property/owner and possibly distressed client (bank) because from what i hear banks do not like to hold real estate property. Is there a way I can tap into this as a source of deals I can get a hold of and package it together to my buyers list? He told me 70-80 properties go through a week, and the whole process takes about 30 days. He told me once a property was sold for $100 to a third party because the client (bank) and defendant did not show up at the court for the sale. My connection also told me this firm has a title company as well. Please let me know if there is anyway I can take advantage of this connection.
I don’t get the sold for $100 claim, which court did they not show up to? I am not familiar with a foreclosure process that would allow something like that to take place.
In any case, such contact can be gold. However, couple of things come to mind:
I can get better bigger list from the 30-60-90 days list which tells me who has defaulted on their mortgage before the lender even contacted the lawyer to take any action. But this costs money and your contact is free
Why would he give you the list? what is in it for him? if he is expecting something in return, are you going to be able to move these properties fast to keep his interest or are you going to learn on his dime? how long will that relationship last?
Use the connection, but don’t build your business around it. Not unless you have similar arrangement with multiple lawyers.
Reference the $100, I was told a property was up for sale in the courts. The client (bank) did not show up to place the bid on the property. The third party was the only one in the court to show up and place the bid. The third party won the property with a $100 bid because no one else was present to compete. Atleast that was my understanding from what my connection told me.
My connection would give me the list just for a favor. I have a good relationship with this person. There is nothing in it for the person except for the fact that he just wants to help me out. I know for a fact he’s not expecting nothing in return, so I really dont need to move the properties fast just to keep his interest, I am extremeley confident in that.
Whats your take based on my reply?
By the way, thanks for your response, I really appreciate it. The list is just GIGANTIC with so many people in the state of Florida and so many different banks. I have a feeling I can work something out with the list but I am just not sure how to approach it.
From what it sounds like you are trying to say is that your friend works for a trustee. I think you are confused on the bank having to show up. The bank gives your friends boss, the lawyer, a reserve that they want to sell the house for.
The house goes for sale on the court house steps. The bank tells the lawyer, our bid will be $_____. That is the reserve (a starting price). If no investor buys that house on the steps than the bank gets stuck with it and they just bought it and now are not only the note holder but the owner.
As far as the $100 goes, the bank likely did not want the house. They said sell it to whoever will buy it and they set no reserve. This is rare. But if the bank has calculated that via their interest and payments already received they are Ok with just letting it go rather than dealing with it they could feasably say just sell it. It also could have been completely wasted. There are some houses that I would have to be paid to take, and I deal primarily in extensive rehabs.
My connection would give me the list just for a favor.
The list would ONLY be a benefit to you if it was given to you on a weekly basis and NO legal notices have been filed yet. Once they have, all investors already know about it and it is useless info as you could get it from the paper just like all others can. If you got the names prior to the required legal notice in the paper you could contact the owner and do pre-foreclosures.
AND, if the lawyer finds out his employee is helping you get these properties in preforclosure (so he doesn’t get his money on the deal) you can be sure the friend will quickly be fired and sued by the lawyer.
So, your benefit to the list is pre-foreclosures and is only a benefit if the people have not had any legal notices in the paper yet. AND a list like the one that FADI mentioned would be a step better than yours.
I appreciate your response. I am going to have a talk with my connect then because if it can risk his job then it is definitely not worth it and I do not want the burden, unless there are contacts he can give me that the firm stopped working on but are still distressed properties. Thank you.
As far as the $100 is concerned what happens is if no one bids at the sale the trustee, lawyer, or representative (whatever you want to call them) for the bank will purchase the house back at the auction for that amount. The reason they do this is the more the sheriff auctions the property for the more commission they collect for the sale. This happens in my area all the time. It is an unspoken rule with the experienced buyers in North Jersey
What you can do is find out what houses are bought back by the bank, find out who the asset manager is, contact them, tell them you would like to make an offer.
The key to this strategy is that when you talk to the asset manager for the bank they are most likely going to tell you they are going to list the house with a real estate agent. What you are going to say to them is that you understand that they have a system they follow and that you do not want to interrupt that system. They can to continue to list the property but all that you are asking is to make an offer and if you can come to a meeting of the minds they can dispose of that house that much quicker.
