How to successfully complete a preforeclosure?

How does a novice complete a pre-forclosure? What forms need to be used and how is the transaction completed successfully? Thanks in advance for feedback.

Harold :slight_smile:

You might have better luck if you describe what state you’re in and what you already know and ask specific questions. What you’re asking is so broad it would take a couple of days to explain. I’d suggest searching this forum or grabbing a book.

Thanks for the quick reply. Sorry, I didn’t realize I was being so vague. I suppose the question demonstrates just how novice I really am. I live in California. The steps I’ve been told to take in a preforeclosure are; locate a property, contact the property owner, analyze the owner’s situation and the property, and make an offer for the property. What’s the best way to do that and what legal forms would I need?

I’m in CA to. Sounds pretty much right. Here’s some caveats.

You should intimately know California Civil Code 1695

A short overview is:

  • If the property is the primary residence of the owner, it is 1-4 units, and you do not plan on moving into the property then:

You must use an equity purchase agreement (EPA), give the owner 2 copies of a notice of cancellation, wait 5 business days starting the day after they sign the EPA before; closing, recording or asking the owner to record any documents, and giving them ANY consideration. There’s a few other restrictions that are detailed in CC1695.

  • If the any of the first criteria are not true then you can just use a standard sales agreement.

You can get the forms from First Tuesday or go to Ward’s site.

You can use a foreclosure data service for your county. Here in So. Cal there are a few like county records research which I use because they include all the loans.

Door knocking, mailing and taking calls, calling the NODs in the legal newspaper, classified ads, etc. Door knocking is probably the best right now.

That’s it in a nutshell. There’s days of study in all that so good luck.

Do you invest in the Inland Empire (San Bernardino County area) of California? I"m a newbie who is focusing my resources in the Apple Valley, Victorville area. I was just curious as to whether you invest out this way as well.

I would consider any investment and/or joint venture as long as the numbers make sense and there is a profit when all is said and done. How about you?

I’m only in San Diego but I checked out Apple Valley a couple years ago right when it was booming. There were still a bunch of lots but they were all bought up by developers. Is that still the case?

The thing I liked about Apple Valley is that I knew older people from San Diego who sold their houses and moved up there which made me think it was an older community. Then they built a big 55+ complex which pretty much confirmed my thoughts.

If you believe folks like Bruce Norris, those outlying areas will be the first places to get hit by the cycle turning over. Could be a lot of opportunity as long as they still have a buying populace. Good luck.

That sounds like fantastic advice – which leads me to a more specific question …

Here is the scenario:

  • I am currently working with a Seller that is in Pre-foreclosure
  • They owe 110,000 on a property & the comps are coming in for an estimated value of 108,000 – NO EQUITY
  • Additionally, there is a 700 tax lien on the property
  • Their financing is a wraparound mortgage & they are in default for 11 months worth of payments – therefore, total owed is approximately 13,000 to stop foreclosure
  • The lawyer fees have also been assessed to proceed with foreclosure


  • If I step in now – am I also responsible for legal fees from the foreclosure proceedings?
  • Also, I plan to go to the bank directly and negotiate a short sale… what is standard process?

When you make an offer, you typically look at it from the following
a) What does it cost to fix up if any
b) Are there many homes for sale in the same location. High
inventory means pricing pressure in the lower direction.
c) If you think the house needs no work and the comps are close,
and you can appraise it for say 100,000 , then make an offer around say 82k. If there is work, then discount that cost from the
82k. 20% discount is not bad in a decent location. You can go
lower depending on the local market.

My 2 cents