My name is Chris Humston. I am a real-estate investor in Nashville, TN. I am fairly new to the game but have done some REO’s and rehabs. Recently I’ve been growing more interested in pre-foreclosures. It seems like a great way to make a fortune. But here’s my question: How the heck do I get everything in order before the house goes to auction? It seems almost impossible. I had 3 homeowners respond to letters I mailed out, but each deal only had 2 days before the auction. I am not at a point yet where I can just write a check for a house. I still depend on a hard money lender. Maybe that’s where the problem lies? If someone could tell me the next step that would excellent. Thanks.
Hi Mr. Fancypants,
I’m Suzanne, live in the Bay Area of Northern Calif., I’m relatively new also. Working on wholesaling preforeclosures. Our market is pretty strong, so most people in default can sell their house before it goes to auction, but you can sometimes find that perfect deal.
I recommend reading “Making Big Money Investing in Foreclosures without cash or credit” by Peter Conti & David Finkel. They have alot of good detailed information. If you find a good deal and it’s close to the Auction date, depending on the state’s process, sometimes you can contact the lender to delay the auction, they might, if they know the house is being sold.
Good Luck!
Thanks for your response. I’ll have to go buy that book. Do you know how I go about stopping the foreclosure process once me and the homeowner come to an agreeable price? Is it paper work and as easy as calling the attorney? What would happen if I successfully stop the foreclosure process, but something falls through with my lender. I would feel really bad and I am sure the homeowners would want to kill me. Thanks.
Hi,
You can’t really stop the foreclosure process until the lender is paid what is owed, default payments, interest, fees, etc. So you have to make sure YOUR lender can deliver. This process is usually done at closing at the title company or escrow company. Also, make SURE you have in your contract when the homeowners are to move out and do NOT give them any $$ until they are out of the house.“Cash for Keys”. I’ve heard horror stories of investor’s trying to be helpful and after they give $$ they can’t get them out of the house, tons of legal fees, holding costs, etc.
If you haven’t already, sign a Power of Attorney agreement with the homeowners, so you can talk to their lender. Talk to an attorney in your state for advise on the paperwork, or you may get the information from a local Board of Realtors in your area.
Hope this helps!
Suzanne
Thanks. I think it’s making more sense to me. I have a couple REO/rehabs in the works but once those are done I think I am going to jump into the pre-foreclosure market. Take it easy in Cali.
Hello thanks for your advise, yes I will return some advise. You see, I have had that same problem and thats why I looking to get those people in pre-foreclosure before they hit the served letter period or even if they have been served within a 30 day period is ok! As far as your question on what to do check with owner and find out what they really want that will solve their problem. Maybe find an investor to help with the financing that has good credit. Or if you find them early enough you can front the rearages on the loan if they give you a Deed.