Preforeclosure, is this owner motivated?

Hi all.
I’ve posted several questions and always received helpful reply! So thank you all of you who helped me.

I have found the property which is preforeclosure.

The owner purchased the house 1998 about 200k and value of the house (regarding comps) is $450k now. However, they (wife and husband: owner) have financial difficulty and can’t make a mortgage payments.

I have talked them about option and l/o; however, they just don’t want to give up the house since they’ve lived the house about 7 years and just can’t loose the house. Well, I do understand…They said that the last option they have (what they think) is to list the house and sell 450k.

Honestly, this is the type of scenario I usually encounter.

Most of the time I talk to the owners,
(1) they want to keep the house
(2) they don’t want to be responsible for the loan if they agree l/o
(3) they think money will come before foreclosure

Do you think should I just walk away from this kind of sellers and contact later? or is their any better approach?

Thank you!

Good Afternoon Amanda,

Lesson Number 1 on L/O’s. You NEVER want to do a L/O on a Foreclosure. Their credit is getting wacked the longer they sit on the Non Payment of their loan.
You always want to either Hard Money purchase the house or do a Sub 2.
You want to get the deed of this house, not to do a sandwitch L/O with them.
If they were not in default on their payments YOU could than go for the L/O…

My recommendation on this property would be to back out. Move on to the next one! They don’t seem motivated enough to sell the place. Most likely, the bank will foreclose on the house and than you’ll be able to purchase the house at a discount in the future!!!

Good luck w/whatever choice you end up doing!!!


Hi Money-money-money

Thank you for your reply.

I have talked to the owner (since I promised to call them) and you are right. They are not motivated enough. Their No. 1 interest is to find money and stay the house. I mentioned sub2; however, they don’t want to be responsible for the mortgage. They have to move out and still reponsible for the mortgage just didn’t make sense to them. I wish all their luck and tell them to call me if situation changed.

So when you find owner whose house is preforeclosure (not foreclosed yet), do you approach sub2? (after they understand that they HAVE TO move out the property) As you know, the owner is usually behind payment (that’s the reason why their house is in preforeclosure). So I usually simply ask, their loan details. Their credit is already wacked because of default of the payment. Then when I asked what is the least amount they can accept if I pay all cash, their answer is ALWAYS top market value.

Well, am I just dealing with unmotivated seller???


Yeah, Your not really dealing with motivation. Your number one goal in REI is to create a win/win… When you find someone in PRE foreclosure. You mention to them that YOU, as the savvy investor, can save their credit by bringing their payments current and taking over their payments from there on.

NOW, if you can get to this point, and you get the deed, and the house is yours, THAN and ONLY than do you do a L/O. and the nice thing about this SUB 2-L/O is its on your terms. No going back to the seller for anything :wink:

Keep your eyes open, you’ll find those motivated sellers!! I send out post cards to Pre-Foreclosed houses. From the first day they come out, untill 3-4 weeks later. If I dont get a response back by the 4th week, i’ll cold call them… Usually at this time they are desperate and EXTREMELY motivated!!! :smiley:

Good Luck!!!


explain “getting the deed” portion of your story. How do you get it? What effect does it have on the preforclosure process in relation to the bank?

Thank you for your reply Money and Flyer.

Money, you are right. When owner (preforeclosure) called me, they are NOT motivated enough. Well, I have to say that they are more motivated than the one doesn’t call me. Yet, they still can keep the house. So I should say that I am an investor and help them to taking over the payment but they have to move out the property up front.

I usually send letters almost right after preforeclosure is in process. So at this point, maybe owners are not really sure what’s going on. Then, I send 2nd letter about 4 weeks later. Maybe I should start calling to them after 2nd letter.

When you call preforeclosure owners (or when they call you), do you approach sub2 up front before getting their payment information? Or do you ask them what they want first? I usually, ask them what they want (and may be this is wrong approach?) and as you can imagine, they say “I want to make payments and keep the house”

In addition, I came across sellers whose properties are listed by realtor because they think reltor can sell the house at top market price. That’s maybe true but when the house is listed, I am not sure how I can approach.

Thank you for your help.



I see a couple of problems here.

First, if you are sending out letters/flyers or have a “we buy houses” ad/sign and people are calling you, they are motivated. The fact that they picked up the phone to call you is a dead giveaway. People who don’t care if they sell their home or not would rarely, if ever, reply to these things.

Second, if they are calling you and they are NOT clear that you BUY houses (as opposed to financing help for troubled homeowners), then it’s not the sellers that have the problem. Either your ads don’t explain it clearly, OR you are conveying that message to them, either directly or indirectly when talking with them.

Don’t get me wrong. It will occassionally happen that you’ll get a call from someone that is just “kicking the tires” with your ad. They WANT to sell. They’ve seen your sign and are motivated enough to call. However, they may not be motivated enough to accept your deal. Again, though, the reason here may be one of two. One, they honestly don’t/can’t/aren’t ready to accept that deal, or two, the offer wasn’t presented in a way that it appeared win-win to the seller.

I don’t know how you explain the process of sub2 to your sellers, but from your posts, I’d gather that it might have something to do with the seller’s resistance to it. John Locke has a course on Sub2 investing that goes into great detail on how to deal with the seller. If you’re considering Sub2 investing, I’d suggest reading it.

Third, you say that they bought the property for $200k in '98 and that it is now worth $450K. That’s an average of a 15% per year increase in value. Definitely a hot market. IF all you are offering is to take over payments on their property, then yeah, I’d guess that they aren’t motivated enough for that.

I can easily shave off 20-30% from the FMV of the property and the sellers will agree to it. Using 30%, that gets the purchase price down to $315K, or $135K off the FMV. That means you would have to come up with $115K+ as a down, just to take over payments.

If the market is really hot, and it sounds as if it is, then the sellers could list for $350-400K, probably sell it for more, and sell it within days of listing.

I’m not saying all this to get you down, but it’s important to know your market. Your investing strategy has to conform to the market.

As for these sellers, the first thing to do is let them know that they can’t stay in the property. If they are unable to pay the bills now, then getting a new loan isn’t going to help them because those payments will be higher. However, you CAN help them save their credit AND receive the most money for their equity in the fastest time possible. IF they want you to work with them, you can immediately take over the payments on the property, and upon them moving, give the $X amount down (usually enough to cover moving into an apartment/rental). From there you will list the property and hold it to sell it for the highest amount possible AND split the profit with them at closing.

Using that, say sell conventional, putting it up with a GOOD REALTOR and it sells for $450K (because you won’t take any less). Assuming about 10% for closing costs, that leaves a profit of $205K. Knock of the $5k for expenses, and you’ve got a smooth $200K to split. Even a 70%-30% split leaves you with a $60K profit.

hope it helps,


Roger J

Thank you for your advise and info.

I haven’t talked to many sellers yet and I know that I need more experience. Like you said, the seller maybe motivated enough but don’t like my offer or just don’t understand what is “We buy house” means when they received my letter. My letter is 3 pages and explains (1) we can take over payment (2) we are NOT realtor (no commission to pay). There are many different options such as l/o, sub2, short sale etc…so my letter doesn’t mention details. As you said, “take over the payment” make seller think that we will take over the owners payment while owners are staying the house.

The market here is very hot. Needless to say, it depends on the area, but most of the area I know (in my County) increased the value about 10 - 15% a year.

When the seller own the property for long enough to have equity, I guess they will list the house. So my focus is to find the seller who has little or almost no equity.

As for these sellers, the first thing to do is let them know that they can’t stay in the property. If they are unable to pay the bills now, then getting a new loan isn’t going to help them because those payments will be higher. However, you CAN help them save their credit AND receive the most money for their equity in the fastest time possible. IF they want you to work with them, you can immediately take over the payments on the property, and upon them moving, give the $X amount down (usually enough to cover moving into an apartment/rental). From there you will list the property and hold it to sell it for the highest amount possible AND split the profit with them at closing.

A couple people mentioned about John Locke’s sub2 materials. Don’t get me wrong, I believe his materials are great. However, after spending a lot of money (at least a lot for me) for REI materials, I am not comfortable keep spending for the materials. I know that education is very important. I will look into his materials anyway.

Thank you very much for your help!

Good Morning Amanda,

Roger said it all in detail. Point well presented.

One after thought on you LETTERS your sending out. Your sending a short noval to someone who dosn’t know who you are. Try sending out a post card to them, Short and Sweet. Make it look presentable to them when they look at the address, all they have to do is flip it over. And they’ll see something like:


This makes them look at the card and think!!! HMMM could this person really get me out of this trouble I am in???

Try some other way besides the 3 page letters your sending them. You might get more responses!!!

Good Luck!!!



I understand your concerns of REI material. I’m very careful as to where my money goes. I also understand that you may have spent alot on REI products. I know a gentleman who has spent upwards of $10K on products, seminars, books, courses, bootcamps, etc and still has yet to make a deal. I don’t recommend fluff material, so please understand, we I recommend John’s stuff, I think that it is top notched. Spend money on quality education, not quantity of material.

And no, I don’t think that you have to look for people with little to no equity. The example that I gave that you highlighted is just one way to work with people that do have equity.

And Money is right on the point. You don’t want your customers trying to read thru a 3 page letter. At worst, you want 2-3 short paragraphs, though I too believe that the postcard works best.

Money’s suggestion is good, but I prefer to use language that tells the customer what you can do for them as opposed to what you do. Example: SELL YOUR HOUSE FAST! No agents, No hassles, and NO B.S. CALL NOW!

You can also dramatize the postcard a bit. Example:
In Foreclosure? Job transfer? Need to sell quick?
WE CAN HELP. We can close on your property quickly and give you CASH to help you move on with your life.

With these short blubs, you’ve let them know that you are buying their property (sellers move, owners stay), that you can close fast, that you pay cash (even if it’s just a little upfront $$$), and most importantly, that you understand their pain and are willing and able to help them fix it.

hope it helps,


Hi Roger

Thank you for your advise.

Yes, I know that we all need to educate ourselves and it’s not free.
Well, after spending money and start taking action is quite big step for me (even though not deal yet). Everybody is different and I learning one step at a time…

When I send out the letters, I usually enclose my business card. It says “WE BUY HOUSE” (bright color) and other side is message to the owner like “In foreclosure? 100% finance? Job Transfer? We can help. We are NOT realtor so no commission to pay. Call us today at 1-800-xxxx” Maybe I should use the business card as a postcard.

One of the materials I learned (I’d rather not to say what material) suggested long letter. They don’t say longer letter is better than postcard but they said when someone received the letter and called you, it means at least the person read your letter and serious about selling their house. Each strategy is different. I will consider postcards, too.

It is actually easy and cheaper…

Thank you so much! ;D

Well, let’s put it in perspective then, Amanda.

When the notice of defaults hits the papers, these homeowners are usually hammered with letters, postcards, etc. offering to buy their home, save their credit, or loan them money so they stay. So you have to put something in their hand that they will want to read.

Put yourself in their shoes for a moment. You’re behind on your payments, the notice has been received, and you don’t know what to do. You get three pieces of mail.

One is a postcard that says, WE BUY HOUSES! Call XXX-XXX-XXXX

One is a three page letter saying that the company is willing to buy your house and goes into detail over it.

One is a postcard/short letter that says, In Foreclosure? Job transfer? Need to sell quick?
WE CAN HELP. We can close on your property quickly and give you CASH to help you move on with your life.

Question is, which would you choose? Personally, I’d quickly dump the 3 page letter because I need help NOW, not going through a whole lot of reading that I don’t understand.

I’ll call the card/letter that says that they can help me, that they buy properties in foreclosures and that they give me CASH (cash is what I need).

I’ll put that we buy houses ad next to all the other ones and call them if this one doesn’t pan out.

I know that I’m biased here. However, my knowledge comes from actual responses from homeowners/sellers. Still, take it for what it’s worth.

Another point when advertising to sellers. ANSWER YOUR PHONE. These people want help NOW. If you don’t answer, they usually just hang up and try the next number. 90% of sellers will sell to the FIRST person that they talk with (btw, it’s the same with RE agents. 90% of the customers will list with the first agent who answers the phone).

Also, if you’re a local company advertise as such. People like to deal with local companies, so if you are, I’d ditch the 800 number and use a local number instead.

hope it helps,


Hi Roger.

Thank you again.

Yes, you are right. As you said, when I think about owner’s situation, simple postcard which is reasy to read and say something “we buy houses” “All cash” etc…will catch my eyes. In addition, no matter what the card says, you will see the postcards. (I mean, when you send letter, it’s up to the owner if s/he will open or not)

I have business card which said “we buy houses. Is your house vacant? Need repairs? Are you in foreclosure? We buy youses from people in situation just like yours…”

I am checking to use the same design to order postcars.
Honestly, when I think about the cost, it will be cheaper than mails. :slight_smile:

Regarding answering the phone, I have live answering serv. which will ask all the questions I need to call back. Since I have my regular job (hopefully, REI will be my regular job sometime!), I can’t answer the phone. I have answering machine for the business; however, like you said, I received many hang up call.

Thank you for your help. I really appreciate your help and advise!


Hello Amanda,

Just a recommendation, if you don’t already, is that you ad on “24hr recording” or something of that sort next to your phone number!

This MAY prevent some of your hang ups!!!

Good Luck!!


Hi Money.

Thank you for your advise. I put “24hrs 7 days a week” next to my toll free phone number. However, I believe that live answering service has more reply than answering service. We are more comfortable talk to person than recording to machine… :slight_smile:

I have to adimit that I need to learn about marketing, too.
Everyday is learning for me…baby step…but I am learning here!

Thank you!