When is it too late to get a house in pre-foreclosure?

13 Replies

I'm a brand-spanking newbie but I'm eating up all the terrific information I can find on BP!!

In searching auction.com I ran across an old friend's house in pre-foreclosure.  The auction is scheduled in two weeks.  Could I still reach out to my friend and make him an offer?

Chances are slim at best.  Now the home is in the hands of the bank and not your friend. 

Bummer!  Thanks anyway, Curt!

It's my understanding that the house isn't literally in the banks hands untill after it doesn't sell at the auction.

Your friend would have to disclose to you all correspondence from the bank so you can see exactly the funds needed. One of the best ways to do this is to have them sign some sort of information release form so you can discuss their situation with the bank. The sooner you can catch the mortgage up the better to avoid additional attorney fees that the bank had to pay.
The general school of thought is that banks don't want a foreclosure on their books and would rather have the loan/mortgage caught up and become a performing asset.

A slim chance is better than no chance at all.

If there is equity, you simply buy it.

Originally posted by @Wayne Brooks :

If there is equity, you simply buy it.

 I've seen this statement around but still am not exactly sure what it means.

What does it mean when a "property that has had the pre-foreclosure complaint filed against it still has equity?"

How do you figure out if it does or does not? 

If you find that it does, do you proceed with attempting to get it under contract as normal, by contacting the homeowner and making an offer?

Sorry, if you don't know what equity is, you shouldn't be making offers on people's properties, playing with their lives.  I don't think wholesalers in general should be f$$cking around with people in foreclosure...usually just giving them false hope their property is sold, and stringing them along until it's too late for them to actually Sell it to somebody.  What I said was "if it has equity, simply Buy it".  I didn't say "slap a contract on it when you have no intention of buying it yourself".

To your point and question, when is it too late? Within 37 days of sale, there are no requirements for a lender to review any offer to purchase. Outside of 37 days, the lender is prohibited from continuing any foreclosure until the purchase offer is reviewed and decisioned. That doesn't mean the lender has to accept your purchase if its not a full payoff. If it's a full payoff, no reputable lender (yes, I understand that is an oxymoron in and of itself) would proceed with a foreclosure sale in lieu of full payoff. If it's a short payoff and inside of 37 days, your chances are slim to none. If its close to 37 days, chances are slim if you can't get it closed by sale date. Hope that helps.

But like Wayne said, yes, I agree. You should be well versed in the nuances of this side of the business before stepping into the deep end of the pool, as your inexperience could create some unintended drama for all parties.

Originally posted by @Wayne Brooks :

Sorry, if you don't know what equity is, you shouldn't be making offers on people's properties, playing with their lives.  I don't think wholesalers in general should be f$$cking around with people in foreclosure...usually just giving them false hope their property is sold, and stringing them along until it's too late for them to actually Sell it to somebody.  What I said was "if it has equity, simply Buy it".  I didn't say "slap a contract on it when you have no intention of buying it yourself".

Well damn Wayne! Way to support a fellow BP member with guidance and "positivity". I don't think any of us here intend to f $$ck around with people's lives. I'd wager that it is quite the opposite. A lot of people learn by asking questions. There is a more kind way to get your point across. 

Francky,

No disrespect but, I don't think Wayne's post was off base. This is a subject that could easily dessimate a rookie investor in a single click of a mouse so, in my opinion, the poster got what he needed to hear if not what he wanted to hear.

Doing surgery on yourself could have less implications than buying a property in foreclosure. Surgery goes wrong, you lose a finger. Buy a property with your life's savings or worse, the savings of someone else, and one could end up homeless quickly.

Complicate it further with Wayne's correct statement that not only is the investor potentially fubar'd but the borrower is also subject to losing out on saving his/her home by chasing their tail with working with someone that doesn't have a clue what they are doing.

Intending to mess around with someone's life is less important than the act of doing it. While I agree with you that it's probably the opposite, I'd also wager that its the dollar that motivates about 99% of the action surrounding the subject and not the altruistic notion of helping someone out. Nothing wrong with that but let's not sugar coat it with too much "I'd like to teach the world to sing in perfect harmony".

@Francky Bastien No apologies. But maybe a little perspective.  I worked primarily with short sale sellers before getting my license, and afterward.  I've seen countless sellers in foreclosure have their house under contract for a short sale, only to have the buyer simply walk way because they changed their mind, or couldn't qualify, 90-120 days later.  At this point the seller doesn't have time to go thru the short sale process again, and gets foreclosed on.   So, when I see someone attempting to wholesale a short sale, who'll simply walk away I if they can't flip it, or someone just "taking a shot at a preforeclosure" with no real chance of actually being able to buy it, then yeah I'll call them out on it.  You don't have to have bad intentions to f$$k someone over who is in preforeclosure, ignorance will do just fine.

@Francky Bastien

  Many states now have pre foreclosure laws  that preclude those that are not qualified to be assisting a seller.  by qualified I mean a RE broker... Lawyer or RMLO...

We all know there are very smart wholesalers that would be capable.. but because wholesaling on the face has the lowest bar to entry into the RE game... you also have many many who should not be doing this and have no qualifications other than what they read on a public forum websites etc.

And to follow on @Wayne Brooks

 comments.. I have many times walked up to a home that I bought at court house steps consulted with the distraught person who lost it.  And they show me the paper work from some wholesaler  who could not perform.. or even worse the call center type companies that charged small dollars to help  say 1 to 2k and never did a D&%$M thing to help them.

ONe in particular sticks out in my mind was a Lady who had 3 developmentally disable children... when I walked up I and met with her I was like OH boy this is bad... she shows me the company that she hired who promised her the moon and then never returned her calls. and I end up with the house.  Now to be fair the States AGs have really cracked down on those call center dudes like they should have.

But yes... foreclosures and such are complicated and best left to professionals not newbies who really could give a rats' A#$% about the seller they just want to get money if they can

I am new and busting it to get going.

In meeting with a FSBO I noticed the house next door was vacant and over grown with weeds/grass. There is some mold on one wall but looks nice if spiffed up.

Looked up property and noted they owners now lived in military housing.  I wrote a note and mailed it to them.  He called today and told me he just wants to be rid of it.

He and his wife with their baby were first time home buyers and the seller suggested their brother in law to do the inspection.  About a year later they had major sewage problems...sewage in the crawl space, which USAA paid to clean up so a plumber could get in.  Said it is uninhabitable...so they moved to base housing as they could not afford $20k to repair and he was being deployed.

His last payment was in June 2012.  Ocwen Financial has done nothing but occasionally send more paperwork.  He explained to them last week that he will be deployed again in 7 months with no phone access to deal with this.  I am the first and only person to contact him in regards to interest in buying the vacant house.

Tomorrow I will have a title search done and will contact my attorney...as I know I definitely need guidance through this IF I am able to help.

Any advice or input on how workable banks are when they've dragged their feet for so long?  Would they rather sell and get it off the books or is it in their best interest to have it go to auction at some late date after it deteriorates more?

I would like to buy and rent after doing repairs.

All well and good gentlemen. I certainly appreciate your input as you guys are experienced. The point I'm making is very simple though. Respond to others as you would want to be responded to. Remember that you had questions, probably silly questions too when you started. I fully agree that investing in foreclosures is not for the uneducated, uninformed newbie investor. That point can be made and just the same minus the "ripping newbies a new one" tone. That's far from having the world sing in perfect harmony @RonScribner, but that ain't a bad idea either LOL

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Join the Largest Real Estate Investing Community

Basic membership is free, forever.