An irregular real estate transaction (pre foreclosure)

[Jared Siraco]

I am writing to request expertise regarding an irregular real estate transaction (pre foreclosure).

The property I am following and would be interested in purchasing, is not listed for sale and the owner has yet to receive a Lis Pendens from the creditor. Based on information that I received from a friend living next door to this property, the property owners are defaulting on their mortgage and have backed taxes. I confirmed the Tax Liens totaling almost $6k over 3 years. And, based on the 4 of what I'm assuming are Equity mortgages taken out in roughly 6 month increments (Each to release the last). With values starting at $80K on the first loan and ending at $340K, I am assuming that my source is correct.

[/b]So now to my Question:

What is the right move here?

1. Should I approach the owner before they receive notice of Lis Pendens and or enter Foreclosure?

2. Should I contact the Creditor?

3. Should I wait for it to go into Foreclosure?

4,5,6 ?

Thanks for your time!

[Monica Breckenridge]

Jared Siraco The homeowner should know how much they owe on their loan. Most of them won't know what liens they have on the property. Once you get them to cooperate you need to order an o&e from the title company. This will show what liens are on title and if there are any judgements. I typically mail people in foreclosure and they call me when they are ready. In my letters, I explain the short sale process to them. But if you are trying to get somebody before they are in foreclosure, you can try to track them down by doing some investigating. You an also write them a letter.

What will their reaction be? Well that depends on the homeowner and what stage they are mentally. Here are the types of homeowners you will encounter:

Seller in Denial
Sellers in denial are homeowners who haven’t admitted to themselves that their home is really in foreclosure. They have not yet accepted this fact. This type of homeowner generally ignores bank letters and public trustee notifications because they have not yet grasped the fact that they are losing their home. When you confront a person in denial, they may tell you they are not in foreclosure or they have already taken care of the problem.

Angry Seller
An angry seller is a homeowner who is very upset and generally looks to blame someone else for their current situation. They usually blame the bank that is foreclosing and say how they won’t help them or how they are wrongfully foreclosing on their house. The angry seller may slam the door in your face. It is best not to be confrontational with this type of person as they may become verbally abusive and get very angry. If you are able to get this type of person to open up, it is best to agree with them. You can make comments such as, “I can’t believe the bank would do that to you,” or “I heard a similar story from another person trying to do the same thing with that bank and it seems like they just want to screw you.” Just agree with them and be on their side.

The Sad Seller
The sad seller has begun to accept responsibility for their situation and what caused them to get to the point of foreclosure. They have stopped blaming others for their financial situation. This leaves the homeowner very emotional about their situation, but they are in a mental state where they are much easier to talk to. They are more willing to accept help, and you can usually sell them a deal when they are in this stage.

The Acceptance Seller
When a homeowner has finally reached the point of acceptance, it is the best and easiest time to contact them. If you have already contacted the homeowner prior to this point, this is the time when they are most likely to contact you. They have finally accepted the fact that they are losing their home and need help. Unfortunately, many homeowners do not reach the acceptance stage until right before the foreclosure date. You will get more deals from desperate homeowners at this stage; however, it is best to try to have them sign a deal prior to this time so there is time to postpone the foreclosure.