preforeclosure?? how hard is it to purchase one???

Question

For my next investment, I was going to try and purchase a preforeclosure. Is this hard to do? I'v heard alot of people will get cash offers, and that if I'm doing the purchase with a loan, to not even try. Just looking for any kind of advice that has to do with these.

,Thank you!!!

Marty Boardman · Answer

Being an investor is a lot like being a fisherman, you should have as many lines in the water as possible. I look for deals in lots of places (from wholesalers, the MLS, text blasting campaigns to absentee owners, landlords) and I target pre-foreclosures and auction deals.

All that matters is margin so don't rule out any buying strategies. All that said, I'm acquiring about 90% of my deals now through pre-foreclosure and at auction so it's a great way to find below-market deals. And as Minna mentioned, the transactional process is no different than a traditional purchase.

However, there is a huge difference in the way you contact and negotiate with a homeowner in foreclosure. Homeowners in foreclosure are experiencing a great deal of stress (job loss, medical bills, divorce) so you must be empathetic and a good listener. They may also be angry, in denial, confused, apathetic or all four! So you've got to be patient as well and understand the process enough to explain their options and provide a win-win solution. You may not even need to get a loan if you are creative with the financing (subject to).

Good luck Chad!

Logan McKay Zylstra · Answer

Quick take: Anything worth doing is "hard". You'll see a lot of rejection, but I think the upside is there.

Best of luck Chad!

Jonathan Greene · Answer

It depends where in the cycle they are. If they are about to get foreclosed on, cash will beat you. If you catch them early, just after initial default, you have a better chance of offering more with a loan than investors paying cash, but what you are proposing right now is theoretical depending on how many deals you've done and what your marketing budget is. If you are a brand new investor, you aren't buying preforeclosures because it doesn't make sense to mail the lists just to offer a low-money-down mortgage and be able to do nothing with the overflow.

Minna Reid · Answer

A pre-foreclosure is no different than any other sale, except the owner has defaulted. if the owner is willing to sell to you and the property is financeable, you can certainly use a loan.

Marty Boardman · Answer

I'm curious Corby when you say "hitting up pre-foreclosures"? What are investors in your market doing to target these homeowners?

Corby Goade · Answer

Everyone and their grandmother is hitting up preforeclosures- they're published everywhere. Probably more competition there than on the MLS.

preforeclosure?? how hard is it to purchase one???

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