HELP! NOD approach, how do you do it?

Question

I've found some great NOD's, how do i go about approaching them?  I figure a letter (initially), but how should I organize it?  Then what?  Please help!

Jared B. · Answer

Flipper101, I see your point.  You've pretty much nailed where I'm at too.  I've been reading everything I can find on pre-foreclosures right now.  This would be my first deal, and honestly, as I intend to work my way into REI, specifically development (as opposed to wholesaling) I'm currently trying to get into a personal residence (that I can develop, and begin building capital, of which I have little (a meager $45k to be exact).  My father is my partner, he needs the write-off.

So that being said, I've found some good information from many including mitchnfreed as very helpful (other threads included).  Clearly I'm scratching the surface at this point but I've gotta start somewhere.  Here's what I've got:

1) Educate myself on the details of a Pre-foreclosure deal in CA.

Re: Foreclosure Consulting - Civil Code# 2945-2945.11 does not apply as far I can figure, I don't intend to request any money from the owner 
Re: Equity Purchasing C.Code#1695-1695.17 doesn't apply since the property will become my personal residence.

2) Have financing in line and ready to go, as well as some "help-them-move" money (how much though?).

3) Check to see if property is listed.

4) If so, contact their agent (& then lender) through my agent (I need to find a new agent and now I know they need to be familiar with Pre-foreclosures).  If not, contact homeowner myself, in a non-threatening way (my thought was to make it personal by explaining a little about myself/situation - hoping it would help get me in the door- via a letter (with my family pic, though some disapprove).

5) I should know and make them aware of their time-line and help educate them on the process of what they will be going through in foreclosure ("Foreclosure" not to be mentioned in a letter) and what will happen should they let me pay-off their mortgage.  So they will better understand my position and theirs.  I will not tell them I can save their credit, or make any other false promises.  Also, refer them to a real estate attorney to back up any claims I've made, further shoring up the relationship.

6) Should they ignore my letter I would approach them personally at an undetermined point-in-time (maybe a week?) before foreclosure.  I would try to get a friendly conversation going, soft sell, regarding what are they planning on doing - steering them towards their smartest solution.

I don't know how to figure an offer for Pre-foreclosure.  What I've gathered is that current recommended for wholesalers is ARV less 30%, I would offer more, maybe ARV less 20-25%.

I'm learning at breakneck speeds here and am thinking about finding a mentor in REI, just not quite ready yet (currently I have you people).  Anyhow, thanks for reading, helping, and any other info you're willing to pass along.  It's all highly appreciated.

Mitch Freed · Answer

My first step would be to call my good friend who is a real estate agent and have her look up each NOD to see if they are listed on the market.

You may find that these homes in default have been listed on the market for some time and they have been dropping the price substantially each week...until they get to the point where they are listing at what the seller owes the bank..maybe even listing at less to attract offers.  Since most banks require a listing history for a short sale...you will want to target homes in default that are actively listed on the market.

Now for the homes that aren't listed...you can try and approach the homeowners, and you may get the door slammed in your face a lot, if they are even home.  Knocking on doors is pretty time consuming and a lot of investors won't do it.  Not to say that you won't have success with a home here and there...but if you have a real estate friend who would be willing to either call or talk to them to see what their intentions are...that is a less threatening phone call.

Bruce M. · Answer

I dont think the letter is the way to go.  I get stuff like that all the time in the mail.....its just part of the never ending stream.

Nothing is going to top just approaching them.  But you better have your spiel prepared.