Kirkland, WA · Member since 2017 · 16 posts · 2 votes
Hi everyone I have a question about pre-foreclosure SFRs.
1. Is it possible to wholesale a pre-foreclosed property and save it from going to auction?
2. If you get a response from a direct mail campaign to homeowners in pre-foreclosure, how do you begin the process? Do you have to have an agent negotiate with the bank, or can you just come to an agreement with the owner? Where is the bank involved, if at all?
3. Can you use a typical "and/or assignee" Purchase and Sell agreement, or is there a more technical, legal process involved?
4. Do you have to pay anything at the time you put the property under contract?
Thanks for any guidance you can provide!!
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
9y
Preforclosue simply means the owner's lender has filed a NOD (notice of default) and if enough time has elapsed, a NTS (notice of trustee sale) for failure to make timely mortgage payments. If you enter into a purchase and sales agreement with a seller in pre foreclosure or any other situation, you still need title, escrow, etc to perform the transaction (or a closing attorney).
That said, trying to wholesale a deal where your sellervid in preforeclosure and you do not have the capabilities or intent to close on the transaction unless you find a buyer, you are getting yourself in a whole lot of potential legal trouble. If you don't find a buyer and you gacknout, then that seller is foreclosed on because they don't have enough time to find a new real buyer, you could be in for a lovely legal battle.
Investor · Los Angeles, CA · Member since 2012 · 1k+ posts · 500 votes
9y
Mortgage servicer's won't allow a party to wholesale a contract. Short Sale Approval letters are buyer specific. The mortgage servicers are involved from beginning to end. For a wholesaler to get paid on a short sale, they need to get more creative, have trust in the buyer, or step into the grey area.
An agent would need to be involved due to investor guidelines in having the property listed for sale.
Hi everyone I have a question about pre-foreclosure SFRs.
1. Is it possible to wholesale a pre-foreclosed property and save it from going to auction?
2. If you get a response from a direct mail campaign to homeowners in pre-foreclosure, how do you begin the process? Do you have to have an agent negotiate with the bank, or can you just come to an agreement with the owner? Where is the bank involved, if at all?
3. Can you use a typical "and/or assignee" Purchase and Sell agreement, or is there a more technical, legal process involved?
4. Do you have to pay anything at the time you put the property under contract?
Thanks for any guidance you can provide!!
Is this a pre-foreclosure or is it a short sale? Reason being that a short sale requires the lenders involvement whereas a true pre-foreclosure with equity can be purchased outright by just paying off the lender and any legal fees.
Kirkland, WA · Member since 2017 · 16 posts · 2 votes
9y
Hi @Paul Amegatcher, I heard that trying to wholesale a short sale is walking a fine legal line, so I'm going to stay away from that for now.
But with the pre-closure process, do I just get a lead and do the sale contract between just me and the owner(s), no agents involved? And when I buy the property I'm just receiving the owner's equity and then paying the lender back and any other liens and legal fees right (or if I'm wholesaling, the investor would then be paying those fees)? Is there anything else involved?
Hi @Paul Amegatcher, I heard that trying to wholesale a short sale is walking a fine legal line, so I'm going to stay away from that for now.
But with the pre-closure process, do I just get a lead and do the sale contract between just me and the owner(s), no agents involved? And when I buy the property I'm just receiving the owner's equity and then paying the lender back and any other liens and legal fees right (or if I'm wholesaling, the investor would then be paying those fees)? Is there anything else involved?
Thanks!
A preforeclosure sale would be just as you described. You would enter into a contract with the owner at a set price(No need for realtors or agents). At the closing all liens, legal fee and judgements will be paid off. As long as the owner has equity and the deal makes sense you can either close on it or assign it to another investor that will be closing on it.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
9y
Preforclosue simply means the owner's lender has filed a NOD (notice of default) and if enough time has elapsed, a NTS (notice of trustee sale) for failure to make timely mortgage payments. If you enter into a purchase and sales agreement with a seller in pre foreclosure or any other situation, you still need title, escrow, etc to perform the transaction (or a closing attorney).
That said, trying to wholesale a deal where your sellervid in preforeclosure and you do not have the capabilities or intent to close on the transaction unless you find a buyer, you are getting yourself in a whole lot of potential legal trouble. If you don't find a buyer and you gacknout, then that seller is foreclosed on because they don't have enough time to find a new real buyer, you could be in for a lovely legal battle.
Business Owner · Madison, WI · Member since 2017 · 79 posts · 59 votes
9y
Use an option, disclose Everything to the seller. Situations like this is why it's extremely important to build a good buyers list in advance as well as have transactional funding lined up if needed. Preparation is just as important as taking action, contrary to popular belief.