Found a home in "Pre-Foreclosure", now what?

6 Replies

I found a home nearby my that is listed on Zillow as a pre-foreclosure.  Yes, I know that zillow's information can be outdated.  Which is why I'm here, asking what are my next steps to figure out if this is a good deal or not?  

Do I go and knock on the door and talk to the people living there?  Call the foreclosure agent?  

Joe,

Pursuing multiple options is the way to go. Call (although they probably are hiding from creditors), send mail (in case they moved), and/or go visit. You can talk to the FC agent, but likely you won't get much. They are better at talking when the mortgagee authorizes them to talk to you in WRITING. Let the owners know you are there to help if you can. 

Depending on how far in the process the FC is will dictate your strategy. Early on, it's possible to lease, or even assume the mortgage (watch a due on sale clause) for no money in. The later it gets, the more difficult it becomes, i.e. you may need to put some cash in to get the bank to back off. In all cases, watch the value vs. mortgage. With the run up in values, it's suspect when you can't sell to break even.

One (almost) absolute: Never let the defaulting owner stay in the property.

Hope that helps.

Good Luck!
Jim

If the home is not listed on the market with an agent, you'll need to go speak to the owner of the property. 

Originally posted by @James C.:

Joe,

You can talk to the FC agent, but likely you won't get much. They are better at talking when the mortgagee authorizes them to talk to you in WRITING. Let the owners know you are there to help if you can.... 

Hi James, I have a similar question I hope you guys don't mind me asking. I saw a great house in Irvine on Zillow, and Zillow lists a Foreclosure Agent for the property. Does that Agent represent the current occupant, the bank or me during the process? Can I trust the foreclosure agent as I would my own real estate agent? Do I need to find my own representative? 

Also you mentioned I need to get the previous owner out ASAP. I read somewhere that allowing previous owner some time (like 1-2 months) to stay on the property while he look for a new place is a bargaining chip I can use to get him to lower the price. I'm willing to do this, but is that a bad idea?

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David,

This depends.  Sometimes Zillow puts an agent in on those FC properties that is just an agent,  they aren't actually listing the property. The best thing to do is to try to get in touch with the owner of the property.  If you get in touch with the owner then they can tell you if they have it listed or not. If you can't get in touch with the owner, then you can try the agent listed on Zillow. Make sure you ask the agent who they represent and get it in writing somewhere. 

As far as letting the owner stay,  as long as it's their property they can stay in it. Once you buy it  or otherwise encumber it (lease option,  sub2 etc.) Then they are out.  You can help them to find a rental  (NOT ONE OF YOURS), and maybe pay a security deposit or first month's rent. Letting them stay is a very, very bad idea. 

As far as trusting an agent goes, in any business there are crooks. 99.999% of agents I know and those that I worked with were upstanding, decent folks trying to make a living.  I would trust but verify, since NO ONE is going to look out for you like you. If an agent gives you that wonky feeling, find another agent that doesn't make your guts go all wonky. 

Hope that helps. 

Good luck! 

Jim 

Originally posted by @James C.:

David,

This depends.  Sometimes Zillow puts an agent in on those FC properties that is just an agent,  they aren't actually listing the property. The best thing to do is to try to get in touch with the owner of the property.  If you get in touch with the owner then they can tell you if they have it listed or not. If you can't get in touch with the owner, then you can try the agent listed on Zillow. Make sure you ask the agent who they represent and get it in writing somewhere. 

Hope that helps. 

Good luck! 

Jim 

Great tips Jim! I'll try sending that address a tactful postcard. Thank you so much!

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