if they can sell it in time? Of course. Yes. the NED is the Notice of Election and Demand...and starts the legal process for foreclosure.
@Jonathan Batson Yes, the homeowner still has the right to sell up until the Auction date. Keep in mind when sending direct mail to these prospects that you know how far they are from their auction date so you can plan out the campaign properly.
Make sure you're using first class mail (speed) for foreclosures and also that you've gone through the paperwork process since you don't have much time to act.
When you mention the paperwork process, what are you referring to?
The process of working with a title company or lawyer (location dependent) to close a deal. If you've never done a deal before, you will discover hurdles that require time to solve - for example what if the buyer lies and says there are no liens and there's a tiny lien put on the house by a plumber for $3k? What do you do? Problems like that take time to resolve and you need room in your schedule to move quickly.
It's easier doing another type of deal first before moving to pre-foreclosures because there's no room for error time-wise for some pre-foreclosure deals that are close to auction.
@Ray Lai As long as his contract states that he's buying with "clear and marketable title", the liens will fall out during the attorney's title search. If you are buying a property at a price above the loan amount and the closing date is after the auction date, the seller can submit the contract to the bank to get an extension so they don't auction the house. Even if you are buying below the loan amount, the bank could still hold off the mortgage if there is a reasonable short sale situation.
If my contract states "clear and marketable title" I would assume that the person or entity that put the lien on the property would not forgive the debt they are owed. When you say fall out, what are you implying?
Also, do you edit your state's contract when purchasing a property in pre-foreclosure to state the "clear and marketable title" clause?
Most likely they won't forgive the debt, however, depending on what type of lien it is, you can negotiate a lower amount. In either case, you will be notified of any liens before you close. If the amount of the liens is greater than your purchase amount, you will not be responsible to close.
My attorney and I created a 1 page agreement so I don't use my state's contract. I generally get the property under contract with a contract to purchase and go right to closing. Meaning, I don't use a P&S.
Thanks for the explanation Justin.
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