Wholesaling a Pre-Foreclosure? (Am I Doing This Right?)

Real Estate Agent · Richardson, TX · Member since 2014 · 511 posts · 161 votes

8y

@Joshua Lindsey The seller need to call the bank and ask for a pay off letter. It's unlikely they will talk to you, as the seller might have to give the bank some sort of authorization to talk to you. I hope you're not entirely relying on realty trac numbers. They tend to inflate the "As is" value which inflates the equity.

Ask the seller to get a pay off letter, have a realtor pull comps and do a walk through with a GC to find out how much it will take to repair the house. If the house is about to be auctioned, you should consider refer the seller to a realtor. Unless you feel completely confident you can find a buyer before the auction date.

0 Reply

Joshua Lindsey

OP

Newburgh, NY · Member since 2017 · 13 posts · 9 votes

8y

Originally posted by @Account Closed The seller need to call the bank and ask for a pay off letter. It's unlikely they will talk to you, as the seller might have to give the bank some sort of authorization to talk to you. I hope you're not entirely relying on realty trac numbers. They tend to inflate the "As is" value which inflates the equity.

Ask the seller to get a pay off letter, have a realtor pull comps and do a walk through with a GC to find out how much it will take to repair the house. If the house is about to be auctioned, you should consider refer the seller to a realtor. Unless you feel completely confident you can find a buyer before the auction date.

@Daniel Moctezuma Is the payoff letter a necessity?

It seems as though the account for the outstanding balance is going through a collections agency of some sort. I'm still trying to sort the details out by getting that response to my email, but I feel it may be able to work. I do agree they won't want to speak to me as I'm not the homeowner.

As for RealtyTrac, I stated in the post that I don't rely solely on those numbers. I do have a cash buyer. He pulls comps and does his own research before he wants to buy. In my experience, none of my buyers will even give the property a thought if they feel it's too expensive in any way, shape or form. I do agree with getting a realtor to pull comps so that I, myself, can physically see what I'm up against, though.

If I refer the seller to a realtor, it kind of defeats the purpose of having me around. As far as he's concerned - according to his attitude - whatever happens, happens. Doubt he'd lift a finger to do anything more with the property. I feel as though asking him to sign a contract may even be too much - but given the incentive (10 - 15k I offer) it may be motivation for him indeed.

There is also no real indication that it is at or heading to auction anytime soon.

0 Reply

Account Closed

Real Estate Agent · Richardson, TX · Member since 2014 · 511 posts · 161 votes

8y

@Joshua Lindsey Well, without the payoff letter you won't know how much he is stuck as realty track is just an approximate (and could be way off too). This will help you determine the exact amount of equity after all lender and legal fees taken into account. after you get the payoff letter, find out repair costs and ARV. Then get your contract signed.

Stop by the house and make the call with them if you have to.. Sometimes you need to hold their hand throughout the transaction as most sellers are clueless about the process.

1 Reply

Ron S.

Paradise, CA · Member since 2015 · 1k+ posts · 871 votes

8y

The first issue I would have is the "reo.com" email. REO? You sure the foreclosure hasn't already happened? The second issue I would have is, if its not REO already, the likelihood of a servicer dealing with you directly as a buyer/assigner is slim to none.

Nothing in your scenario is unique or creative. It's quite typical...someone trying to cajole a disengaged owner into executing a contract without an agent advocating on their behalf for their best interests, and then assigning that purchase contract to an end buyer to get paid with minimal infusion of cash, and doing so before the clock stops ticking. Happens every day and there are countless stories on this board with both successes and failures in the endeavor.

1 Reply

Joshua Lindsey

OP

Newburgh, NY · Member since 2017 · 13 posts · 9 votes

8y

Originally posted by @Ron S.:

The first issue I would have is the "reo.com" email. REO? You sure the foreclosure hasn't already happened? The second issue I would have is, if its not REO already, the likelihood of a servicer dealing with you directly as a buyer/assigner is slim to none.

Nothing in your scenario is unique or creative. It's quite typical...someone trying to cajole a disengaged owner into executing a contract without an agent advocating on their behalf for their best interests, and then assigning that purchase contract to an end buyer to get paid with minimal infusion of cash, and doing so before the clock stops ticking. Happens every day and there are countless stories on this board with both successes and failures in the endeavor.

Everyone’s situation is unique. These exact steps were not highlighted in another post. In general, the concept is pretty widely known. I haven’t trademarked anything. I did, after all, ask if I was doing it correctly. Right?

Regardless of if it is a foreclosure:

a) it’s off-market

b) end-buyer expressed interest

c) it’s flipping a contract, not a closing. Procedure should be simple as highlighted.

Just remember, it was on a Li’s Pendens list so the possibility of it going straight to bank owned without it going through... really an on-market preforeclosure, foreclosure or auction stage is slim to none at best.

*In any case, the representatives at FayServicing already told me that I needed the homeowner to request a payoff letter. Once I have that I’m able to get a better idea of the financials and I’m sure I can move forward

0 Reply

John Thedford

Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes

8y

Just make sure and be straightforward with the owner that you have no personal intention of buying the house. If they still want to deal with your kind I wish them all the luck in the world.

3 Reply

Wayne Brooks

Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes

8y

I’m guessing you haven’t done a title search for other mtgs/liens. If you really think a property is worth $184k, with a $20k debt and the owner doesn’t care......you’re missing something.

2 Reply

Ron S.

Paradise, CA · Member since 2015 · 1k+ posts · 871 votes

8y

Originally posted by @Joshua Lindsey:

Originally posted by @Ron S.:

The first issue I would have is the "reo.com" email. REO? You sure the foreclosure hasn't already happened? The second issue I would have is, if its not REO already, the likelihood of a servicer dealing with you directly as a buyer/assigner is slim to none.

Nothing in your scenario is unique or creative. It's quite typical...someone trying to cajole a disengaged owner into executing a contract without an agent advocating on their behalf for their best interests, and then assigning that purchase contract to an end buyer to get paid with minimal infusion of cash, and doing so before the clock stops ticking. Happens every day and there are countless stories on this board with both successes and failures in the endeavor.

Everyone’s situation is unique. These exact steps were not highlighted in another post. In general, the concept is pretty widely known. I haven’t trademarked anything. I did, after all, ask if I was doing it correctly. Right?

Regardless of if it is a foreclosure:

a) it’s off-market

b) end-buyer expressed interest

c) it’s flipping a contract, not a closing. Procedure should be simple as highlighted.

Just remember, it was on a Li’s Pendens list so the possibility of it going straight to bank owned without it going through... really an on-market preforeclosure, foreclosure or auction stage is slim to none at best.

*In any case, the representatives at FayServicing already told me that I needed the homeowner to request a payoff letter. Once I have that I’m able to get a better idea of the financials and I’m sure I can move forward

I agree everyone's situation is unique. Where they end up with their unique situation isn't.

"on market preforeclosure"? I'm guessing you mean a home somewhere in the foreclosure process (As is the case in your scenario) that's listed on the market? "Lis Pendens" by definition means pending legal action so, I wouldn't go buy that new to you BMW just yet thinking this thing has no chance (Or as you put....slim to none) of going through foreclosure.

Are you doing everything right? The answer depends. To the person being fleeced? Probably not but then again, you aren't looking to help anyone out but yourself, and if the owner is too tired or naïve or distraught to exercise any further effort on saving their home or selling it for money in their pocket, better you get it than someone else right? I get it...

Good luck on your endeavor. Let us know how it turns out.

1 Reply

Joshua Lindsey

OP

Newburgh, NY · Member since 2017 · 13 posts · 9 votes

8y

Originally posted by @John Thedford:

Just make sure and be straightforward with the owner that you have no personal intention of buying the house. If they still want to deal with your kind I wish them all the luck in the world.

The owner is aware I may assign the contract to my end-buyer. There are pros and cons to dealing with an investor like there are pros and cons to dealing with a realtor. Luck isn't needed, just sheer honesty and communication.

0 Reply

Joshua Lindsey

OP

Newburgh, NY · Member since 2017 · 13 posts · 9 votes

8y

Originally posted by @Wayne Brooks:

I’m guessing you haven’t done a title search for other mtgs/liens.
If you really think a property is worth $184k, with a $20k debt and the owner doesn’t care......you’re missing something.

No, not yet. Both my partner and I are heading to the County Recorders office for the appropriate documentation. $20,000 is a starting point, especially since that was out of the homeowners own mouth. Of course it isn't going to be $20,000. There are HOA's, Property Taxes and legal fees that must be accommodated for.

0 Reply

Joshua Lindsey

OP

Newburgh, NY · Member since 2017 · 13 posts · 9 votes

8y

Originally posted by @Ron S.:

Originally posted by @Joshua Lindsey:

Originally posted by @Ron S.:

The first issue I would have is the "reo.com" email. REO? You sure the foreclosure hasn't already happened? The second issue I would have is, if its not REO already, the likelihood of a servicer dealing with you directly as a buyer/assigner is slim to none.

Nothing in your scenario is unique or creative. It's quite typical...someone trying to cajole a disengaged owner into executing a contract without an agent advocating on their behalf for their best interests, and then assigning that purchase contract to an end buyer to get paid with minimal infusion of cash, and doing so before the clock stops ticking. Happens every day and there are countless stories on this board with both successes and failures in the endeavor.

Everyone’s situation is unique. These exact steps were not highlighted in another post. In general, the concept is pretty widely known. I haven’t trademarked anything. I did, after all, ask if I was doing it correctly. Right?

Regardless of if it is a foreclosure:

a) it’s off-market

b) end-buyer expressed interest

c) it’s flipping a contract, not a closing. Procedure should be simple as highlighted.

Just remember, it was on a Li’s Pendens list so the possibility of it going straight to bank owned without it going through... really an on-market preforeclosure, foreclosure or auction stage is slim to none at best.

*In any case, the representatives at FayServicing already told me that I needed the homeowner to request a payoff letter. Once I have that I’m able to get a better idea of the financials and I’m sure I can move forward

I agree everyone's situation is unique. Where they end up with their unique situation isn't.

"on market preforeclosure"? I'm guessing you mean a home somewhere in the foreclosure process (As is the case in your scenario) that's listed on the market? "Lis Pendens" by definition means pending legal action so, I wouldn't go buy that new to you BMW just yet thinking this thing has no chance (Or as you put....slim to none) of going through foreclosure.

Are you doing everything right? The answer depends. To the person being fleeced? Probably not but then again, you aren't looking to help anyone out but yourself, and if the owner is too tired or naïve or distraught to exercise any further effort on saving their home or selling it for money in their pocket, better you get it than someone else right? I get it...

Good luck on your endeavor. Let us know how it turns out.

I think you may be reading my posts incorrectly.

Clearly Pre-Foreclosures can be Off-Market (not yet listed on the MLS...) especially recent ones. That's why my business partner and I habitually pull Lis Pendens lists. More often than not, the property situation is public information but it hasn't yet been listed. We deal with these properties on a regular basis. As someone in Real Estate of any kind, you should know this...

A BMW... don't be silly. What I choose to do with my portion of the money I make is private and up to me entirely. Do you not work for money? @RonS? You're making me out to sound like another selfish Wholesaler fitting the stereotype. The next house you sell, forfeit your commission in totality and then we can talk about how deep I'm trying to make my pockets off of a homeowner...

Pre-Foreclosures are the best scenario because I help them and sure, help myself. How else am I supposed to grow? Some would argue 15 thousand dollars is too much, but I give it anyway... just because they owned the house. I not only help prevent a foreclosure which ruins your credit, I increase their credit by paying off their mortgage of a house they (more often than not) no longer want. These are just a couple of benefits to dealing with pre-foreclosed properties and their owners.

So please, don't attempt to shun my practices unless it's unethical. Rather there be no reply at all than a slap in the face no one would ask for.

3 Reply

Joshua Lindsey

OP

Newburgh, NY · Member since 2017 · 13 posts · 9 votes

8y

Originally posted by @Account Closed:

@Joshua Lindsey Well, without the payoff letter you won't know how much he is stuck as realty track is just an approximate (and could be way off too). This will help you determine the exact amount of equity after all lender and legal fees taken into account. after you get the payoff letter, find out repair costs and ARV. Then get your contract signed.

Stop by the house and make the call with them if you have to.. Sometimes you need to hold their hand throughout the transaction as most sellers are clueless about the process.

Thanks for that. I just wanted to verify it was needed. I will have the homeowner call and request one. This way I can get all of the necessary information on how much the payoff amount is exactly. I'm also going to be running my own title search and obtaining information on any liens, add this to the remaining mortgage balance and pit it against the After Market Value to see how much remaining equity I have to play with.

0 Reply

Ron S.

Paradise, CA · Member since 2015 · 1k+ posts · 871 votes

8y

Originally posted by @Joshua Lindsey:

Originally posted by @Ron S.:

Originally posted by @Joshua Lindsey:

Originally posted by @Ron S.:

The first issue I would have is the "reo.com" email. REO? You sure the foreclosure hasn't already happened? The second issue I would have is, if its not REO already, the likelihood of a servicer dealing with you directly as a buyer/assigner is slim to none.

Nothing in your scenario is unique or creative. It's quite typical...someone trying to cajole a disengaged owner into executing a contract without an agent advocating on their behalf for their best interests, and then assigning that purchase contract to an end buyer to get paid with minimal infusion of cash, and doing so before the clock stops ticking. Happens every day and there are countless stories on this board with both successes and failures in the endeavor.

Everyone’s situation is unique. These exact steps were not highlighted in another post. In general, the concept is pretty widely known. I haven’t trademarked anything. I did, after all, ask if I was doing it correctly. Right?

Regardless of if it is a foreclosure:

a) it’s off-market

b) end-buyer expressed interest

c) it’s flipping a contract, not a closing. Procedure should be simple as highlighted.

Just remember, it was on a Li’s Pendens list so the possibility of it going straight to bank owned without it going through... really an on-market preforeclosure, foreclosure or auction stage is slim to none at best.

*In any case, the representatives at FayServicing already told me that I needed the homeowner to request a payoff letter. Once I have that I’m able to get a better idea of the financials and I’m sure I can move forward

I agree everyone's situation is unique. Where they end up with their unique situation isn't.

"on market preforeclosure"? I'm guessing you mean a home somewhere in the foreclosure process (As is the case in your scenario) that's listed on the market? "Lis Pendens" by definition means pending legal action so, I wouldn't go buy that new to you BMW just yet thinking this thing has no chance (Or as you put....slim to none) of going through foreclosure.

Are you doing everything right? The answer depends. To the person being fleeced? Probably not but then again, you aren't looking to help anyone out but yourself, and if the owner is too tired or naïve or distraught to exercise any further effort on saving their home or selling it for money in their pocket, better you get it than someone else right? I get it...

Good luck on your endeavor. Let us know how it turns out.

I think you may be reading my posts incorrectly.

Clearly Pre-Foreclosures can be Off-Market (not yet listed on the MLS...) especially recent ones. That's why my business partner and I habitually pull Lis Pendens lists. More often than not, the property situation is public information but it hasn't yet been listed. We deal with these properties on a regular basis. As someone in Real Estate of any kind, you should know this...

A BMW... don't be silly. What I choose to do with my portion of the money I make is private and up to me entirely. Do you not work for money? @RonS? You're making me out to sound like another selfish Wholesaler fitting the stereotype. The next house you sell, forfeit your commission in totality and then we can talk about how deep I'm trying to make my pockets off of a homeowner...

Pre-Foreclosures are the best scenario because I help them and sure, help myself. How else am I supposed to grow? Some would argue 15 thousand dollars is too much, but I give it anyway... just because they owned the house. I not only help prevent a foreclosure which ruins your credit, I increase their credit by paying off their mortgage of a house they (more often than not) no longer want. These are just a couple of benefits to dealing with pre-foreclosed properties and their owners.

So please, don't attempt to shun my practices unless it's unethical. Rather there be no reply at all than a slap in the face no one would ask for.

I wrote this long response with corrections to your errant attestations but erased it and will just state, wholesalers are a dime a dozen, as are the benefits they profess to bring to the table. Some wholesalers are good and some are bad.

You have six posts on this forum (Half supporting your initial post)? Guys like Thedford, Brooks, Hinrichs, Gimer, and others on this forum have THOUSANDS on the same subject/topic. We've all, "been there done that". We've all heard the achievements the wholesaler is going make to help the homeowner.Nothing unique to your situation. That's all I was trying to say with the first post.

...and I'm not a realtor.

1 Reply

John Thedford

Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes

8y

Originally posted by @Joshua Lindsey:

Originally posted by @John Thedford:

Just make sure and be straightforward with the owner that you have no personal intention of buying the house. If they still want to deal with your kind I wish them all the luck in the world.

The owner is aware I may assign the contract to my end-buyer. There are pros and cons to dealing with an investor like there are pros and cons to dealing with a realtor. Luck isn't needed, just sheer honesty and communication.

If you cannot assign do you close or screw over the homeowner?

1 Reply

Account Closed

Real Estate Agent · Richardson, TX · Member since 2014 · 511 posts · 161 votes

8y

I have mixed feelings about wholesaling pre-foreclosures. I've done it in the past... but I had the ability to close in case things go south. I suggested referring this to a realtor because time is of the essence in these type of deals. If you have a buyer and he backs out, you have pretty much screwed the seller. Just make sure you have a solid buyer and enough time to prevent the house going into auction.

Everyone has to start somewhere. I just don't think PFs are deals new wholesalers should be pursuing.

1 Reply

Tom GimerBusiness Member

DMV · Member since 2017 · 3k+ posts · 3k+ votes

8y

Sounds like he's $20k in arrears.

Get a title search done. Until you know the true equity position this is pointless.

Gimer Law516 Reviews

Website View Page

3 Reply

Joshua Lindsey

OP

Newburgh, NY · Member since 2017 · 13 posts · 9 votes

8y

Originally posted by @John Thedford:

Originally posted by @Joshua Lindsey:

Originally posted by @John Thedford:

Just make sure and be straightforward with the owner that you have no personal intention of buying the house. If they still want to deal with your kind I wish them all the luck in the world.

The owner is aware I may assign the contract to my end-buyer. There are pros and cons to dealing with an investor like there are pros and cons to dealing with a realtor. Luck isn't needed, just sheer honesty and communication.

If you cannot assign do you close or screw over the homeowner?

How about neither? With this example, I'm flipping the contract, not closing.

I didn't include it in my post, but I have an entire list of cash buyers I advertise to. I make sure 3 are interested before I officially try and flip or close a property. They serve as backups. The one described in the OP is one that has expressed a lot of interest initially, so I used him as the example.

0 Reply

Joshua Lindsey

OP

Newburgh, NY · Member since 2017 · 13 posts · 9 votes

8y

Originally posted by @Ron S.:

Originally posted by @Joshua Lindsey:

Originally posted by @Ron S.:

Originally posted by @Joshua Lindsey:

Originally posted by @Ron S.:

The first issue I would have is the "reo.com" email. REO? You sure the foreclosure hasn't already happened? The second issue I would have is, if its not REO already, the likelihood of a servicer dealing with you directly as a buyer/assigner is slim to none.

Nothing in your scenario is unique or creative. It's quite typical...someone trying to cajole a disengaged owner into executing a contract without an agent advocating on their behalf for their best interests, and then assigning that purchase contract to an end buyer to get paid with minimal infusion of cash, and doing so before the clock stops ticking. Happens every day and there are countless stories on this board with both successes and failures in the endeavor.

Everyone’s situation is unique. These exact steps were not highlighted in another post. In general, the concept is pretty widely known. I haven’t trademarked anything. I did, after all, ask if I was doing it correctly. Right?

Regardless of if it is a foreclosure:

a) it’s off-market

b) end-buyer expressed interest

c) it’s flipping a contract, not a closing. Procedure should be simple as highlighted.

Just remember, it was on a Li’s Pendens list so the possibility of it going straight to bank owned without it going through... really an on-market preforeclosure, foreclosure or auction stage is slim to none at best.

*In any case, the representatives at FayServicing already told me that I needed the homeowner to request a payoff letter. Once I have that I’m able to get a better idea of the financials and I’m sure I can move forward

I agree everyone's situation is unique. Where they end up with their unique situation isn't.

"on market preforeclosure"? I'm guessing you mean a home somewhere in the foreclosure process (As is the case in your scenario) that's listed on the market? "Lis Pendens" by definition means pending legal action so, I wouldn't go buy that new to you BMW just yet thinking this thing has no chance (Or as you put....slim to none) of going through foreclosure.

Are you doing everything right? The answer depends. To the person being fleeced? Probably not but then again, you aren't looking to help anyone out but yourself, and if the owner is too tired or naïve or distraught to exercise any further effort on saving their home or selling it for money in their pocket, better you get it than someone else right? I get it...

Good luck on your endeavor. Let us know how it turns out.

I think you may be reading my posts incorrectly.

Clearly Pre-Foreclosures can be Off-Market (not yet listed on the MLS...) especially recent ones. That's why my business partner and I habitually pull Lis Pendens lists. More often than not, the property situation is public information but it hasn't yet been listed. We deal with these properties on a regular basis. As someone in Real Estate of any kind, you should know this...

A BMW... don't be silly. What I choose to do with my portion of the money I make is private and up to me entirely. Do you not work for money? @RonS? You're making me out to sound like another selfish Wholesaler fitting the stereotype. The next house you sell, forfeit your commission in totality and then we can talk about how deep I'm trying to make my pockets off of a homeowner...

Pre-Foreclosures are the best scenario because I help them and sure, help myself. How else am I supposed to grow? Some would argue 15 thousand dollars is too much, but I give it anyway... just because they owned the house. I not only help prevent a foreclosure which ruins your credit, I increase their credit by paying off their mortgage of a house they (more often than not) no longer want. These are just a couple of benefits to dealing with pre-foreclosed properties and their owners.

So please, don't attempt to shun my practices unless it's unethical. Rather there be no reply at all than a slap in the face no one would ask for.

I wrote this long response with corrections to your errant attestations but erased it and will just state, wholesalers are a dime a dozen, as are the benefits they profess to bring to the table. Some wholesalers are good and some are bad.

You have six posts on this forum (Half supporting your initial post)? Guys like Thedford, Brooks, Hinrichs, Gimer, and others on this forum have THOUSANDS on the same subject/topic. We've all, "been there done that". We've all heard the achievements the wholesaler is going make to help the homeowner.Nothing unique to your situation. That's all I was trying to say with the first post.

...and I'm not a realtor.

Thanks for your time. Have a good one.

0 Reply

Joshua Lindsey

OP

Newburgh, NY · Member since 2017 · 13 posts · 9 votes

8y

Originally posted by @Account Closed:

I have mixed feelings about wholesaling pre-foreclosures. I've done it in the past... but I had the ability to close in case things go south. I suggested referring this to a realtor because time is of the essence in these type of deals. If you have a buyer and he backs out, you have pretty much screwed the seller. Just make sure you have a solid buyer and enough time to prevent the house going into auction.

Everyone has to start somewhere. I just don't think PFs are deals new wholesalers should be pursuing.

Of course.

I agree that it is definitely something that requires experience. But I'm a fast learner and I minimize risk by being anal about things that need to be in place before I move. As you've said, everyone has to start somewhere, and the worst that can happen in this scenario is me backing out (because there is not enough equity to profit on as I originally thought) or there is not an end-buyer in place (which won't happen to me, I have backups). I expressed interest in the property. Nothing was signed and there are no legal remedies involved this early in the process, so no harm done should things not work out.

It's not fool-proof but it's less risky than most other aspects of REI

0 Reply

Ron S.

Paradise, CA · Member since 2015 · 1k+ posts · 871 votes

8y

Originally posted by @Joshua Lindsey:

Originally posted by @Account Closed:

I have mixed feelings about wholesaling pre-foreclosures. I've done it in the past... but I had the ability to close in case things go south. I suggested referring this to a realtor because time is of the essence in these type of deals. If you have a buyer and he backs out, you have pretty much screwed the seller. Just make sure you have a solid buyer and enough time to prevent the house going into auction.

Everyone has to start somewhere. I just don't think PFs are deals new wholesalers should be pursuing.

Of course.

I agree that it is definitely something that requires experience. But I'm a fast learner and I minimize risk by being anal about things that need to be in place before I move. As you've said, everyone has to start somewhere, and the worst that can happen in this scenario is me backing out (because there is not enough equity to profit on as I originally thought) or there is not an end-buyer in place (which won't happen to me, I have backups). I expressed interest in the property. Nothing was signed and there are no legal remedies involved this early in the process, so no harm done should things not work out.

It's not fool-proof but it's less risky than most other aspects of REI

There is the rub...YOU may one that isn't hurt but, putting a homeowner through the emotional ringer with your assertions that you are going to save them from foreclosure, put money in their pocket, and increase their credit (Your quotes, not mine) as a selling point, only to back out if your interests wane somewhere in the process, will cause harm.

I'm guessing the property must not be in New York or other areas of the state that require you to be a licensed foreclosure avoidance consultant or that, you have a written contract before any consulting services can be rendered (You did say you have nothing in writing if I read correctly). I noticed you mentioned nothing about that, or that you might be a registered non profit, attorney or other exempt from licensure entity and, I'm sure you pointed the borrower to New York consumer protection agencies so that they could understand their rights and protections that may be available to them against foreclosure rescue fraud.

...but then again...you're a fast learner.

1 Reply

Joshua Lindsey

OP

Newburgh, NY · Member since 2017 · 13 posts · 9 votes

8y

Originally posted by @Ron S.:

Originally posted by @Joshua Lindsey:

Originally posted by @Account Closed:

I have mixed feelings about wholesaling pre-foreclosures. I've done it in the past... but I had the ability to close in case things go south. I suggested referring this to a realtor because time is of the essence in these type of deals. If you have a buyer and he backs out, you have pretty much screwed the seller. Just make sure you have a solid buyer and enough time to prevent the house going into auction.

Everyone has to start somewhere. I just don't think PFs are deals new wholesalers should be pursuing.

Of course.

I agree that it is definitely something that requires experience. But I'm a fast learner and I minimize risk by being anal about things that need to be in place before I move. As you've said, everyone has to start somewhere, and the worst that can happen in this scenario is me backing out (because there is not enough equity to profit on as I originally thought) or there is not an end-buyer in place (which won't happen to me, I have backups). I expressed interest in the property. Nothing was signed and there are no legal remedies involved this early in the process, so no harm done should things not work out.

It's not fool-proof but it's less risky than most other aspects of REI

There is the rub...YOU may one that isn't hurt but, putting a homeowner through the emotional ringer with your assertions that you are going to save them from foreclosure, put money in their pocket, and increase their credit (Your quotes, not mine) as a selling point, only to back out if your interests wane somewhere in the process, will cause harm.

I'm guessing the property must not be in New York or other areas of the state that require you to be a licensed foreclosure avoidance consultant or that, you have a written contract before any consulting services can be rendered (You did say you have nothing in writing if I read correctly). I noticed you mentioned nothing about that, or that you might be a registered non profit, attorney or other exempt from licensure entity and, I'm sure you pointed the borrower to New York consumer protection agencies so that they could understand their rights and protections that may be available to them against foreclosure rescue fraud.

...but then again...you're a fast learner.

Those aren't reassurances. Those are pros to working with me, should everything go through smoothly. This is disclosed to them.

If you actually took the time out to read the OP, you'd know this and other pieces of information you've consistently needed clarification on.

Before I continue, I will say that I've managed to successfully flip this contract yesterday, with no help from you in particular. I've dismissed you from this forum. You are following up with a post that wasn't directed towards you. Public forum or not, I didn't quote you, so don't respond, especially not in a rude manner like you have been.

You do not need to be licensed to do any sort of investing, including with pre-foreclosure or foreclosure. There are no particular parts of the state that require you to be one, should you want to invest in the property or take it off of a seller's hands. Given that you are in California, it comes as no surprise to me that you don't know this.

The next time you respond, please give sensible advice instead of mocking the original poster.

1 Reply

Ron S.

Paradise, CA · Member since 2015 · 1k+ posts · 871 votes

8y

Originally posted by @Joshua Lindsey:

Originally posted by @Ron S.:

Originally posted by @Joshua Lindsey:

Originally posted by @Account Closed:

I have mixed feelings about wholesaling pre-foreclosures. I've done it in the past... but I had the ability to close in case things go south. I suggested referring this to a realtor because time is of the essence in these type of deals. If you have a buyer and he backs out, you have pretty much screwed the seller. Just make sure you have a solid buyer and enough time to prevent the house going into auction.

Everyone has to start somewhere. I just don't think PFs are deals new wholesalers should be pursuing.

Of course.

I agree that it is definitely something that requires experience. But I'm a fast learner and I minimize risk by being anal about things that need to be in place before I move. As you've said, everyone has to start somewhere, and the worst that can happen in this scenario is me backing out (because there is not enough equity to profit on as I originally thought) or there is not an end-buyer in place (which won't happen to me, I have backups). I expressed interest in the property. Nothing was signed and there are no legal remedies involved this early in the process, so no harm done should things not work out.

It's not fool-proof but it's less risky than most other aspects of REI

There is the rub...YOU may one that isn't hurt but, putting a homeowner through the emotional ringer with your assertions that you are going to save them from foreclosure, put money in their pocket, and increase their credit (Your quotes, not mine) as a selling point, only to back out if your interests wane somewhere in the process, will cause harm.

I'm guessing the property must not be in New York or other areas of the state that require you to be a licensed foreclosure avoidance consultant or that, you have a written contract before any consulting services can be rendered (You did say you have nothing in writing if I read correctly). I noticed you mentioned nothing about that, or that you might be a registered non profit, attorney or other exempt from licensure entity and, I'm sure you pointed the borrower to New York consumer protection agencies so that they could understand their rights and protections that may be available to them against foreclosure rescue fraud.

...but then again...you're a fast learner.

Those aren't reassurances. Those are pros to working with me, should everything go through smoothly. This is disclosed to them.

If you actually took the time out to read the OP, you'd know this and other pieces of information you've consistently needed clarification on.

Before I continue, I will say that I've managed to successfully flip this contract yesterday, with no help from you in particular. I've dismissed you from this forum. You are following up with a post that wasn't directed towards you. Public forum or not, I didn't quote you, so don't respond, especially not in a rude manner like you have been.

You do not need to be licensed to do any sort of investing, including with pre-foreclosure or foreclosure. There are no particular parts of the state that require you to be one, should you want to invest in the property or take it off of a seller's hands. Given that you are in California, it comes as no surprise to me that you don't know this.

The next time you respond, please give sensible advice instead of mocking the original poster.

You seem angry. Glad you have it all figured out.

0 Reply

Joshua Lindsey

OP

Newburgh, NY · Member since 2017 · 13 posts · 9 votes

8y

Originally posted by @Joshua Lindsey:

Pre-Foreclosures are a niche in my market because there are so many of them. It's a perfect scenario for motivated sellers as they're already in a desperate situation most of the time...

I've learned a lot from BiggerPockets. Yes, I've already read EVERY discussion with other members posting similar questions.

However my situation is rather unique.

I want to know if I'm going about this the right way: and what better way to do it than by asking the professionals on BP?

Now, I've been busy obtaining Lis Pendens lists from my local town/city hall (which is like an hour from me...) and did some research on the properties I've obtained. Some were filed that same day, the day before, two days prior, etc.

I went ahead and contacted the owner of a property after obtaining their phone number. Typical motivated seller phrase: "I'm out of state, I just wanted to get rid of the house", etc.

What caught my attention is that he says he's been living out of state for nearly the length of an entire high school career. Odd considering his house is in Pre-Foreclosure.

He advises me to contact a company called FayServicing if I want to inquire about the house. Apparently they have a debt collection agency and are a third party for helping homeowners rectify their mortgages that they're falling behind on. My best bet is that he's fell too far behind with payments with them so the house fell into Pre-Foreclosure. (Yes, I will just go ahead and ask him, no need for sarcasm :) )

I have a Cash Buyer that is very serious about obtaining this property. He wants me to simply flip (assign) the contract to him. Obviously I've incorporated the remaining balance (which I still need to verify) in the asking price along with my spread. He's aware of any repairs and update that need to be made.

I suppose I'm trying to ask if what I'm doing to go about closing this deal seems okay to you guys...

What I Have Done

1. Obtained Lis Pendens list

2. Researched houses

3. Found one I'm interested in (house has $164,000 equity..! and a $20,000 remaining balance)

4. Contacted Seller (is motivated, just doesn't care about the house, just wants it gone)

5. Seller refers me to FayServicing

6. I contact FayServicing about the house

7. FayServicing says to email their department (reo at fayservicing dot com) (weird, I know. But I can't post emails on forums)

8. I email their department about a house I am interested in paying off in order to obtain.

What I am Going to Do/What is Going to Happen

9. Find out how I can go about paying the outstanding balance (I may need authorization from seller, in which case I would call and have him allow me to make the payment or whatever the case may be) (I'll find this out from the email I get back from their department I assume)

10. Get the Seller under contract (electronic signature since he is in a different state; not the most appealing or best way, but it's something as I can't secure the deal without it (obvs); get them under contract for the remaining balance + an offering I do for my pre-foreclosure homeowners - I give them 10 - 15k. This is incorporated in the asking price I give my cash buyer which motivates the seller to sign and sell quickly)

11. Show the home to the Cash Buyer (all of my cash buyers habitually want to see a home before they purchase. Always. Nothing wrong with it, just stating a fact!) (This step may need to come earlier or later, but this is a vital one and has to be done at some point before 12 obviously)

12. Flip (assign) contract to Cash Buyer with 'asking price' (within my asking price, I incorporate my spread (commission, percentage, whatever you guys call it), any outstanding balances and the money needed for the seller). The Cash Buyer is aware the house is a Pre-Foreclosure and has an outstanding balance that needs to be rectified.

13. Get Paid! Pay off the outstanding balance and the seller what they're owed (both stated in Purchase and Sale Agreement for everyone's safety).

Obviously some of this is not traditional, such as getting something under contract before a debt is paid, but Real Estate Investing is usually more open to creative solutions.

I absolutely line up buyers before I do anything. That's just how I roll. I have built a list of over 10 cash buyers that I advertise my properties to.

...and yes, this is a lot of work to do before the Cash Buyer even VIEWS the home (1 - 12), but it's a chance I'm willing to take. He is not my only cash buyer and I can advertise a house within a week and get multiple offers anyway. Unless there is something so wrong with the house that not even I can ignore, then me not selling to one cash buyer isn't the end of the world.

No, I have not seen the inside of the property yet.

Yes, the Property is Off-Market. I can see it on RealtyTrac verifiably under pre-market and pre-foreclosure status (I don't put all my eggs in one basket, I know RealtyTrac has pros and cons in regards to its reliability, dependability and accuracy, like everything else on the internet... (lol).) Plus I verified it's off market other ways.

Let me know what you guys think! Is everything I have done/are going to do correct? Are there extra steps I need to take to protect myself? Any advice?

Thanks in advance BP community.

It's my first post, by the way... so forgive me if I didn't post this in the correct area.

To those of you who responded in a respectful manner, giving sensible and practical advice: thank you. I've managed to flip the contract to the end-buyer. I told the seller that I may be assigning the contract that I had him sign electronically to another buyer. I ran a title search and found that there was a lien on the property, but only for about $8200 which raised my asking price to the seller about 10k. All of the money is given to me and I - with the seller's authorization - am able to go about relinquishing the debt to ensure a smooth closing for my end-buyer Post-Assignment!

2 Reply

Tom GimerBusiness Member

DMV · Member since 2017 · 3k+ posts · 3k+ votes

8y

Originally posted by @Joshua Lindsey:

FYI that is not accurate. There are many places in the US where it is illegal to deal with homeowners in foreclosure (and definitions vary on what this means). The purpose of these statutory frameworks is to prevent people from coming in and "helping" the homeowner by taking all the equity.

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Joshua Lindsey

OP

Newburgh, NY · Member since 2017 · 13 posts · 9 votes

8y

Originally posted by @Tom Gimer:

Originally posted by @Joshua Lindsey:

FYI that is not accurate. There are many places in the US where it is illegal to deal with homeowners in foreclosure (and definitions vary on what this means). The purpose of these statutory frameworks is to prevent people from coming in and "helping" the homeowner by taking all the equity.

Tom,

Foreclosure and Pre-Foreclosure are two different things. As a top contributor, surely you know this. I successfully dealt with a seller in PRE-Foreclosure. You do ***not*** need to be licensed in any way, shape, or form to do what I’ve done in dealing with this homeowner. I simply wanted to purchase the property (act as a middleman, of course; ‘wholesale’ as you will) to prevent a foreclosure. Banks prefer this over foreclosing on a home any day.

I steer clear from foreclosures for this very reason. It takes a seasoned real estate investor, in my opinion, to deal with foreclosures. It’s too sticky of a situation. At that point, banks, auctions, and other entities are involved. Should you be licensed to deal with it? Of course.

Is that relevant to my situation? Of course not.

Also, any penalties for an early mortgage payoff are forfeited once a property has a Lis pendens filed. Just food for thought for anyone else that comes across the form in a similar situation.

1 Reply

Wholesaling a Pre-Foreclosure? (Am I Doing This Right?)

Wholesaling a Pre-Foreclosure? (Am I Doing This Right?)

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