While listening to Brandon Turners podcast earlier tonight I began to brainstorm in attempts to find a way to easily find great deals (if there is such a thing)and heres what I was thinking :
Since banks know what loans are going in default and will hit their books in the next year ; is their an employee at the bank that you could go to that would have a list of these homes of potential great deals : You could save the bank a year worth of foreclosure costs while taking a handful of properties off their plate
Genius or Idiotic ? You decide :
Sounds like a great idea but highly doubtful it will work.
We have had some local smaller banks in our area offer packages to us that they are holding as rentals looking for a cash buyer but never get them in the pre-deliquent stages.
Heres why I think its possible : Big players in Wichita (certain top level real estate agents firms) seem to be buying up a ridiculous amount of good rentals ; I know they aren't doing it the same hard working ways that all of us average investors are because they would be find 30-50 steals per year. They must have insider knowledge from banks ; or some other source that is allowing them to achieve what they are achieving.
I don't need to be the best; I just want/need to beat the best ; that's what I am trying to learn how to do.
about 12-18 months ago we were plagued with hedge funds buying 80-100 homes per month. They were hitting the courthouse steps, regular listings, HUD homes to get this many. I am not saying you cant get homes from the bank but to get them while the home owner is still living in the home in a pre-deliquent stage I dont see happening. A few yrs ago we purchased a package from a bank where the investor who owned about 50 homes had to sell so we worked with the bank but that is different then when they are actual home owners in the home.
I understand. What about getting a list of addresses from the bank where you could then go "driving for dollars" and calling on all these potential leads to work out deals with the sellers in exchange for a referral fee or something else ? (im not sure if ethics would come into play here ; if it would maybe there would be an ethical way to come to an agreement?)
: Maybe another idea would be to find Project Managers that fix up foreclosures and paying them for leads then negotiating with the bank before they hit MLS. (once again if you could find a way to do this ethically)
I'm not going to say it never happens, but what you're suggesting is illegal, from the bank's standpoint. Names & addresses of mortgagees, along with the current state of their loan is protected information. The bank can't release that information without the homeowner's permission. Again, I'm not saying there isn't ever someone doing something shady, but it can't be done above board. Once foreclosure proceedings begin, particularly in judicial states, the rules change, because it becomes a matter of public record.
I would expect, considering what the potential sanctions could be, the way these brokerages are getting a head start on these deals is that the bank is actually contacting the brokerage to dispose of the property, when foreclosure is achieved. The bank doesn't really care whether the brokerage sells the property to a 3rd party or buys it themselves, so long as the institution gets what they want from the sale.
I think you are thinking about a pre-foreclosure list. I believe they are available in some areas. I think it is a list of mortgages that have been reported late in the 30-60-90-90+ time frames.
Maybe I was mistaken but I believe that is able to be searched. notice of default or lis pendens I think is the term. You may be able to find them for an area. I would think anyone at a bank who gave out the personal information about individual owners would likely lose their job. Even if that information was public in some way.
I deffinately wouldn't want to do anything unethical (not against walking close to the line though) and I wouldn't mind being that guy that the bank discloses these deals to once they achieve foreclosure.
In this case would an investor be able to purchase them once they hit foreclosure but before they become active on MLS so investors could essentially buy pass the investor waiting stage aka home owner occupancy purchase stage ?
@Ben Reiss You are correct. Those are available in states requiring Judicial Foreclosures. In Texas, which is a non-judicial foreclosure state, some lenders file notices and others do not, so you wind up getting a very limited list and a hodgepodge with no way to filter.
Either way, the notice filing is the beginning of the legal proceedings, which is when the situation becomes a matter of public record. Prior to that, the bank can't release any of the information.
Generally, it takes banks a ridiculous amount of time between when a foreclosure is finalized and when the property gets listed. You can absolutely try to network with and form relationships with bank REO agents & managers. Once the bank has foreclosed and is fully in possession of the property, they are legally within their right to dispose of the property almost any way they want. They don't have to offer it in a public fashion.
With that said, you're going to be hard pressed to get to the REO folks at the big banks, since none of them are going to be based in Kansas! However, if you have local, high-volume originators, it might be worth your time to try to form some relationships with their people. The brokerages have an advantage, because the big banks reach out to them to dispose of local properties.
Good idea though.
@Hattie Dizmond thanks, I knew it was hit or miss on them. I never went with them but I am still part time and working off of a yellow letter campaign and random dumb luck.
You're probably more "hit" than I am. I just happen to have spent 20 years in large corporate banking!
You can obtain (NOD) lists from title companies or sites like RealtyTrac, Foreclosure/PropertyRadar or CoreLogic, but it is fee-based and primary play would be a Short Sale or other distressed asset alternative. If you have experience negotiating short sales and farm a specific area, you may have some success.
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