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How does acquiring a preforeclosure work in texas?

Posted Jun 11 2019, 09:19

I would like to get started investing on real estate. Ive looked at several auctions and while they have good deals. Ive noticed is possible to approach a home owner and work something out with them before theyre foreclosed. My question is if I were to come to an agreement with a distressed home owner. whats next? Do I need to pay their loan or how is it transferred to me. Ive tried contacting foreclosure re agents and all of them looked at me like they have no idea what im talking about and the rest don't feel comfortable with anything other than dealing with a traditional listed home. BTW this is in Texas. Ive also contacted a few RE Attorneys and they want to charge 200 just to talk to me even though I don't have a deal yet. 

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Wayne Brooks#3 Foreclosures Contributor
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Wayne Brooks#3 Foreclosures Contributor
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Replied Jun 11 2019, 09:34

That’s probably the best $200 you can spend. 

A preforeclosure is like any other sale.....you just buy it. 

Their loan will not be “transferred” to you. 

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Ehsan Rishat
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Replied Jun 11 2019, 13:43

@Daniel Hixson Look into other types of properties rather than foreclosures and pre-foreclosures. The people in this situation are at risk of taking a hit to their credit. So, if you agree to a deal with no plan and end up with no buyers, it will put them in a very bad spot. Other than that @Wayne Brooks basically answered your question. 

Good Luck!

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Replied Jun 11 2019, 21:58

So I finally found a knowledgable RE agent. All the other I talked to before were confused at what I was trying to do and how I wanted to buy homes that were not listed or were in preforeclosure. He pretty much answered all my questions and has been giving me tips on what to look for. I am not looking to wholesale, I just dont think thats for me right now that im starting out. But im looking to actually buy this property homes at around 70% emv Do a bit of remodeling and reselling.

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Greg H.#3 Real Estate Guru, Book & Course Reviews & Discussions Contributor
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ModeratorReplied Jun 12 2019, 05:51

The number 1 problem with perusing pre-foreclosures in Texas is time.  The first and only public notice that a house is potentially being foreclosed can be as little as 21 days and is rarely much more than that

The number 2 problem is that many of these property owners have other liens/judgments that will only be extinguished by a foreclosure.  

So, the big players in this game have systems in place to get these deals done quickly.  They have a service to scrape the information instantly from the County Clerk's Office where the public notice is recorded.  They have a title company run a title search quickly and the liquid funds to get the deal closed quickly

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Abbie Bejrowski
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Abbie Bejrowski
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Replied Jul 24 2021, 10:13

@Daniel Hixson I'm curious if you have actually gone through with any pre-foreclosure/foreclosure purchases in Austin? I am in the same boat you were when you posted this - interested but finding it hard to find information on how buying a pre/foreclosure works.

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Stephen Stokes
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Replied Jul 24 2021, 15:40

@Daniel Hixson the wonderful thing about pre-foreclosures is you are truly helping someone in a major way. That is where we as investors are adding tons of value to the community and thus are justified in reaping large rewards for our efforts. Part of the reason why most people don’t pursue is borrowers tend to be difficult to work with and banks are also tricky. The amount of effort is sizable as well.

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Eric James
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Replied Jul 24 2021, 20:25

You have your team do title searches to determine which properties are worth pursuing. Then, when the owners wait until the last minute to contact you, your team completes the deed paperwork and files it with the county just before the auction. 

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Greg H.#3 Real Estate Guru, Book & Course Reviews & Discussions Contributor
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Greg H.#3 Real Estate Guru, Book & Course Reviews & Discussions Contributor
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ModeratorReplied Jul 24 2021, 20:45
Originally posted by @Stephen Stokes:

@Daniel Hixson the wonderful thing about pre-foreclosures is you are truly helping someone in a major way. That is where we as investors are adding tons of value to the community and thus are justified in reaping large rewards for our efforts. Part of the reason why most people don’t pursue is borrowers tend to be difficult to work with and banks are also tricky. The amount of effort is sizable as well.

You realize in many states what you just described is a crime right?  

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Stephen Stokes
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Replied Jul 24 2021, 20:46

@Greg H. Helping people avoid foreclosure is illegal in what state?

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Greg H.#3 Real Estate Guru, Book & Course Reviews & Discussions Contributor
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ModeratorReplied Jul 24 2021, 20:52
Originally posted by @Stephen Stokes:

@Greg H. Helping people avoid foreclosure is illegal in what state?

 Please enlighten me as to where a short sale is a part of this thread? A short sale is when a borrower has no equity which is clearly not the intent of the Op or your desire to "reaping large rewards for our efforts"

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Stephen Stokes
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Stephen Stokes
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Replied Jul 25 2021, 04:26

@Greg H. Short sale, payoff, subject to, reinstatement, loan modification, are all options for helping borrowers who face foreclosure. Curious to know what state would enact laws against investors helping borrowers avoid foreclosure using any of these strategies. Seems like that would be counterproductive to the best interests of the borrower. Anything that can be done to save from a foreclosure is better than the alternative which leaves the borrower unable to get a loan for 10 years.

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Greg H.#3 Real Estate Guru, Book & Course Reviews & Discussions Contributor
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ModeratorReplied Jul 25 2021, 06:13

@Stephen Stokes

First off you edited your post above which referred to a short sale.  Anyway, focusing on your statement "adding tons of value to the community and thus are justified in reaping large rewards for our efforts".  This article is a dated but there were 18 states at the time

https://www.pewtrusts.org/en/r...

Again, the OP was referring to profiting from this model as were you.  Actually you were more on the "reaping large rewards" as your form of "help".  Curious how a short sale or loan mod produces that result?  Collecting a fee to "help" with those is also illegal in many states

Lastly, 10 years to get a loan with a foreclosure?  Most are 3-5 years with some lenders being 2

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Jay Hinrichs#5 All Forums Contributor
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Replied Jul 25 2021, 06:24
Originally posted by @Greg H.:

@Stephen Stokes

First off you edited your post above which referred to a short sale.  Anyway, focusing on your statement "adding tons of value to the community and thus are justified in reaping large rewards for our efforts".  This article is a dated but there were 18 states at the time

https://www.pewtrusts.org/en/r...

Again, the OP was referring to profiting from this model as were you.  Actually you were more on the "reaping large rewards" as your form of "help".  Curious how a short sale or loan mod produces that result?  Collecting a fee to "help" with those is also illegal in many states

Lastly, 10 years to get a loan with a foreclosure?  Most are 3-5 years with some lenders being 2

Its a crime in OR WA and CA .. with very narrow path ways .. this was a major focus of my business prior to the laws going into affect in 2007/8.  There was so much fraud in the so CALLED we are going to help the poor homeowner the AG's stepped in and created new legislation.  As for some benevolent service for these poor home owners we can save that propaganda for those that sell how to seminars.. there is one goal in these deals and that is a profit for the person bailing out the owner who cant manage their own finances.. Does it help them well marginally.. once they are in foreclosure their credit is trashed.. having it go to sale just adds makes it a bit worse there is NO HUGE Help there.  So we all have to be honest those of us that did foreclosure rescue did not do it for the sake of the owners we did it as a business model for profit and if the by product was helping an owner thats OK.. but lets be real here.. I am the first to admit it I would not have done this model if it was not very profitable. And it was a ton of work took a ton of liquidity that 90% of investors simply dont have and the ability to take on risk IE no title insurance..  Not to mention very robust methods to get to the owners in the first place. Very high touch hands on ..  But spare us the Altruism  that as I said could be a by product but its not the reason any of us did this..  UNLESS your a NON PROFIT and you dont take a salary for running the non profit  then I think you can make that statement.  Other wise its just regurgitating what the HOW to Gurus tag lines.  Kind of like those that buy notes and talk about how they are helping people when they re write them of course they are but its a for profit business and they end up foreclosing on at least half of those  LOL..  we all know the score.  

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Jay Hinrichs#5 All Forums Contributor
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Replied Jul 25 2021, 06:38
Originally posted by @Greg H.:

@Stephen Stokes

First off you edited your post above which referred to a short sale.  Anyway, focusing on your statement "adding tons of value to the community and thus are justified in reaping large rewards for our efforts".  This article is a dated but there were 18 states at the time

https://www.pewtrusts.org/en/r...

Again, the OP was referring to profiting from this model as were you.  Actually you were more on the "reaping large rewards" as your form of "help".  Curious how a short sale or loan mod produces that result?  Collecting a fee to "help" with those is also illegal in many states

Lastly, 10 years to get a loan with a foreclosure?  Most are 3-5 years with some lenders being 2

Greg,  I answered before I opened the link you provided I am glad I got my states and dates correct..  CA also passed legislation on this around the same time.. Cant tell you how many houses I bought at the court house  that when I went to knock on the door to let them know we bought their and what are their intensions.  Only to have them pull out the paper work of some rescue company ( usually FLA based) that they paid 1k to 3k for and said their problems were solved. 

Now granted our foreclosure rescue we did not charge we just either paid off the loan or bought sub too  and cashed the seller out .. and then Many times rented back to the seller.. Although I will tell you  90% of those deals we were evicting the old owner within a year.  Main reason they wanted to stay   SCHOOL  

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Replied Jul 25 2021, 07:22

@Jay Hinrichs the rewards are not a fee from the borrower directly but rather the discounted property we acquire as a result of helping the borrower avoid foreclosure. Anyone pushing the model you referenced is a complete scam and is not helping anyone.

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Greg H.#3 Real Estate Guru, Book & Course Reviews & Discussions Contributor
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Greg H.#3 Real Estate Guru, Book & Course Reviews & Discussions Contributor
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ModeratorReplied Jul 25 2021, 07:40
Originally posted by @Stephen Stokes:

@Jay Hinrichs the rewards are not a fee from the borrower directly but rather the discounted property we acquire as a result of helping the borrower avoid foreclosure. Anyone pushing the model you referenced is a complete scam and is not helping anyone.

Again.  Even that model is illegal in some states.  Some require the investor to pay at least 80+ % of current market value

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Greg H.#3 Real Estate Guru, Book & Course Reviews & Discussions Contributor
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Greg H.#3 Real Estate Guru, Book & Course Reviews & Discussions Contributor
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ModeratorReplied Jul 25 2021, 07:45

@Jay Hinrichs

I think we will much more of investors trying to take advantage of  delinquent homeowners in the next couple of years as this time around will be different then 2008 in that most homeowners will have some equity.  These types of deals have never been part of my model as I just get way to sympathetic when it is a person to person transaction.  

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Jay Hinrichs#5 All Forums Contributor
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Jay Hinrichs#5 All Forums Contributor
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Replied Jul 25 2021, 08:34
Originally posted by @Greg H.:
Originally posted by @Stephen Stokes:

@Jay Hinrichs the rewards are not a fee from the borrower directly but rather the discounted property we acquire as a result of helping the borrower avoid foreclosure. Anyone pushing the model you referenced is a complete scam and is not helping anyone.

Again.  Even that model is illegal in some states.  Some require the investor to pay at least 80+ % of current market value

Stephen my point is once someone is in foreclosure their life and credit history is trashed.. the fact that it goes to sale at that point ( foreclosed does not affect them that much more)  So its not about helping these poor people  its about US being in the business to make a profit that the honest answer and if it helps someone OK  but thats not the primary reason or even the secondary reason that people do this work its to get a DEAL  end of story.. anything else is just well wishing delusional talk..  Just like Wholesalers who say they are saving these poor sellers when they rip a huge amount of equity from them .  Buying low and selling high is the corner stone of real estate investing lets just be honest about it and not couch it as we are doing this out of the goodness of our heart  helping these poor owner/borrowers.. UNLESS your a non profit.  myself and some other BP members we did start aheroshome.org which is a true charity with IRS designation and we are going to give a home away to a deserving family and we all do this with nothing more than the thought to give back.. Plus we seeded the charity with our own money and 100% of the donations go to this charity..  rescuing someone from foreclosure so you can get a deal on a home is NOT charity its a business transaction thats my point.  

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Jay Hinrichs#5 All Forums Contributor
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Replied Jul 25 2021, 08:42
Originally posted by @Greg H.:

@Jay Hinrichs

I think we will much more of investors trying to take advantage of  delinquent homeowners in the next couple of years as this time around will be different then 2008 in that most homeowners will have some equity.  These types of deals have never been part of my model as I just get way to sympathetic when it is a person to person transaction. 

I am afraid your right. However when I read my mortgage banker industry reports. All the lenders servicers govmit they are going to do everything possible to keep people in their homes.  UNLIKE the GFC that hit us and no one really knew what to do..  With the internet the way it is and SM and robo calling and everything else you KNOW there will be bad people set up shop to take advantage.  Just like the fake lenders out there and the bombardment of those off shore  calling and saying they are the IRS  LOL.

YES I sat with many many folks who let them selves get into foreclosure and this was 2000 to 2007  good to great markets. Bottom line as you know there is just a certain % of US Americans that cant manage debt  get a divorce and walk from financial obligations  death or illness. And then you have those that like I said you drive up to their place its in foreclosure but there is an RV in the driveway a boat and two nice Vehicles ..  I cant tell U how many times these folks said to me we make enough money but we cant figure out how we got here. I remember one where I asked about the RV  they said well the payment is only 250 a month cant let that go.. but they can stop paying the mortgage.. And once they get behind very tough to catch up in many instances.

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Replied Jul 25 2021, 08:46
Originally posted by @Greg H.:
Originally posted by @Stephen Stokes:

@Jay Hinrichs the rewards are not a fee from the borrower directly but rather the discounted property we acquire as a result of helping the borrower avoid foreclosure. Anyone pushing the model you referenced is a complete scam and is not helping anyone.

Again.  Even that model is illegal in some states.  Some require the investor to pay at least 80+ % of current market value

Exactly thats why I left that model behind.. this is true in OR and WA.  plus the threat of being predatory and if charged its felony just was not worth the risk for a few bucks of equity in a home..  People get mad they get an attorney and you will wish you never did the deal. before the law changed I did have one file a complaint against me at the AG in WA.. thats not a pleasant experience.  They simply write a letter and demand copies of all the files you have done in their state.. so for me its was many many bankers box's you package them up ship them to Olympia and wait. All the while the person who turned you in has hired an attorney who is banging on you. To make it even worse the AG does not communicate they dont even send a letter stating you did nothing wrong you simply never hear from them unless they are going to charge you ( which for us we were legal) but with the new rules if you did not know them a person would be TOAST