All Forum Posts by: Marty Boardman

I've purchased several properties through Auction.com and they don't publish this information. The only way to find out is to wait until the sale is recorded with your county tax assessor.

But I wouldn't worry too much about what the seller paid at the auction. What matters most is can you make your numbers work? I've seen too many investors lose out on good deals because they were upset about how much profit the seller was going to make on the property.

And approximately how many houses do you visit per day/week?

Here's the exact script (and step by step instruction) I use to speak with a distressed seller:

PRE-CALL HOMEWORK:

If this lead came from your website or Batch Leads, then you should have the seller’s address. If this is the case run your comps first so you have a general idea of the home’s value.

ON THE CALL:

*It’s important to develop rapport with the seller at the beginning of the call. Be a good listener and find something you have in common. It could be a hobby, sport, family, location, etc.

You could ask them how they like living in their area. If they say, I love it here because there are so many parks for my kids to play…

Then say I have kids too, my kids love to get outdoors. If you don’t have kids then talk about your brother, sister, friend that has kids and how much you enjoy playing with them outdoors.

Whatever kind of connection you can make will help you close the deal.

NOTE: This conversation shouldn’t last more than 3-5 minutes. Be friendly, but don’t drag this out too long.

QUESTIONS:

1. Why are you considering selling your home?

*This may come out during the rapport part of the call, but ask it again. It’s important you find out the real why. If the seller isn’t really in distress this call will be a waste of your time. If the seller tells you they “just wanted to see what you would offer” then here’s how you respond…

“To cut right to it Mr. Seller, we can’t offer you retail price for your home. Have you ever traded a car in at a dealership? Then you know they typically offer you about 70% of the car’s value in trade. That’s how we work too. If you’re looking for full market value then we can end the call now, no hard feelings”.

If the seller is truly in distress they’ll likely be very open about talking about it with you. When someone is struggling financially often times it makes them feel better sharing their feelings. Again, be a good listener and empathetic. Keep your mouth shut and let them talk.

2. Can you tell me more about your home (approximate square footage, bedroom/bathroom count, year built, basement, garage)?

3. How long have you lived in your home?

4. Do you know approximately how much you owe on your mortgage?

5. Are there any other mortgages or liens you know about?

*Many home sellers do not know the answers to questions 4 and 5, and many sellers will lie to you about what they owe. That’s okay, you’ll find out later about any outstanding liens or judgments when you get a title report. Just ask them to be honest and do their best to remember, because if you don’t have a full picture of where they are at then you can’t offer as much for the house (or close quickly).

6. Are there any major repairs needed at your home (roof, siding, windows, HVAC, plumbing, electrical, foundation)?

7. If we can make the right offer on your home, how soon would you like to close?

NEXT STEPS:

Based on the information the seller provided you should have a clear picture of their situation and if it’s worth setting up an appointment to visit their home.

There are many ways to make a profit on a deal, even if the homeowner has no equity. However, you don’t want to invest a lot of money in repairs if this is the case.

For example, if the mortgage balance on the house is equal to, or is greater than the value of the property, AND the seller tells you there are major repairs required, you should politely tell them that you’re very sorry, but there’s nothing you can do to help.

If your exit strategy is to fix and flip, you don’t want meet with the seller unless there is enough margin between what the homeowner owes on the mortgage/s and the market value of the property. And the only way you can really know how much the rehab will cost is to set an appointment to visit the property.

ON THE APPOINTMENT:

*Be on time and be prepared. Have a phone/camera, laptop and portable printer. In the event the seller accepts your offer you’ll need to have a contract and borrower authorization form for them to sign. If you don’t have a laptop/portable printer be sure to bring several blank copies of your contract/authorization form.

1. After you knock on the door and introduce yourself, let the seller know you’d like to inspect the outside of the property (don’t record a video or take pictures at this point).

1. Next, go inside and inspect the interior of the home and all mechanicals (HVAC, H20 heater, service panel and basement/foundation).

1. At this point you should have enough information to estimate the rehab costs of the home and make the seller an offer (if you don’t have enough information, or need to seek an expert opinion on a particular repair, go the end of this outline).

NEGOTIATING WITH THE SELLER:

There are two key parts of the contract that a distressed seller will care about:

1. The purchase price
2. Closing date

However, what the seller will REALLY want to know is how much cash they will end up with after closing.

Of course, this can’t really be determined until you know exactly how much the seller owes on the outstanding mortgage/s and any other liens/judgments. That’s why it’s so important they disclose to you approximately how much debt they have against the property.

IMPORTANT: Before you make your offer ask the seller “how much cash were you hoping to get from selling your home?”

Most distressed sellers don’t know how much their house is worth. So if you can make an offer that gets them the cash they desire then you could end up paying MUCH LESS for the house.

For example, I once met with a distressed seller and after running my comps and inspecting the property I determined I could offer her $115,000. She only owed $90,000 on her mortgage. Instead of telling her what I could pay for the home, I asked her how much cash she was hoping to walk away with after the sale. She told me she’d be thrilled to get $3,000. Did I offer her $115,000? Of course not! I wrote the offer for $93,000! During the negotiation I explained she’d get her 90K mortgage paid off AND the $3,000 she wanted! And I got the deal for $22,000 LESS than I was willing to offer!

Once you’ve determined how much cash the seller wants and have agreed to the purchase price and closing date you will:

1. Prepare the contract and have the seller sign it.
2. Prepare the borrower authorization form and have the seller sign it.
3. Record a video tour of the property and take photos.

REMINDER: The borrower authorization form is just as important as the purchase contract. You MUST have the seller’s permission to obtain information from their creditors (so they can be paid off at closing).

IF YOU DO NOT HAVE ENOUGH INFORMATION TO WRITE AN OFFER:

In the event you do not feel comfortable writing an offer because you’re uncertain about rehab costs then schedule a follow-up appointment with the seller so you can return with the appropriate contractor.

NOTE: It’s okay to let the seller know you need to get an expert opinion on a repair. By now you should have built up enough rapport. However, MOST professional wholesalers and house flippers can make an offer on a property at the first appointment, so if you have to come back to the house you could lose the deal to another investor.

After you’ve scheduled a follow-up visit with the seller be sure to record a video and take photos of the home and the specific issue you’re concerned about. That may be all a contractor needs to give you an accurate estimate on repair cost.

When you return to meet with the seller refer to the NEGOTIATING WITH SELLER section of this outline.

Hey Tyler, I'm curious. What would you estimate is the percentage of homes you visit that are vacant? I'd start with researching those first as pre-foreclosure opportunities.

Each state has their own legal process for initiating foreclosure. Your search will begin in the county where the property is located (either the county courthouse or recorder). The document you're looking for is sometimes called the notice of sale, notice of foreclosure, notice of trustee's sale. This notice typically contains the owner name, attorney, lender and place/time of the auction. The notice may also contain the principal amount of the loan and/or the judgment amount.

Some counties have this info online, small rural counties usually don't so you'll have to visit them in person and access their records. Remember, the more difficult it is to obtain this info the better! It means less competition. Best of luck to you Evan!

When door knocking (if someone actually answers their door) you'll almost always have the owner say "I've got it taken care of". They may not necessarily be lying, but they are misinformed. Just because the owner is working the the lender (i.e. forbearance agreement) doesn't mean the legal proceedings end.

The sale doesn't get canceled until the loan is brought current or paid in full. That said, I wouldn't trust any third-party website for up to date and accurate information. I recommend you get this information directly from the county courthouse (or circuit court records) depending on how the notices are filed in your county. Regardless, congrats to you on being so motivated. I got my start door-knocking foreclosures and still use this strategy today. It's highly effective! Good luck Ben!

In the past I could always rely on my network of Realtors and wholesalers to bring me off-market deals. But it seems like those have days may be gone for good.

For the past 2 + years I've been buying houses in pre-foreclosure and at the auction. I've also incorporated a skip trace/text message campaign with the help of a VA. Combined I've been able to do about 40 deals using this strategy. I do this in small to medium size markets in the midwest. Best of luck to you Brian!

There are 3 phases to foreclosure:

1. Pre-foreclosure

2. Auction

3. REO

I purchase most of my fix and flip and rental properties in the pre-foreclosure phase (directly from the owner by door knocking and text messaging) and at the auction. Auction buying is much more risky, but with the right strategy you can reduce a lot of that risk. These days finding REO properties with any margin is almost impossible.

If you're looking on behalf of buyers your best bet is to target homeowners in pre-foreclosure. As Tim mentioned you'll need to search the county court records for the notice. Then you can send these homeowners a letter, knock on their door or skip trace/text. Best of luck to you!

I actually have a client I'm working with in Wisconsin that removed an owner's belongings after the auction. He tried reaching out to the owner but couldn't find him. A few weeks later my client got hit with a burglary charge. It's a crazy story. Now he's in court having to prove he didn't steal the former owner's lawn mower and other personal items. It turns out the bank removed everything home before the sale because they thought it was abandoned too.

Bob and Steve offered excellent advice, but to add a few tips...

30 days (or less) is more than enough time for a title company to execute a closing, especially if you're paying cash. So I'd recommend having a title company handle escrow for you and the seller. I've gotten deals done with my title company on foreclosure properties in under a week. They will need the contract, a loan authorization form signed by the seller and info for the lender/attorney (phone numbers, loan number).

I've allowed homeowner's to stick around after the closing but I hold back at least 50% of their sales proceeds until after they move out. If they don't move out on time they forfeit their remaining proceeds. It's a nice carrot/stick offering and it works very well.

Good luck to you David!