pre-foreclosure, got a quick minute

[txrigdiver]

While out checking on my rehabs today one of my contractors told me his sister in law was losing her house to mortgage foreclosure and the sale is next Tuesday.
As excited as I am to be doing my first pre-foreclosure I'm pretty anxious because I'm operating blind.
I called her and she's 6 months behind in paymnets. I've run comps and the house values out at $122K. and she owes 96K with back payments, the bank wants $8600 to stop the foreclosure.
I'm headed out to get her to sign a release right now so I can talk to the bank but I don't have a clue what I'm doing here. I haven't done any negotitions with her or anything else. I don't know what the next step is and I don't know how to negotiate with the bank either. I've basically got tomorrow and Monday to stop the sale if everything looks good but I don't even know how to analyze it I hate not knowing what the next step is.

OK, I'm on my way to get the bank release signed right now. Any one who could lend a hand and some advise I'd appreciate it.
281-798-8144

[brianb_cobbres]

What kind of shape is the house in or how much to rehab for resale?

Please update us on your progress. Really want to see how this works out for you.

Brian

[kjowers]

yup any info you can share about your experiance would be greatly appreciated. :praise:

[Dan Auito]

I have some feelers going out for more info here, so in the meantime I'll put these here to give you some activities while we continue gathering knowledgeable replies!

Foreclosure bulletin board: http://www.foreclosureforum.com/mb/index.html
Another board for you: http://www.therealestatelibrary.com...d/wwwboard.html
Foreclosure glossary: http://www.foreclosureforum.com/glossary.html
www.foreclosurelms.com. They are teamed up with www.homeownersaa.org also.
Florida foreclosure lists: http://www.foreclosuresdaily.com
Final links set: http://www.therealestatelibrary.com/rer.html
__

[txrigdiver]

OK, I just got back home but missed 2 appointments with one of the many realtors I work with to go look at 2 other rehab properties he wanted to show me. Now, besides pursuing this pre-foreclosure deal I have 5 properties I have to do evaluations on tomorrow. I never worked this hard or was excited about the work I was doing when I worked for Shell Oil.

The pre-foreclosure.
I got the release signed to talk to the bank. I inspected the house and this is not a rehab, it's a pretty house. Evidently the house flooded from a burst supply line to the kitchen sink less then a year ago and the insurance paid off big time and instead of buying a boat like I did when my house flooded they actually put the money back into the house. brand new ceramic tile and carpet, remodeled master bathroom, all new kitchen cabinets and silestone counter tops and all new stainless steel appliances. It's a 3/2 1938sqft, my comps show the value at $122K. All of the exterior siding is in good shape. It looks like I'll give it a fresh ext paint job, and pressure wash the bricks.
The bad news, relatively speaking anyway. Property taxes are 1 year delinquent by one year and that's $4K. The really bad news, the husband and wife are separated and in divorce proceedings and I haven't dealt with the husband. The wife told me that he was actually on his way over to the house with another investor. Besides signing the release she also gave me all of the original correspondence from the bank with all of the contact info. I don't know how the other investor is going to get all of that info now. :lol: I'm sure he'll figure it out though.

I'm going to go through and read all the material from the links everyone so graciously sent me and then I'm going to :SM013:. not really, those days are very long gone. After I get through reading all of that material I may add to this post with more questions. I guess the next step is to contact the bank?

whats the next thing you would do?
Thank you so much for your support everyone.

[Dan Auito]

Don, Randy Lee himself just stopped by to answer NoFuss's question and here are his comments!

Randy Lee
Junior Member Join Date: Oct 2004
Location: Huntsville, AL
Posts: 3


Best place to find pre-foreclosure deals

--------------------------------------------------------------------------------

I've found that the best pre-forclosure deals come to me from two sources:

1) From other investors and 2) Referrals from home sellers who's houses I've bought on short sale.

At first you may think it strange that other investors would provide me with good deals. However, it makes a lot of sense if you think about it. There are tons of investors out there looking for properties they can buy at 50 to 70% of retail. They post signs all over. They advertise in newspapers. They hire bird dogs. They are contantly on the look out.

...Unfortunately most of the properties that are about to go into foreclosure and doing so because the homeowners can't sell the house for what they owe on it. To put it in modern day terms; they are "upside down".

...So when they call the typical investor and tell them their sob story; the investor's reaction is either A) "Don't call here anymore." B) "Please don't call here anymore." or C) "I think I know someone who can help you. Call Randy Lee." The reason for response #3 is that I have adequately educated my fellow investors about what it is that I do.

Every time you go to an investors group meeting (REIA) you should be broadcasting that you do short sales. You don't have to explain it in detail. Just tell the other invetors that you can help home sellers that owe more than their house is worth. If they want more detail; explain that you negotiate with the bank on behalf of the homeowner and often can secure a significant discount on the amount owed.

Most investors have their on strategies for obtaining properties (and what they will do with them). They are glad to pass along the ones that don't fit their method of operations.

Next; once you've managed to successfully complete a few Short Sales, the home sellers you help will help you! Treat people with respect and follow the "golden rule" and you will find that they will be glad to provide you with referrals. That is as long as you remember to ask for them.

Note: I've tried to put all I know about the basics of short sales in my book: "Short Sales: The Secrets and Strategies of Pre-Foreclosure Investing". In it you I walk you through each step from finding deals, working with bankers and presenting proposals to exit strategies that make sense for you. I'll show you the marketing ideas that have worked over and over for me and others. And I will encourage you to, as they used to say in those cool Nike commercials, "Just Do It!". You can find my book at my publisher's web site: www.Purpose.4T.com. I think you'll find it the least expensive way to learn what you want to know about this subject.

Good luck!
-Randy Lee

[txrigdiver]

I can't even begin to thank you for your help or again and I feel like a stuck record, this wonderful fourmn you've created!

[Dan Auito]

It ain't me brother :smiley6: Its YOU :SM049: Everyone who participates and contributes to this sites content and family atmosphere should be taking the bow. Go ahead stand up and take a bow, YOU are the ones who deserve it and I for one would like to thank you!

If anyone wants to thank me then all they have to do is go out and bring back new members that will make it even better, that's my mission, to propagate the family with powerful support so people can actually DO real estate through using the resource. :praise:

[ChrisGA]

Sounds like u have a pretty decent deal going there, just remember u wont get all your money back unless u sell on a contract for deed at 10@ down minimum.................. Make sure u check title and get title insurance and pay your attorney to close this one for you. Make sure the people get out of the house very quickly with u putting up that kind of money on such a short notice to foreclosure. oh, dont forget when u sell sell the house for 10k more than it is appraised for because the house is worth more with owner financing.

I personally would take title in a land trust and then assign the beneficial interest over to you, just tell ur attorney and they can handle that end for you.

THE LESS YOU DO THE MORE YOU MAKE...........RON LEGRAND

[txrigdiver]

I called the people today to find out what they wanted to do and it looks like they are going to go with another investor. Easy come easy go.

But I got a "no" and that's what counts, as soon as I can get out there and get another 50 of those "no's" as quick as possible, I'm going to get ma a "yes"
HA HA!!!

[Just Information]

They come and they go - for every NO you just get one step closer to the YES!

Make sure you follow up with them and let them know you are available for help. I would do this Saturday afternoon.

Good luck on the next deal

[Pasquini]

sell on a contract for deedNot in Texas you don't.

[Just Information]

Why would you say you can't do contract for deed in Texas?:SM001:

What is this based on? Just the facts please!:whip:

Show me in Texas law that you can not do contract for deed!:SM017:

Thanks!

[Pasquini]

Said don't, not can't. I know you know the difference, JohnMichael.

[Just Information]

Said don't, not can't. I know you know the difference, JohnMichael.

:SM031: Say What?:SM031:

[Pasquini]

TAMU on Texas' law regarding CFD transactions (http://recenter.tamu.edu/tgrande/vol9-1/1547.html)
This change in the law was clearly designed by the leadership of the Republic of Texas to discourage the use of the device. After looking over the linked article I'd find it hard to believe Joe Investor (or is it Bubba Investor in TX) is following these rules to the letter of the law. If he isn't, and he gets called on the carpet, he could be in a world of hurt.

If TX has backed off on this please let me know. I'm not too proud to admit I'm wrong.

[kimesha]

txrigdrver,
if i were you i would try to find out why they went with the other investor? ask them to be honest and express that you just want to know so that you can help the next person who comes along

[RosewoodTx]

I'd find it hard to believe Joe Investor (or is it Bubba Investor in TX) is following these rules to the letter of the law.

Well, my dady's name was Joe, but my sister's dady's name was Bubba so I guess you right on both them acounts.:SM032: I wonder what my brother's daddy's name was? Hmmmm.....I think I'll ask my momma, yep she auta know, I hope.






(to my mother, sister and brother should you ever show up here and find this wee little post, please forgive me, I couldn't help myself):whistling

[Just Information]

TAMU on Texas' law regarding CFD transactions (http://recenter.tamu.edu/tgrande/vol9-1/1547.html)
This change in the law was clearly designed by the leadership of the Republic of Texas to discourage the use of the device. After looking over the linked article I'd find it hard to believe Joe Investor (or is it Bubba Investor in TX) is following these rules to the letter of the law. If he isn't, and he gets called on the carpet, he could be in a world of hurt.

If TX has backed off on this please let me know. I'm not too proud to admit I'm wrong.

Effective Sept. 1, 2001 - this is not a new law!

This law was established to stop the riff raff from taking advantage of people! It's just a new scare!

Texas is one of my markets and yes many investors has stopped using this strategy and that's good for me and maybe you.

Only those that do not understand compliance issues and those who want to take advantage of people are concerned about this almost 4-year-old law.

I have used this same compliance in all my states that I do business in! It's a simple process when you act as a bank comply to the same rules and regulations that govern lenders and one will have no problem.

[Pasquini]

JohnMichael,

Quite frankly I don't care how old the law is, and there is no riffraff test to see whether you are required to comply or not. I'm willing to bet the regular investor in Texas doesn't comply with the requirements spelled out in the law, especially since it is my informed opinion most of these are closed at the kitchen table. You are telling me you personally do. Bully for you, and I'll take you at your word. If everything goes smoothly there probably will never be a problem because I doubt they have a contract for deed police running around looking for violations. It will be the moment something goes sideways, and then someone will be looking for industrial strength fan cleaner.

Given the requirements one operates under in Texas with respect to a sale under the contract for deed I would and do choose a different device. If one wishes to sell under a contract for deed you are well advised to fully understand your compliance issues and do it right. The penalties are onerous.

[DionEvalueMortgage]

Bless the tests of knowledge that occur on this site. However, remember when looking to follow in the footsteps of the great, seek what they sought.

Personally, I think since the deal has kind of been given to Investor B, it is deffinately worth finding out why. This will provide you with more insite to what you are trying to accomplish. :thumbsup:

[txrigdiver]

My last update was simply that I lost the deal to another investor, that was Friday, April fools day. I just didn't divulge all the details. The simple reason is that the other investor offered to give 20% of the profits back to the previous owner. Looks simple enough and sounds good for the home owner but lets take a closer look at what I know and what I don’t know.
The balance due on the mortgage is 96.xK, that does not include the past six months of payments of 8.6K, which I originally thought it did, so a total of around $114K is owed. Then lets throw in the delinquent property taxes of $3.5K (I would think the new investor would be required by the lender to pay this amount too) and the total liability comes out to 117.5K. It’s a 1938 sqft property, int and ext painting and pressure washing would cost me $2K. All in all to stop the foreclosure and do what little work needed to be done including paying the back taxes only $14,100.00 cash would have had to have been laid out. If they actually sold the property for $122 K as my comps showed, then 122000 – 14,100 = 107,900 – the loan bal (negotiated to 90K) = 17,900 gross profit, there are no closing cost, insurance, taxes, HOA dues, or realtors fees taken out of that but lets say the deal netted 12K for the investor and they had to give 20% back to the home owner, they’d have a pre tax profit of $9600.00 remember though, this is with a new mortgage negotiated to 90K, that is a reduction of better then $6K.
If that other investor had a buyer (or better exit strategy) lined up, and they negotiated even a better short sale and paid cash or got great terms on it, then I can see how they would have made it work. I on the other hand didn’t have a buyer lined up so would have had to market it myself. Avg. DOM in that neighborhood for a comparable house is 71 days.
OK, we have a whole bunch of hind sight here and I may have more details that are pertinent that I don’t know about. This was my very first attempt at mortgage pre-foreclosure so I'm not really that disapointed, but I want it to work.
I'm left with nothing but questions
Moving forward and wanting to be more effective, What did I do right?, What could I have done differnetly? What would you have done to make this work? is $9600.00 pre tax worth the time and effort.

[kimesha]

i've been following your post hoping for the first day that i can at least write that i MIGHT have a seller. i think that when we see a potential deal we get all excited . did the new investor make an offer the very next day. if so he/she is good to have gotten a title report that fast. he probably did it him/herself :newbie: