Understanding the Options Available to SELLERS in Foreclosure

It is crucial to you as a real estate investor to fully understand all the options and alternatives that are available to owners in foreclosure and the consequences of each – Following are a list of Alternatives and Consequences

1. Reinstatement – buyer secures default
   • Through own money
   • Short term borrowing.
   • Includes – missed payments, attorney’s fees, and other fees charged by the lender
2. Sell the property
   • Sell prior to foreclosure sale
   • Can be difficult and risky
   • Deals can fall through
   • Prospective buyers may not qualify
   • May require short sale to create equity
3. Refinance
   • Owner refinances the property with a new loan to pay off the loan in default
   • If the owner is behind in payments, this may be difficult
4. Deed In Lieu
   • Owner deeds property to lender
   • Lender doesn’t have to go through the foreclosure process
5. Bankruptcy
   • Owner files bankruptcy which will stop the foreclosure
   • Owner has to make up the back payments
6. IMPORTANT – Once the stay is lifted, the foreclosure process will continue where it stopped
7. Get it when it sells
   1. Foreclosure proceeds
   2. Receives anything above the opening bid after paid junior liens (usually not much)
8. Walk Away
   1. Foreclosure – Lasts 10+ years

 Strategies – Here is how you can increase your income from 1 out of 5 deals to 4 out of 5!

Early moves set the stage for what happens later!

1. First Be Certain Great Deal is available
2. Review the numbers
3. Decide exit strategy
4. Call the owner
5. Ask permission to visit them with all people on title there
6. Tour property
7. Look for factual info – pictures of kids, anything to start relationship
8. Let them talk about predicament, and actively listen
9. Display empathy with their situation
10. Take Notes
11. Have Sellers restate facts
12. ASK what they would like to do – best outcome of our meeting
13. IF they realize that selling is the best option for them – tell them about my company – video testimonials
14. Plant seeds -How the back payments on their loan will be paid, and immediately improve their credit
15. When EVERYONE agrees on all the terms of the sale – tell how making payments on their loan, further increasing their credit score to minimize any future objections
16. Agree on moving date, closing date, etc.
17. Go over all the terms before taking out the purchase agreement

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