There are three things to think about when buying a foreclosure property.
1. Pre-foreclosure
2. Foreclosure
3. Post-foreclosure
Actually, there is a fourth one, the “pre-pre foreclosure”, that means the property or loan is in default but it is not advertised yet.
The “Pre-foreclosure” means, it’s in default and it is known to the public.
Important information to know: each state has its own rules and regulation about foreclosures.
Whereas the “Foreclosure” is when the attorney is announcing or advertising the details about the loan that is being foreclosed.
The “Post-foreclosure” is when the property has already been foreclosed and the bank now owns the property and sells it to the public.
To learn more about the process of finding and buying and a foreclosure home, continue watching this video.
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Hi! It’s Lou Brown. How to buy a foreclosed home? How to buy a foreclosure property, right? It’s the hot, sexy word foreclosures. Well, there’s really three things to think about. There’s pre-foreclosure, there’s foreclosure and then there’s post foreclosure. Really there’s four pre pre-foreclosure. That means that the property is in default. The loan is in default, but it’s not even advertised yet. And it’s not even known to the public yet. Are there lists like that? Yes, there are lists that can be bought from different list brokers that actually can get you defaulted loans, but it’s not yet advertised as a foreclosure. Now the next is the “pre-foreclosure” and pre-foreclosure means that it’s in default and it is being advertised. Now it’s known to the public different areas of the country have different ways that they foreclosed. So for example, in Georgia, where I am, there’s only a 30 day foreclosure period.
However the client has to be, or the borrower has to be notified first of the default, they have to be given an opportunity to reinstate that default. Then they start the foreclosure process by advertising, and that advertisement has to be in prior to the beginning of the calendar month. So then they advertise once a week for four weeks, and then the properties foreclosed on the following Tuesday, unless it’s a holiday and then there’s a delay for that. So here’s an important thing to know. Each state has its own rules. It has its own regulations about foreclosures in Texas. For example, it’s only 21 days. Now you go to New York or California or Florida. It can take a very long time to get foreclosures done. And so you definitely want to learn what the rules are of your state. And then one of the things that you learn is that there’s opportunity there.
So if it’s a compressed tight foreclosure period, then you have a compressed time that you can communicate with people and actually get things arranged. If it’s a long foreclosure time, they’re not motivated because they often think for a long period of time that they’re going to be able to get their act together. They figured that, you know, they’re going to strike gold or manna from heaven is going to come down and enrich them and solve their problem. And so it’s not necessarily a good thing that there’s a long foreclosure process, simply because people are hiding out from the reality of the situation that they’re in. Now, certainly if people can get free housing during a period of time. So that’s what some people do. And they actually save up the money that they’re not paying to the bank to get themselves in a position to get another property.
And certainly that sometimes people that we help to get into a new property simply because they were upside down on the other property. And it’s likely because something happened in their life. So our typical foreclosure candidate is somebody who had some kind of issue occur and, you know, God bless them. They’re living something that they were on this planet to learn and live. And that’s just how life works. So we look to help people. We don’t look to hurt people. When we talk with people in foreclosure, we say, look, the first preference is that you keep your home. Is there a way that that can happen? And if that does not pan out, then we start talking about what their situation is. Now I have an amazing thing. It’s called “a cost to sell worksheet”. We actually make a presentation to our sellers. And throughout that presentation process, then we arrive at our cost to sell worksheet.
And the seller actually helps us fill that out. Now that’s part of my training. Something that I’ll do, it’s a quite extensive process and it is amazing what occurs because it literally shows the seller how it makes perfect sense to do business with you. Now I’ve told you about pre pre-foreclosure and that those lists are available. And that simply people that are in default and they might be interested in selling the pre-foreclosure is they’ve advertised it. And now it’s available for anyone who’s looking at foreclosures. Now the next one is “foreclosure”. You’re at the steps when the attorney is calling it off and they are calling off all the details about the ad. Usually that’s been run in the newspaper and that ad now states all the details about the loan that it’s being foreclosed, the value of the loan and the amount of the balance that’s due right now from the borrower.
And then that goes out into the world because they’re, what’s called crying at off on the steps. So they’re crying it out. They’re saying it to all the world to hear. And then anyone who’s there in earshot of the foreclosing attorney, then they will call out their bids. Now, often the lender starts the bidding and the lender starts the bidding at the amount that they’re owed. But sometimes the lender actually comes in at an amount under that amount. And so just because you see it in the newspaper that they owed $283,960 does not mean that that lender will not call it all for a lower number. And they do that for a couple of reasons. One is they want to get rid of the property. They don’t want to own it. They want to be rid of it. And an investor can come in. They’re going to get that instant cash coming in.
Another is it might be subject to a government program where the lender actually gets paid the difference between what they’d knock it off for and what they were owed for their mortgage. And that’s another whole conversation that we won’t have right now, but just know that the lenders probably not getting hurt in that conversation. All right. And in the next one is “post-foreclosure”. Post foreclosure is when the property has already been foreclosed. The bank was the successful bidder at this courthouse, steps. The bank now owns it. And the bank now is, is putting it out to the world. Typically they will go ahead and list it with a local real estate agent that typically works with the bank. They have sweetheart deals. Sometimes the agent is often not getting a full commission on that simply because they’re going to putting it out at a discount.
Now, sometimes the banks will actually put in the money to actually fix up the property, have it totally ready and renovated for somebody to come in and purchase. Other times they sell it as is. They want to put another diamond, the property, they just want to get it cleaned off their books. Again, if that’s below what they were owed for the mortgage, they might be able to collect that under a government program. And so the lender is not going to get hurt anyway. And there’s another opportunity for you. Now out of all of this, what do I love? Well, I love the “pre pre-foreclosure” because I really don’t have any competition in that world. Other people don’t even know about those lists. They don’t know how to market and get those sellers coming into them, but we do. And that’s one of the things I teach, pre-foreclosure is okay.
Like I said, depending on the length of time that they have in the foreclosure process, they may not pay any attention to you. Often people that owe bills and they’re getting knocks at the door, won’t even answer the door. So you have to get very creative in how you communicate with those folks. At the steps, not my favorite place to be at the steps. The den of sharks is circling around there. Usually they have very significant cash to work with. It is a cash deal at the steps. Whereas with a pre-foreclosure, I might be able to take over the existing financing on the property. If it’s a good loan, if there’s equity in the property, we come in and reinstate the loan and we start making payments on that loan. Now that helps the seller in an amazing way, because the seller now doesn’t have to worry about their credit.
Their credit is being reinstated. Now over time, as we are making the payments over time, it’s actually helping the seller’s credit and that now helps them right their ship and get themselves in a way that they can now proceed down life’s road without such turmoil as having a foreclosure on your credit report that lasts for 10 years. So it makes a lot of sense to a seller to take that route in the pre-foreclosure world. But as I was saying at the foreclosure steps not my favorite place, simply because number one, you typically have not seen the inside of that property. So you’re judging that property from the outside. You have no idea if there’s holes in the floor, if there’s a toilet, you have no idea. And believe me, I’ve done all of the above. So I know what I’m talking about. And if you don’t have the cash to sustain such a hit, as you thought it was one thing, and it actually turned out to be something else.
Now, another thing is when the people are leaving the property, the ones that are being evicted because they lost their home to foreclosure to get back at the bank, because they’re angry about their situation in life. They’ll pour concrete in the toilet and block up the main lines and tear up the property, take out the entire kitchen, take out the windows. Even I’ve seen all of that. I’ve seen all of that. And what’s kind of interesting to know, is that at the foreclosure steps there’s deals made. There’s no question about that, but if you are not in a position to sustain a situation like that, then I would be careful about at the steps. The other thing is there’s kind of a cartel there of people that know each other. And you come in as an outsider. Sometimes they’ll bid you up just to get you out of the game, just to make you pay too much for something and kill you off, so that you don’t come back and mess in their arena.
I’ve watched all of that happen. And it was one of the reasons I really don’t like at the steps foreclosures simply because there’s risk involved. There can be significant risk. And of course, after the foreclosure, that’s a favorite as well because the bank already owns it. You can view the property, you can see exactly where it’s at and you can make offers to the bank. And if it makes sense to them, you buy it. We bought many, many, many, many, many properties that are called R E O’s, Real Estate Owned by the bank. So once it’s an REO placed with a real estate agent, that real estate agent is now going to control that listing and make your offer to the bank. Boom, boom, easy peasy, lemon, squeezy, you got your deal all done. So hopefully that is of help to you. And you’ve learned a bit about the amazing world of foreclosures.
My name is Lou Brown. I’ve been at this game of buying, holding, and selling property now for over 40 years. And I have a training coming up. It’s called The Wealth Builder Workshop and it is an online class. So we are going to be doing this virtually, Hey, from the comfort of your own home, it’s an all-day training and I’m going to help you get in for the amazingly low cost of $1. That’s right. You get me over 40 year veteran in this game. Hopefully you’ve been able to understand what I’ve been teaching and how I’ve been teaching it to you. Imagine that you could have a whole day of training. Now we’re going to go an interesting route in that training. I’m going to talk to you about finding buyers before you even buy the property. I’m going to teach you and show you exactly how we find those buyers.
I’m going to show you the difference between wholesaling and the amazing world of the becoming the bank for your buyer and the amazing amount of money you can make on that side of the business versus wholesaling. I’m going to show you all the numbers. You’re going to learn exactly what it is and how it works. And then I’m going to show you about another amazing thing, protecting all that you create using trusts, land trusts and personal property trust. We’re going to teach you our step-by-step process of exactly how we protect everything that we buy. And I’ve taught many people. I’ve got licensees of my system in all 50 States and they absolutely love this training. So I’m inviting you to come for the amazing low price of $1, and you will be able to register at www.WealthBuilderWorkshop.Online And I’m looking forward to seeing you there. I’ve got a lot of goodies there. You’ll take a look at that. We’ll give you some advanced homework and you’ll have that as a download prior to the class. So take a look at all the VIP goodies that I’ve got for $1. My name is Lou Brown. Look forward to seeing you there. Yeah, baby!
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