How Do You Work With Preforeclosure Properties?
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How Do You Work With Preforeclosure Properties?

Hey, this is Joe Crump, and welcome to my
new series of video blogs. I’ve taken questions and I’m going to give a bunch of answers
to people who have sent me emails with questions. The last time requested it, which was about
a month ago, and I’m finally catching up here. This first one is from Michelle Wright.
It says, “When pursuing pre-foreclosure properties, do you have a script or flow chart
of what to say and how to overcome objections?” First of all, I think it’s important to
state here that I don’t do pre-foreclosure properties very often. And the reason is that
most pre-foreclosure properties have no equity in them, there’s not a way to easily do
seller financing with those deals, because if they’re in the pre-foreclosure system,
or in the pre-foreclosure process, that means that a notice of default has been filed on
them which means that at least four months has passed with them being late on their payments.
So on an average property that’s maybe $125,000, with a $1,000 a month payment that means they’re
$4,000 a month behind on their payments. They’ve also got attorneys’ fees they got to pay,
they’ve got to pay late fees, just in order to bring it current again. So if you paid
those fees for them, then you could probably take over their property and they’d let
you have the property. But there’s usually no equity in those properties, or it’s a
very small amount of equity. So, pre-foreclosures don’t make as much sense as you might think. Now I do have objection handling and scripts
and processes for the other types of zero-down structures that we use, and I’ve got a whole
hierarchy of zero-down structures. The one that we focus on is what I call the “For
Rent Method,” and essentially all that is, is flipping lease option deals, getting control
of them and then flipping them to someone else. It makes a lot more sense than taking
properties that are in pre-foreclosure because we go right after people who have them who
are for sale by owner, we’ve got people that are trying to rent the properties, and
this solution for them is much easier because they aren’t behind in their payments most
of the time. So it makes it easier to put these deals together
for them and it allows you to pull the low hanging fruit rather than having to go and
try to track down people that are in pre-foreclosure. So many of these pre-foreclosure lists that
I’ve seen in the past, and I’ve tried to work them, it’s very difficult to get
hold of them. Sometimes the best way to get hold of a pre-foreclosure is go knock on their
door and try to put the deal together. But then you’ve got to find out if they actually
have any equity in the deal, and you’ve got to find out if they’re willing to talk
to you and what I’ve found, and most of the people that I’ve worked with that have
done this have found, when you knock on that door, those people don’t answer the door.
They’re in hibernation mode. They don’t want to talk to anybody. They know they’re
late. They don’t want to talk to another creditor. If they’re not paying their mortgage, they’re
probably not paying their other stuff, too, and there’s nobody that they really want
to talk to. It’s very embarrassing when you go through that process. I know this personally
when my business crashed back in 1991. It’s not a pleasant experience. So, anyway, but I’m saying that it’s easier
to go after other types of zero-down structures from people that are in good standing with
their lenders or people who have lots of equity in their property and those usually are not
on the pre-foreclosure list. So let’s get into the objection handling in some of the
future videos that I’ve got. I’ve got actually some people that have sent me emails
asking me how to handle specific situations and I’ll get into that for you as we go
along. Of course, all the stuff is in my programs as well. All right. I hope that helps. Good

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4 thoughts on “How Do You Work With Preforeclosure Properties?

  1. I am starting with door knocking on PreForeclosure doors.
    Hoping & Praying I will get my first deal soon!

  2. I GOT ONE!!!
    After months of doorknocking after work and on days off, I FINALLY landed a contract!
    A preforeclosure I got subject-to.
    After making up all behind pmts, and charging the tenant buyer 7% down, I will pocket $3,850, and after paying the PITI payment, and charging market rent I will pocket $500/month.
    The bank is owed $293,000, the ARV is $305,000 and I am selling (lease purchase) for $315,000
    Can you please tell me tge best contract to use on buying this?
    They did sign a regular contract for RE purchase. But should I have them sign one for a land contract??
    I wasnt sure the best one to use in this case. And I honestly don't have but a few different ones I was able to find online for free.
    They are basic RE sales contracts.
    Its my first deal and I dont want to mess it up.
    Thank you in advance!!

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