How Do You Work With Preforeclosure Properties?
Have you been thinking that the kind of leads you should be going after are Pre-Foreclosure Properties? Here are my thoughts about these deals.
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“How Do You Work With Preforeclosure Properties?”
“How to Find Investors to Buy Your Deals”
Joe: 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?”
Joe: 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.
Joe: 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.
Joe: 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.
Joe: 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.
Joe: 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.
Joe: All right. I hope that helps. Good luck.