When I’m talking with homeowners in foreclosure, I think about two things. First off, I think about treating them like they’re my brother or sister. Secondly, I think about not giving them a seminar. What I mean by this is that you want to do what you can to help the homeowner. If they want to keep their property, then I help them keep it by giving them helpful hints they can use to do their own workout. Most investors will not do this for them, and the homeowners will be grateful to you for your assistance. What this does for you is it sets you up to buy their house when they can’t or don’t get the workout done. Since you helped them keep their house, they will come back to you when it’s time to sell. This is effectively putting leads in your pipeline which will eventually come out as future deals. On the flip side, you are not required, nor should you, DO the workout for them (unless you’re charging for it). Here’s the problem. What happens if you try to do the workout for them and it gets denied? Your plan, I’m sure, will be to buy their house via a short sale. Now, it’s very rare that this will happen, but in theory, the homeowner could come back at same later date and accuse you of not doing everything possible to help them keep their house. You never want to be in this situation. This is the reason why I do not do workouts for homeowners in foreclosure any longer. I WILL spend the necessary time explaining to them how to do it themselves (10-15 minutes is usually enough).
One final note. Some people give money to the homeowners. Remember, in most cases, this is illegal. There are ways to justify giving the homeowners money back at closing, but you have to be careful and make certain you’re staying legal. Additionally, there are enough deals out there and enough homeowners out there that will work with you WITHOUT getting any money from the transaction… you primarily want to work with them. The homeowner is gaining in many ways from this transaction, you should not need to give them money to seal the deal.
If you handle your pre foreclosure sellers in this way, you will be a success.
Good luck!
