There’s a story on the news or in the newspapers almost every day about how foreclosures are almost an epidemic but fortunately for investors, foreclosures are a great way to pick up a bargain and continue to develop your real estate portfolio.
Foreclosures happen when the homeowner goes into default on the mortgage payments and stops making payments to the bank. The whole time you’re dealing with the bank and the seller, payments aren’t being made and that works to your advantage.
When a person is in pre-foreclosure, they are extremely motivated to get out of the house and save their credit score. In other words, they are motivated to sell and get the bank off of their case.
Of course there are owners who will counter your logic for selling to you with a number of arguments. For example:
· What do you say when a homeowner tells you that they were promised an amount by another investor? You might reply to them that how can an investor make a promise of a certain amount of money without first speaking with the bank that holds the mortgage. You would also be frank and tell them that you can’t promise them any money at the moment but once you speak with the bank and get the details you would be able to make an offer.
· Some owners will insist that they be allowed to stay in the house. Your reply would remind them that if you should buy the property, you are not able to rent to them and actually leaving the property and the problems that have come with not being able to keep up with the payments would be a blessing in disguise.
· If the seller asks how you as the buyer can be trusted it is a good idea to be able to show them how much time and effort you’ve spent on other home foreclosure purchases and reassure them that you are not playing games but are serious about buying and rehabilitating this property.
Keeping these simple ideas in mind when you’re ready to start purchasing and rehabbing foreclosure properties should go a long way to giving you success in the foreclosure real estate market.