Think of the early stages of foreclosure as that period when a homeowner has has been served with a summons by the bank’s attorney(s). It is a period during which a homeowner, faced with having to make several decisions in relatively little time, may find it rather difficult to cope with the circumstances.
S/he has 30 days to answer the summons; since the lender has refused payments in any amount short of the full amount pass due, including tacked-on late charges and attorney’s fees, s/he has to raise the required amount and there’s no one to turn to for that amount of money needed.
S/he still must meet other pressing obligations and living expenses; e.g. utility bills, food, kids, work, etc., while being under pressure to – perhaps – find a place to relocate to should the worst case scenario becomes a reality. The homeowner needs help, and since s/he is still in complete ownership of the property, s/he alone is able to make the decision to sell.
The question is, will you be the one who makes the deal with a homeowner in this type of situation? Will you approach this homeowner with the right offer and in the correct manner? If you keep in mind that a homeowner facing foreclosure has a financial problem (not a memory loss or sudden case of stupidity) and will listen to reasonable offers, you may be able to make a great deal for yourself.
Let’s face it, if there’s no equity in the property, you’re probably not going to even make a call. When there is enough equity to get you interested in the property you must take into consideration the homeowner’s circumstances and base your approach and presentation around those instead of your desire to grab everything and risk insulting the only person capable of making a deal with you on that home.
As an investor you know it’s a heck of a lot easier to deal directly with the homeowner instead of the lender, so you must be able to convince that individual that you are the ONLY one who is capable of providing a solution to the problems s/he now faces.
You have the answers! You have the money to make a deal whereas the bank takes the home and s/he gets nothing. However you must convey that you will make the transition as smoothly as is possible under the circumstances.
Making your best efforts not to totally deplete the little dignity that homeowner has left will go a long way towards you making the deal to buy that property instead of another of the homeowner getting tugged and pulled in all different directions by the many real estate salesmen, investors and mortgage reps, and then finds it difficult to make any decision at all.
There’s a deal to be made with homeowners whose homes are in the early stages of foreclosure. The right approach will usually help you make a great deal.