Purchasing Pre Foreclosure Properties
Distressed Properties in Utah
The hardest stage to purchase foreclosure properties in Utah is the Pre-foreclosure stage, but it also presents the most potential for big profits.
The pre-foreclosure stage begins when home owners receive a "notice of default" after they have missed about four missed mortgage payments. The owners usually have about three months before the foreclosure auction to find a way to make up the missing payments and bring the loan current. However, usually they are monetarily unable to do such. If they had the money, they most likely wouldn't be in default now would they?
Many preforeclosures are for sale and are listed on the MLS. These home owners realize that they need to sell their home to prevent the foreclosure. When the homes are listed, they are usually at or near market value and are being sold as is. These aren't nearly the deal most real estae investors are looking for. However, the majority of distressed homes are not for sale, atleast not to the general public. Many real estate investors attempt to contact these distressed owners, and offer to purchase their homes below market value to help them avoid foreclosure and preserve their credit.
Search for Short Sales and Pre-Foreclosures!
How do I find Pre-Foreclosure Deals?
The best way to find pre-foreclosure deals is to find distressed homes as soon as possible. The sooner you can find that a home owner is missing payments, the more options they have. Word of mouth is great, but you can find preforeclosures from the following notices:
Notice of Default
Anybody can find out about preforeclosure houses when the "Notice of Default " is filed at the County Recorders office and becomes public records. The Notice of Default is issued approximately four months before the foreclosure auction. Companies like "Foreclosure.com" can provide you with these default records online. Anyone can subscribe to these services for a monthly fee. You can also sign up for free trials to see how you like their service.
This search below showes RealtyTracs database of preforeclosure homes. It also shows auction homes and bank owned homes.
Notice of Trustee Sale
The Notice of Trustee Sale is another public notice received 1 month before the date of the Public Auction. These notices are available at the local county recorder offices, and are posted in local newspapers. Sometimes they even include the amount owed on the property.
Several Trustee Lawyers also post the upcoming auction dates and results online.
How to Contact Distessed Home Owners?
Facing Foreclosure is not a fun time for the home owners. They usually have other crisis going on in life while their house is in distress. There are two effective ways I have found to contact the distressed home owners.
I have tried mailing both letters and post cards and have seemed to have a better response from the post cards. (In addition they are cheaper to mail). I think post cards are more effective is because the owners actually look at them. If they get an letter in an envelope there's a good chance they won't even open it because they think its just another collection notice.
My postcards simply said " You still have time to save your home or save your equity but you must act soon. We can help"
You can actually get free postcards and business cards at vista-print.
The most effective, yet most time consuming and gut wrenching way to contact them is simply to show up at their houses. The owners of the distressed properties usually have one of three responses.
- Denial - The majority of the people I've talked to at the door are in denial. They either don't admit that there actually is a problem, or claim that they've got it under contral and have taken care of it.
- Hatred - Some people are just so mad and bitter at the world right now they just swear at you and slam the door.
- Welcome Acceptance - These are the people you're looking for, and you usually have to hit a few before finding them. These owners realize that there is a problem and are open to any suggestions and advise you may have. They want to solve a the problem before it becomes a crisis.
When should I contact distressed homeowners?
I've found that the sooner the better. They have more time and more options, however, if you contact them as soon as you get the notice of default they often times haven't received it themselves yet and don't even know what's going on.
Door knocking is hard. It takes persistance and lots of rejection, but if you'll do it, you will find preforeclosure success.