Knocked On Door Of Pre-forclosure Today.....
Left a flyer. Guy called me back 5 min after i left. I thought to myself, wow that was. I didn't think my flyer would work that quickly. But to my surprise, he goes on to verbally attack me asking "how i can sleep at night" and how people like me are only out to take advantage of people and how if people get themselve into a situation, it's no one else's biz etc. The whole time i'm thinking to myself, this guy's gonna lose his house in 3 weeks and he's wondering how i can sleep?! So, needless to say, I tried to be nice as i could end the conversation. Made me truly realize that some people just don't want any help. Sure did toughen me up though! Some will, some won't, so what, NEXT!
well I wouldn't worry too much most people in their situation are all stressed to the max. They also think your trying to take thier house rather than accept that they are losing the house for whatever reason.
I also found that many are in denial all the way to the auction block. Nothing you can do or will ever do will be accepted by this kind of person.
They don't realize the benefits of selling to the right investor nor will they be open to this concept in that kind of emotional state.
Chaulk it up and keep going!
There's also another perspective.
When I started my (non-real estate) business in NYC back in 2001, I leveraged everything I owned, including a 2nd on my house.
After the attacks, I alsmost lost everything and went into foreclosure. I said 'almost.'
I was able to rally, rebuild my business and in fact, paid off a $250,000 mortgage within two years.
I now own rental property in NYC and a
lake home in VA.
The point is this: The guy in foreclosure may be a smart, ambitious entrepreneur and is fighting to turn his business around. You better believe he's going to throw you off his porch when you drop off your 'flyer.'
Don't assume everyone is doomed to the auction block; they may be working through hard times and need breathing space to do so.
You never know, the same guy may drop off a flyer at your house one day.
i'm not so sure this is the type of guy you can't sell to. if i were you (and i've gotten calls like that), i would've stayed on the phone and let him berate me a bit. i've taken calls from bill collectors that seemed 20x madder, b/c they wanted my money, u want something from this guy - so it's different.
once the hot air runs out, you can casually switch modes for him and let him know you're not a predator and the whole reason you came by was FOR him. never argue back, never even try to raise you voice over his, to explain a point, just let him run out. after all is said and done - if he's still on the phone (hasn't hung up) then say you understand completely. when dealing with folx in person or on the phone, people say the best way to deal with them is to join 'em. mimic thier body language and mimic what you think they're feeling, so it comes off to them as someone who "gets" them. then, you're on the easy road and they have respect for you and trust you.
check back with this caller and answer any concerns he has about you as a person or business and i bet you win him over - even if not for the sale, maybe for the referral of someone else he may know in his predicament, now or in the future.
God Jackman,
You are good, right on the snozz. I am impressed. Start your book at once. and save a little time in sessions for your old highly impressed friend. Lucius
Jackman,
Excellent advice!
The people who are screaming at you the loudest...
... just want to be heard by you the most.
Thanks for the good advice all. One can always use some while out in the trenches.[ Edited by Nievana14 on Date 12/13/2003 ]
This is what you tell him and it has worked for me in the past in other aggressive sales fields:
Sir I understand how you feel and many of the home owners I helped in the past felt the same way initially till they saw the benefits of the soloutions I am offering.
And then you ask a turn around question Sir can I ask you a quick question?
If I can show you a way to solve this this problem like I helped others while you benefit from it at the same time, would that be of an interest to you?
Hope that helps
Hey,
I think the major point has been completed missed in this: The belief of most people is REI are stealing people's houses.
Why do you think that is???
How many times have you read a thread here where someone is going to offer a homeowner $1000 "moving money" and the REI plans on making $30k???
Or how many times have you read about someone who lowballs every single offer they make (or tries to renegotiate at the closing table) and says "Hey who does it hurt?"
Well guys, it hurts us all.
There are a ton of people on this website who treat everyone with the basic respect they deserve. They turn a nice profit, but they are not greedy. They truly create win/win situations.
BUT there are people who take advantage of the seller's weakness. Bleed them dry. These folks don't last long, but the damage is done.
So folks, please think a little bit before you make offers or offer advise to people.
Bruce:
I couldn't agree more.
There are many RE 'gurus' who preach closing techniques that are just plain silly and insulting.
When a person is under durress, the last thing they want to hear is some oily salesman preaching how he/she is going to 'help' them by giving them money for the U-Haul. They know damn good and well that the property will be flipped and their equity will be snapped right up. Is it htier fault they're in the bad financial shape? Well, probably. But it doesn't mean they're going to fall for a ridiculous sales tactic such as 'mimicking their body language.'
And yes, I fully realize it's better to walk away with credit intact. There's no disputing that.
But those investors who actually believe desperate home-owners actually fall for the 'But I'm HELPING you!!' are delusional.
People just aren't that stupid, for the most part.
Do I believe foreclosure investing is a bad thing? No, quite the contrary. It is a legitimate business.
It should be conducted with dignity and class, however, because the infomercial sales pitch is creepy and only hurts those investors who operate within tasteful boundaries.
My 2 cents, yours to take or leave.
Yep I agree with the let me *help* you bit is a bit much to swallow. That said I do know that by helping to find the soloution to the problem I am helping everyone but still i do not use the term help, because I find it to self serving. As far as lowball offers go, I try and manage risk and once you have a large amount of cash tied up in a deal that turns legal you understand part of being fair is making sure you are ready for all outcomes.
"the last thing they want to hear is some oily salesman preaching how he/she is going to 'help' them by giving them money for the U-Haul"
If you were refering to my post .. then I think you truely missed the point.
You know what is the difference between average realtors and the top 10%? 90% are just realtors and top 10% are sales people who happen to be realtors.
Now when I say sales people I don't mean used car sales techniques.
A salesperson is a consultant. Your job to find the problem and offer how to fix it and handle OBJECTIONS <gasp> yes objections along the way.
For example, you ask the owner what he is looking for. Try to understand his real objections. Maybe fear of being on the street with no home if gives his house away. Which you will counter by helping him get a rental home. there are so many real objections and fears owners may havbe and your job to identify them and address them. The sooner you can understand this is a sales process and follow a sales presentation" the better results you will have.
Although I am farily new I confess in forclosure business, I have been in sales all my life and in top10% including real estate. I already have my first couple of deals in pre forclosure not because I am the greatest saleeman, but only because I treat it as a consultant sales call!! and you need to learn to overcome OBJECTIONS!
I don't understand how it can be said that you are not "helping" someone in foreclosure by offering them money for their house, even if the offer is "low".
Who is better off in this situation:
1. No house, no money, foreclosure on their credit report.
2. No house, some money, no foreclosure.
I'd say that it's number 2 every time.
What people in foreclosure don't realize is that they actually don't have ANY equity in their property (even though their property may be worth more that what's owed on it). They are not entitled to any of it! Not a dime! If they were, then the bank would pay them the difference between the FMV and what is owed when they take the house back. They don't, and it's for a reason!
Case in point, I just bought an REO where the bank made a 25k profit on the sale. Did they cut a check to the former "owner" for that money? I don't think so!
How come no one asks the bank if they can sleep at night when they take a property back, put the "owner" on the street, ruin the owner's credit (making it VERY HARD for them to get another home) and give them nothing for their "equity"?
Even $1k to a person in foreclosure is more than they're gonna get if they let the bank take the house back.
As an investor, I think that you ARE helping someone out buy offering them "something" for their house above what they owe on it.
I had a situation where I offered someone 10k for their "equity" and they turned it down. The house had an ARV of 220k, with a 120k first and a 25k second. In addition, he was 10k in arears. The "owner" purchased the house 2 years prior for 125k! Here was a situation where the person turned down a profit of 40k because he thought he was entitled to more! Who's the greedy one here?[ Edited by jkgrossi on Date 12/16/2003 ]
Good post jkgrossi. And doing a proper sales process (ID needs, goals, objections) will help owners understand their situation better and make the right decision.
In reply to johnqreplies -Junior Investor comment... "you newer know, maybe one day he'll drop by your house..." a thought went through my mind: Or, he will maybe drop by your house and ask to test-drive you,instead of checking your house backyard. You know abviously how it goes in those strange situations, so why dismiss such option?
No, you're missing the point.
Go back and read my original posts.
Yes, foreclosure investing is a valid business. I'm not disputing that.
But your infomercial sales pitch is just going to piss some people off, period.
I run a very successful non-re company and sales is part of our marketing process. We are successful because we treat our customers with dignity and respect and don't rely on some oily RE guru's step-by-step closing method.
If you choose to 'mimic body language' or speak in soothing vocies, saying:
But we are here to HELP you, sir! That's your choice.
But don't be surprised when you do find yourself in a heap on his front lawn.
The stark reality is this: Foreclosure investing does offer an 'out' to people in trouble. Most likely, trouble they created for themselves. But you are preying on their bad fortune, no matter how you sugar-coat it to make yourself feel better.
Some people may want to work through their situations without your 'help' and will be insulted by your snake-oil pitch.
Open you eyes and realize that there is actually a real-world out here and your guru's methods may not work in all cases.
I recently ran into a situation that while I was begining my discussion with a couple, the husband actually got mad at me and started ranting about, all I wanted to do was to take their house and he went on to say I was as bad as the other jerks that he talked to and I took that for about 3 minutes and then I stood up and told him that I was finished listening to him verbally attack me and I was done trying to help him at that point. His wife then stood up and told him to go sit in the other room while she talked to me and after about 5 minutes, the gentleman came into the kitchen and his wife explained to him what I had tried to tell him earlier and before I knew it, he wanted to be my friend. But, I think I did the unmentionable, because, I actually raised my voice and stood my ground and explained that I was only there to help and not to administer more grief, and it worked. I think that every situation needs to be looked upon and evaluated(quickly) as to how we respond to verbal abuse. I for one am not going to take that for but so long before I will get up and leave and usually when you time it just right, they will come around quickly because they see, possibly the last glimer of hope they have to retaining some sort of dignity in this unfortunate situation.
That's a great point. Some people MAY come around, if they have time to think about it.
And it sounds like you didn't insult their intelligence, which makes all of us look good in the long run.
Thank you, I would never insult the intelligence of someone whom I have never met. Not good for anyone. I did what I had to do to diffuse that situation, but I never lost control of my own emotions, I just didn't let them know that. Sometimes we just have to adjust to all levels of conversation and drive on from there. I just let them know that the only option was not to just take their home from them and once he calmed down, I had control of the whole situation. It felt good when I left,knowing that things got so heated and then calmed so quickly by just being me and showing that I really do care. That is why I am doing this, because I do care about people.
Come on, now.
It's OK to do it for money as well.
Helping people is great but you gotta pay the yourself...oh and of course the accountants and lawyers.
Otherwise, you'd be banging the Salvation Army drum down at the WalMart.
Not there's anything wrong with that.
Mimic body language?
That is not what true sales about.
I stronly suggest you read books like Spin Selling or some of the books by S Schifman. These books are the ones used by companies like IBM, Sprint , AT&T to train their high level exceutive sales. So it is far from being an oily salesman approach!
Sales is nothing but being a consultant which is what I was trying to get through. Its not about mimicing voice or body language.
You also need to learn to address objections that are certain to come up.
I have been out with a couple of those supposdly "seasoned" pros in pre forcl. and it was so amusing. We must have been seen 20 propsects and they got ZERO!! They certainly did not use any sales techniques, but rather they were all over the board in their presentaion and kept telling them how they wanted to help!! lol
I have got my first 2 so far from only five appointments and I have hardly any experience in pre forcl. So getting them to say yes has been the easy part. Of course I am still to learn how to be leverage the $$$ side yet.
But hey to each his own.
Sales is not a bad word lol
We are all sales people and this forcl business is certainly one hard core sales. Like it or not every time you meet with owners you are trying to sell them on yourself.
For all those new ones out there do yourself a fav and get some of the good sales books out there that teach consultative selling!
Ok, the money is good, but that was not the driving motivation for me. And, I like Wal-Mart
Quote:
On 2003-12-17 04:23, omega1 wrote:
In reply to johnqreplies -Junior Investor comment... "you newer know, maybe one day he'll drop by your house..." a thought went through my mind: Or, he will maybe drop by your house and ask to test-drive you,instead of checking your house backyard. You know abviously how it goes in those strange situations, so why dismiss such option?
Did this make any sense to anyone? Or am I the only one that didn't understand any of this?
Dear Omega et al.
I have always enjoyed the problems that are present in the PreForeclosure. I have over the years worked out a rather positive method which seems to work in about 90% of the situations that I encounter. It is really rather simple.
I evaluate the house. For Real. I list the necessary tasks which must be done to remove it from the hungary clutches of the Loss/Mitigator aka Walter Mitty and or that demon incarnate the REO officer working his way up the banks tree. I put a figure on it. I then examine the house in great detail roof to woof. I put a money figure on that, I list the costs to carry, I list the costs of sale, title report etc. Of course I did find out who the Trustee was using for title insurance and took that number and arranged to hold the order open so I can benefit on a very reduced cost on upcoming sale. I add all these items together and I divide the estimated profit if any. The nice home owner, those who can write, then signs an acceptance of this info and he signs the deed. Executes a Statement of Identity, I give him whatever sum I have agreed to advance against fruture profit. I give him a statement suitably embossed which identifys him as the person who is entitle to receive a one half interest in the future profit. And this is important, I give it to him fully accounted including the beer I bought the Building Inspector, on close of the upcoming sale. He, She, or the ever popular It are now my friends. We may have a drink on the future closing or I may just send him his check. I do not worry about some future arrival of him at my front door complete with a vest wired for boom. I do not worry about actions at law, cause the documentation that he has signed is so complete and FAIR, no court in the land would find otherwise.
Sorry I am so wordy but I really do not know how to condense this info which I think is at the heart of the Pre/Foreclosure business. iI is just that I think I understand this small portion of that situation called The Human Condition..
So there, deep breath Lucius
Lufos,
very good info. I am curious .. what disclosures do you have the owner sign?Any detailed answer is greatly appreciated!!
Johnqreplies,
First I want to say congratulations on having a successful business.
Now, with regards to your comments about sales pitches and soothing tones and the "I am here to help you" concept, I must say perhaps your position on the matter is a little to strong.
Now don't get me wrong, everyone is entitled to their own opinion, but you must remember these forums are not only to hold conversational pieces but also for the learning experience, for that new investor born only yesterday. I must say to everyone reading this,
There really is no "right" or "wrong" way to deal with the consumer, you have to practice "your" own tone control, you have to really read yourself as well as the consumer and find out how you respond to the objections and questions.
The sooner you find your own internal niche with regards to how you operate "your own" business, the sooner you will be making people happy. And "in my humble opinion" as a Investor "that's" your job. We our the problem solvers and we get paid well for doing it.
SacVestor
I've watched this thread from its beginning and now that it's about petered out, thought I'd drop in my two cents along with a different perspective.
How about really helping the guy in foreclosure (catch more flies with honey…and all that). Why not offer to save his home; preserve his equity; reduce his payments; restore his mortgage credit…and all of this while dealing with him only at the true full value of the property?
How about a flyer (or letter) that says something like this:
-0-
WHY NOT SELL SOMETHING YOU DON’T EVEN OWN (YET) IN ORDER TO SAVE YOUR HOME?
Dear Mr. and Mrs. Smith,
Regarding your property, which the public record shows to be in arrears, may I offer to SAVE YOUR HOME FOR YOU while leaving you and your family in the property; stopping your foreclosure; bringing your mortgage payments current; and even reducing your payments for at least the first year of our agreement.
However, should you prefer instead to vacate the property and make no further payments, I will then...fully at your discretion...be happy to simply purchase the property from you at its full value while still preserving as much of your equity for you as possible.
Our program requires only the following:
• That the existing mortgage financing remain in place for the term of our agreement (note that our program does not violate a lender’s ‘due-on-sale’ clause)
• That the property’s title be held in a third-party, co-beneficiary land trust for the term of our agreement (for the personal and legal protection of all parties)
• That the two of us share together in future appreciation potential (usually by 50%) should such appreciation have occurred by the time the property is sold or refinanced by you at termination
• That my initial investment be returned to me (without interest) from proceeds received upon the disposition of the property (sale or refinance) at termination
• That you will have thoroughly reviewed and feel wholly comfortable with the program in question.
• That you agree (should you opt to remain in the property), in the event of a future uncured default, that you will sell us your equitable interest in the property at full fair market value.
Respectfully,
Bill Gatten
Please call my private line at 800 207 xxxx
-0-
I’ve done this a few dozen times and made a bunch of money in the process (without a lot of competition I might ad). My motto has always been that “Think BIG is great: but thinking small a whole bunch of times can yield the same results.”
Hi Bill,
A question about your flyer. How do you give them a lower payment than they originally had? Are you personally paying a portion of the payment yourself?
Also, when they refi, they'll of course have to re-fi to pay you back but at that point, that makes their payment higher than before. I think you also stated that the appreciation would be 50%, are they refi'ing for the max amount allowed?
I think the flyer is a great idea because, personally, I like to have things to read over and study.
quinn
In my area, there seems to be some investors trying to make money by doing whatever they could. They seem to be doing well financially, being out there for many years. They are completely different kind of people from you and I, but they still call themselves "investors", which makes me sick.
One example: This investor contacts folks in default, telling them he has a buyer who wants to live in the house. He actually brings in some folks to take a look at the house. He tells the owner they want to buy at the market price. Owner signs some paperwork. We have 111 days in California before the trustee's sale. He ties the house almost the entire 111 days and backs out just a couple of days before the sale saying the buyer changed their mind. And he offer to take over the house at the price just little more than it's owed. Desparate homeowner sells it as they see no other way at the last minutes. I tried to get the name of the guy, but couldn't get it.
Quote:
On 2003-12-16 12:27, jkgrossi wrote:
<snip>
What people in foreclosure don't realize is that they actually don't have ANY equity in their property (even though their property may be worth more that what's owed on it). They are not entitled to any of it! Not a dime! If they were, then the bank would pay them the difference between the FMV and what is owed when they take the house back. They don't, and it's for a reason!
Yes but, not for the reason you state below.
Quote:
Case in point, I just bought an REO where the bank made a 25k profit on the sale. Did they cut a check to the former "owner" for that money? I don't think so!
The reason is quite simple. You did not buy a foreclosure. You bought what was once a foreclosure and was now a REO. The bank had carrying costs involved and was entitled to recapture them.
Once the bank actually owns the property, the rules change. If you had bought the house on the courthouse steps for $25K more than the bank's judgement, the owner absolutely would be entitled to the overbid money.
Out of the 40+ pre-foreclosures we've talked to, we have taken title to two and currently short-saling two(one is definatly gonna work since the second is held by an actual person). And then the five listings we have gotten, VERY few people have not been willing to hear what we have to offer. Homeowners do have the option to say no. Yes, they are in distress, but not to the point they can't make a somewhat educated decision. The we are here to help attitude DEFINATLY works. Haven't you ever had to go to bed at night with a past bill you cannot pay or money problems? It's just a huge burden on your shoulders that affects every aspect of you life. If an RE investor can come in and relieve a persons problem, yes, even if you are paying $1k for a POTENTIAL $30k profit, why not? Secondly, profit is purely speculative. Nobody can guarantee you what you can get for a given property, especially the way the market is going right now, you could easily be off by $10k. One deal we have agreed to give the owner $1k if we profit $10k or more off the deal and they are happy with that. Before you can say how a person in foreclosure would act, you have to actually have spoken with one! This is not like your typical sales business. Your consumer is nothing like any other business. Knock on a few doors, get a single mom to start crying because she's so happy that someone is there to save her because she didn't know what to do, then tell me that we are not "helping" people.
They have a problem, we have a solution.
Quote:
On 2004-10-27 03:12, GeneralSnafu wrote:
Quote:
On 2003-12-16 12:27, jkgrossi wrote:
<snip>
What people in foreclosure don't realize is that they actually don't have ANY equity in their property (even though their property may be worth more that what's owed on it). They are not entitled to any of it! Not a dime! If they were, then the bank would pay them the difference between the FMV and what is owed when they take the house back. They don't, and it's for a reason!
Yes but, not for the reason you state below.
Quote:
Case in point, I just bought an REO where the bank made a 25k profit on the sale. Did they cut a check to the former "owner" for that money? I don't think so!
The reason is quite simple. You did not buy a foreclosure. You bought what was once a foreclosure and was now a REO. The bank had carrying costs involved and was entitled to recapture them.
Once the bank actually owns the property, the rules change. If you had bought the house on the courthouse steps for $25K more than the bank's judgement, the owner absolutely would be entitled to the overbid money.
My postcard that earns a 10-15% response on foreclosures says on the front, "FORECLOSURE? We can help" and it works well. They may be selling this way out of desperation but many are still appreciative that there is someone there to explain the situation to them and make them not have that feeling of not knowing what to do, afraid to tell people, etc. I've noticed that usually when people know that you know they are in foreclosure, they open up and spill their guts because they are just wanting someone to talk to about it. Plus, people have just been so stressed about it for 6 months that they just want the weight is off their shoulder.
Quote:
On 2004-10-27 03:51, kenmax wrote:
you maybe helping but some will think they are being taken. they are only selling this way out of desperation. they would not be selling at all if it wasn't for "this sitiuation we are in" so they feel the world, life in general is "cheating" them and in some cases it is, like death in their family ect. so they see you as another "cheat" in the "situation" no matter what your intentions are. so if you say "help you" they say "yea right" they "also feel helpless and belittled. i try to partner with. as if dealing with any seller, to give them self-respect. it works for me i just don't say the word "help"........km
<font size=-1>[ Edited by kenmax on Date 10/27/2004 ]</font>
I have also seen both ends of the spectrum - people who are in complete denial about their situation and consider me a 'vulture', and people who are fully aware of the pending consequences and have viewed me as a 'savior' because I was able to rid them of this terrible burden. I take the former with a grain of salt, and the latter with utmost respect and appreciation. By "grain of salt" I mean I don't take it personally, although I am sympathetic to their feelings.
One of the keys to success is being able to listen to people and understand what they are trying to communicate - which sometimes means "reading between the lines". Although someone is yelling at you and telling you how terrible they think you are, they may actually be venting about something that is completely unrelated to you. If you are capable of listening through the rant and not reacting to it emotionally, sometimes you may hear the "true" message, which is they are frustrated by everything they are going through and they simply want a way out. You have to be able to read people, and if you have that gift you can sometimes pick up clues on how to respond to them in a way that will change their perception of you, and consequently how they feel about you. When that happens, you can still be effective, and truly help them.
For me, the challenge sometimes has been exercising the patience to listen through it without mentally writing them off and politely apologizing for bothering them. It is much easier to politely back your way out of those situations than it is to endure the tongue-lashing and see whether there is a deal.
Here's one thing you may want to try. I work foreclosure deals all the time. My first door knocking experiencing about landed me in the guys front yard. He was not happy either. I was not willing to give up. I went back and showed him how I could help him. I researched storage lockers and offered to pay the first two months and moving companies. I offered to pay for the moving expenses. I now own the house and many others. I really do not like to disclose how I do a lot of things but this is a great site! :-D