Lend Me Your Techniques...
I just started with these pre-forclosures. It's tough. So far I've interviewed with 5 leads and I am not getting anywhere. I understand that people in this type of situation are very emotional and tend to put up thier gaurd. I've hope i'm asking these people the right questions. I've been asking, how can I??? I get over these objections of denial. Would it help if I started a business and had a business card in order to appear more professional? I'm not frustrated at this point. I know that I'm only going to probably get 1 deal out of 100 and I don't mind. I just want some good constructive criticism here.
Newbie
Come up w/ a company name i.e "FlippingCoins,LLC" and represent your company not yourself. Say things like "we can help you" opposed to "I like to buy homes".
This should give the seller more security. Also don't be greedy. Give them $10k at close and a L/O
You mean L/O the house back to them? or offer to take the property off thier hands with a L/O?
From what I've heard (never have done it myself) you DO NOT want to L/O or rent the house back to them. High chance of legal battles or issues with trashing the house. Besides, if they can't pay the lower mortgage, what makes you think that they'll pay you higher rent?
What you CAN do is offer them 5-10% of your profit when (if) you sell the house as terms of deferred settlement. Just explain how the house may re-sell of bazillions of dollars more in a couple of years, and they'll get a paycheck at that time that can substantially exceed anything they're not pulling out of the house now. NEVER use word in negotiations like "no, not, never, impossible, lose, losing, forego" etc. No matter how positive the entire sentence may be. Example: Notice how above I didn't say: money they lose now. I said Money they're not pulling out. When you actually speak with the seller, replace "not" with "in addition to". In addition to the money you're pulling out now. Also use a technique that surgeons use, called "safety island". I use it 99% of negotiations. ALWAYS WORKS! Get enough info over the phone so you know if it's worth even going there. Once at the house, BEFORE you even look at it... Sit down at the dinner table, and discuss their doomy situation, explain to them how you can help, and convince them that you're NOT here to buy their house. You're looking at it, and IF you're interested, and IF you come up with a way how you can help them, then you will formulate an offer together with them. Have your paperwork in your car or in a briefcase, so you can stand behind your words. This not only instill a lot of comfort into the seller, and gets them to trust you and take you seriously, but it also puts them on a defensive. They want to convince you now to buy that house! They want to create a deal that will work for you, because they know you can always walk away and you have 4-5 deal to look at, right after you leave them, before you have to go home and walk your dog and pick up kids from daycare. You're a man(woman) of your word, you have family, you have a life, you're responsible, you take investing seriously, and this is your job, not a one time deal. You won't be made into a silly kitty with their house dangled over your nose like a crumbled newspaper. They won't take you seriously if you don't take yourself seriously.
And practice your negotiations. Walk up to people on the street and within 5 minutes get them to tell you a sensitive piece of information about themselves. Like a last name. In a restaurant, get the name, street address, and a phone number of that cute waitress, get the barman to tell you what his father does for living, and what his life plan is, outside of the bar. GET PEOPLE TO TRUST YOU.
Hope my 2 cents help you. Best of luck!
L/O property back to them
example: $100k value, $50 owed/ buy
90% LTV loan = $90k
payoff $50k, give seller $10k, you keep $30k
if they default just evict them and sell home
this scenario is much better if your the buy/seller and your investor carries loan and lease option. In this scenario you would flip over to another investor for $65-$70k and profit $15-$20k w/out any obligations
Now... about the representing the LLC. Would that be illegal if I don't have a business?
If you're buying foreclosures in CA then I highly recommend that you do not lease/option it back to the seller, don't give them any compensation beyond the deal they agreed to on the equity purchase agreement, and that you thoroughly understand and implement Civil Code 1695 and are aware of Civil Code 895 and 2945. You'll save yourself a lot of potential legal and financial problems later.
If you don't know what CC 1695 is then you're not ready to buy foreclosures. Good luck!
I found that §1695. To the Post.(is a code about an 18 minute rule for horse racing); §895 Stolen Personal Property. Is about stolen properties. §2945 is Access and Workspace Requirements. How is this suppose to stop me with purchasing pre-forclose properties. I looked them up in the California Code&Regulations. Is that the right place for these codes you gave us.[ Edited by flippingcoins on Date 12/06/2004 ]
Quote:
On 2004-12-06 16:12, flippingcoins wrote:
I've been searching the net for these civil codes. I'm not having any luck. What is Civil Code 1695;895;2945. By the way I'm in a hault now. I don't want to do anything unethical to my state's law.
I use this link: http://www.leginfo.ca.gov/calaw.html
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See the following code for lease op's
1. FINANCIAL CODE SECTION 7700.3-7704
2. FINANCIAL CODE SECTION 7300 : 1145
3. FINANCIAL CODE SECTION 18000-18019
4. FINANCIAL CODE SECTION 14650-14656
5. FINANCIAL CODE SECTION 1220-1239
6. FINANCIAL CODE SECTION 4050-4060
7. FINANCIAL CODE SECTION 17635-17654
8. FINANCIAL CODE SECTION 6850-6856
9. FINANCIAL CODE SECTION 18435-18457
10. FINANCIAL CODE SECTION 18040-18043
11. FINANCIAL CODE SECTION 3100-3132
12. FINANCIAL CODE SECTION 18190-18192
13. FINANCIAL CODE SECTION 18415-18425.17
14. FINANCIAL CODE SECTION 7260-7275
15. FINANCIAL CODE SECTION 22550-22551
16. FINANCIAL CODE SECTION 750-782
17. FINANCIAL CODE SECTION 40050-40060
18. FINANCIAL CODE SECTION 22250-22251
19. FINANCIAL CODE SECTION 690-698
20. FINANCIAL CODE SECTION 14000-14007
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Thanks for clearing that up for me johnmichael, and thank radio-52 for the fair warning. Do you have any other tips for a newbie concerning these trust of deed sales?
Never Never Never L/O back to the owners in this situation. You are likely to be sued for usury.
Ok, so hopefully you've decided to avoid L/O-ing the house back to them...
Back to the original question...it's helpful to establish their level of motivation (which may well be the inverse of their understanding of the mess in which they may soon find themselves). My favorite screening question is, "So, on a scale of one to ten, how motivated are you to sell your home?" Their answer may not correspond to their actions, but it's a start, and it can be fuel for later use..."Now (seller), you told me you were pretty motivated a minute ago. Let's review your options." Be sure to remind them they could lose the house and all the equity in it. And that selling with a Realtor could be a crap shoot, may work out, may not.
Also, tough as those visits were, five is a good start, but a pretty small sample size. Most pros agree that it will take dozens of pitches, at least at first, before you get to the point of making an offer they'll consider. Not that this should stop you from making offers. Tell them you're going to make them an offer when you visit with them or speak on the phone. If you don't feel embarassed by your offer, it's probably too high. If they object, review their options, or leave your card and make a polite exit. Then knock on the next door.
Are you running any kind of ad, or doing other marketing? It's always good to have them call you, kind of establishes that they are ready for something to happen.
It helps, too, to remember that if this were easy, everyone would be doing it, and succeeding. Though some of the gurus (and experienced posters in this forum) make this look/sound easy, it ain't necessarily so, esp. at first.