What's Going To Happen To Me???
I am new to this and I would like to know how others have handled this situation.
You have someone in pre-foreclosure and your coming into to help save the day by catching up the payments and stopping the foreclosure. You are sitting down discussing the situation with the homeowner and you know that you are only buying the house to turn around and sell it. Then they ask you:
"What's going to happen to me?"
How do you tell someone that you will save them from foreclosure and make everything better and at the same time kick them out??
I am just interested to know how others have handled this.
You can only save their credit from a foreclosure. They will still have to give up the house.
Consider making a tax deductible contribution to a non-profit company that assists homeowners. This company can take your donation and give most of it towards the buyer. Give enough to cover 6 months of rent.
Explain that you are there for damage control. You are preventing their foreclosure and taking away this one financial obligation. Even more you are willing to give them a place to stay payment free for 6 months while they figure out the rest of their life.
One technique...i'm sure there are others. GOOD LUCK
What did you say?
Ther have been a couple of times that I have leased/ optioned the property back to the owner. This is on rare occasion and usually when I'm feeling soft (kids usually). Anyway a L/O can be productive for you. You get your 5% up front (if they can't do that negotiate) positive cash flow and a sure sell if they are serious about buying! If not keep there option money and move on, no loss to you!!!
Just tell them "Good bye." I mean, be nice about it, but that's basically it. If you are going to do a short sale (and you should really try and do that if they are already behind in payments) then just tell them, "Look, you're about to lose your house, and that sucks. But, we can still try and save your credit, which is good. You are still going to have to move but when your financial situation changes you are in a much better position to get a new house." If you short sale, give them a few thousand to move out. I've got a buddy that gives people like 5K to move out, which covers a couple of months rent and Uhaul money.
If you do a LO you can still do some thing like that. I had one house where the people were in pre-foreclosure and they couldn't pay for the house. So I told them I'll make up the back payments, take over the payments and whatnot. I was able to give them money for a few months rent and make up the back payments with the option deposit. I helped them pack up, borrowed a buddies truck and trailer, moved their stuff to an apartment and then got them set up with CCCS. I helped the husband find a job, we had to sell one of their cars but they are starting to get back on their feet. They are saving money, paying off their debt (which will be cleared up in three years) and right now I'm looking for a house for them to move into and get out of that apartment. We've become pretty good friends and now I'm dating the daughter...hehehe....
Anyway, the way I approach it is to just be nice about it. Be honest, they have to move. No biggy, they were going to have to anyway. I guess I'm too nice because I tend to stick around and help out as much as possible. That's really my motivation for getting into this business, the money is just another benefit.
Okay!
Peace,
Mitchell
This is what I do. I take the deed or Contract. I move them into a small apartment in a fringy area. I pay at least three months rent and I leave them with some cash money. I evaluate the wage earner and I intrude into their life and try to arrange employment.
Ok that is my overhead. I then sell the property and if there is a cash consideration I may give them some of it. If as usual there is a workout on the buy I give them nothing more. I do my best to keep the kids going to school and the wage earner out working.
You have a debt to society. they have been so wonderful to you all of your life. Yeah Right. But that is what I do it is part of the cost of doing business.
I consider it part of my overhead.
On all of my poverty units all my managers always had a container of rice and a container of beans and a scoop. Any tenant could come and get it and that kept them alive and at function.
It is nice to know that it is there. You do not realize how bad some of these situations get out here. Many many people live right on the fringe. The father goes out each day sometimes with no food and tries to find a job by hanging around the corner where the contractors come to take advantage of low cost labor. He comes home and if he is lucky he has $50. He has to feed the family, keep the bike going, pay rent and the utility bills and sometimes little things PTA dues, lunch money for kids. medical bill. It aint easy and as a fellow human you gotta help.
Lucius
I'm really glad that I saw this post and all the replies. You guys are awsome. I hate when people get too greedy and just kick the family out on the street with nothing. Lets face it there are alot of people out there that just hit one bad situation after another and now they are loosing their house. What a deal life has given them, and they gave themselves in alot of cases, but the point is they have already paid enough and i'm glad there are still people out there that give 2 cents!
Keep up that state of mind!
Tom Stewart
[addsig]
Helping people has been a blessing for us.
That is why we got into investing thru Loss Mitigation. Over the last year and a half, we have learned that 98% of all loan defaults are mitigatable IF we can get the distressed homeowners to call us in the pre-foreclosure stage.
We do charge the homeowners a fee to help them keep their homes but we save them $1,000's in back payments too.
Of course, if they are just too far gone, we can contract the home ourselves ior flip it off to one of our very kind and ethical investors.
The bottom line is that there is almost always a win-win solution to ever y problem or circumstance and sometimes going the extra mile to do what is right does indeed pay off financially and spiritually.
C- :-o
I have been reading this forum for a while, but not contributing anything, largely because I'm relatively new at this. But now I am moved to break that silence.
Yes, I believe there is money to be made in preforeclosures, but I also believe in win-win. Our job is not to "but a home at huge discount", but to (creatively) find a way to make money while helping someone out.
I have gained much from the responses posted here, and I am pleased to share cyberspace and a profession with people who think like (most of) you.
Thank you for believing in win-win solutions.
Here's how we handle it in our neck of the woods.
I have created a team of 5 persons to work with homeowners who are in the last 4 weeks prior to Auction.
So we figure that they may have a high level of motivation at this point.
Our steps and procedures are designed to make them see the selling process as a positive action which will enable them to put this sad period behind them in a positive way.
We have therefor geared up to deal with the contingencies specific to the urgency arising from the extremely late moment of action.
There's a lot of issues there at this point, but let's deal with your basic question.
So one of the early questions we always ask is: "Are you OK with the place you're going to be moving to...?"
And we just shut up and look at them straight in the eye with an understanding smile.
We deal with this issue early on, as we don't allow the option of having them stay on the premises when the deal has been signed and money has been exchanged.
As a matter of policy we are prepared to offer financial compensation to the tune of "first, second, last and deposit" in helping with a (reasonable) rental, and up to 3 months cost of storage.
Funny thing...we haven't had anyone take us up yet on the storage; they' all seemed to prefer our offer of helping them with a well promoted garage sale.
We "involve" the Sellers as much as possible in our actions.
This seems to strengthen them in the realization that they are managing their destiny in a positive manner.
So among others we have them make (controlled) "important" phonecalls, produce certain documents and "explain their situation" whenever possible at least once at a meeting with a 3rd party.
All of this makes them stronger.
They become convinced in the process that they are doing the right thing, and we tend to bond very well over time with the families that we are helping to avoid foreclosure.
So we don't even allow it to get close to the point where they could get the feeling of being "kicked out".
We work out a pattern of getting them involved in making the "solution" happen, and I truly feel that the homeowners on average look back on what transpired with a feeling of achievement and satisfaction as to having made the right decision.
It may sound like a lot of work, but in reality it isn't.
It's just a different way of getting the job done, and I'll vouch for it that it gives a lot of satisfaction to those involved.
If you truly believe that you are providing a valuable service to a vulnerable group of folks, you'll find it easy to get that message across.
That's my way of looking at it, and I hope it adresses your question in a positive way.
:-D
[addsig]
Thank you all for your responses, they were all very informative and I am also glad that everyone is of the helping nature when it comes to taking care of people in their time of need.
I must say if I had not found TCI I would not know nearly as much as I do now, thanks to everyone who contributes, it the best source to learn from when you are new to the game.