The Million Dollar Foreclosure System - Part 10 12-7
You must treat this expense as another debt against the property just like
mortgages and liens. This added expense would be subtracted from the equity
when it comes time to calculate what you will pay the prospect. Let’s say fix-up
costs will be $3,000:
The cost of buying must also come out of the owner’s equity. If escrow,
title insurance, inspections, late charges, pre-payment penalties and foreclosure
attorney’s fees amount to another $3,000, the equity is now down to $49,000.
After you have determined the amount of all debts and costs you must
subtract them from the owner’s equity. The result is the Adjusted Equity. That is
the true value of what you are buying. That is how you determine whether this is
a property worth pursuing.
"Tyrone we aren’t going to reach an agreement unless there is something
in it for both of us, right? If you will give me some information about your home I
can give you an idea of just what I can do to help. Does that sound OK?" Then
you can turn to your Property Info Sheet and start asking questions:
12-8
Use the Property Info Sheet as a guide and fill it out as you talk with the
prospect. If you are a good listener you will get some of this information without
asking. You will just pick it up from what the homeowner is saying.
She may volunteer other tid-bits of information that aren’t asked for on the
Info Sheet – where she works, name of a local relative, that she is planning on
moving next week, etc. Make a note of any such information on the back of the
sheet. You never know when it might become valuable in the course of your
negotiations.
PROPERTY INFO SHEET
Date of 1st contact __________________. He called us _____________. We called him
____________
.
Owner's Name_________________________________________________
_
Other name(s) on
deed_______________________________________________________________
_
Property Address
Now living at
Phone (work) ____________________ (home) ______________________
What was starting date of foreclosure?
Have you received notice of sale date?
Attorney/Trustee handling foreclosure?
_____________________________________________________ (12-9)
Address ____________________________________________________ Phone ___________
_
What have nearby homes sold
for?_________________________________________________________
_
How long for sale? _____________________________ How many other homes now for sale?
What is average price? $_____________________________
_
Would yours sell for same price $____________________ Why?_____________________
_
Bedrooms _____ Baths _____ Garage ________ Pool ________ Fireplace ______ Near school
Landscaped front & back ______________ Type of foundation ____________ Termites?
Type of roof __________ AC ________ What home repairs needed
Have you tried to sell? ________ For what price? $____________ Why no buyer?
When was last appraisal? ___________________ What value?
Are you now working? __________________ Is your spouse?
What are you planning to do if you sell the home?
Have you tried to get a loan?
Are car payments current? ________________________________
NOTES:
1st loan lender ____________________________________ Balance due
(12-10)
$_________________________
_
Payment $__________________ Number of payments behind _________
_
2nd loan lender ____________________________________Balance due $ _________________
_
Payment $ ___________________________ Number of payments behind _________________
_
3rd loan lender ____________________________________ Balance due $ __________________
_
Payment $ ___________________________ Number of payments behind __________________
_
Other loans, liens, debts
Property tax lien $___________________ IRS liens $_________________ Judgment liens
$_____________
Estimated late charges due $____________________ Foreclosure fees
$____________________________
Prepayment penalty ________________
Total debts/costs $______________________
_
Estimated fix-up $______________________
_
Purchase costs $______________________
_
(Escrow, etc)
Quick sale discount $______________________
_
TOTAL $______________________
_
Estimated property value $____________________ minus TOTAL $______________________
=
ADJUSTED EQUITY $_____________________________
_
The information you gather from the homeowner will have to be revised
when you have a chance to study the prospect’s loan documents and other
papers. You will revise again when you get current figures from lenders,
contractors, etc. Explain this to the prospect. He/she will not have an immediate
answer for every question.
12-11
Come right out and ask the prospect if you bought the home today what
would be his best price. He may surprise you by saying something like, -XVW ,
JLYH PH VR FDQ JHW RXW RI KHUH , ,
You now have two choices. Based on the information you have just
compiled you can make a preliminary offer right there on the telephone. Or you
can tell the homeowner that, yes, it looks like you may be able to help, but you
need to visit his home, examine his loan documents and do some research.
Making a preliminary offer on the phone allows you to save time, because
you won’t waste a visit to someone who won’t even consider your offer. If he
seems interested in the offer you can arrange the meeting.
On the other hand, if you visit the prospect without telling him the nature of
your purchase offer you may be able to influence a reluctant prospect to agree
to the type of offer he might have rejected on the telephone?
In either case if you have done a good job of connecting with the
homeowner You will find that he often comes back to discuss your offer even
though he rejected it the first time he heard it.
Always leave the door open for further negotiation. The prospect may be
shopping your offer around to others who are trying to buy from him.
If you have done a good job of presenting a friendly and competent image,
and you learned what the homeowner’s real needs are, there is a good chance
you will hear from him again.
The foreclosure process costs money. As soon as the first document is
recorded the homeowner becomes responsible for all of those costs.
Real estate attorneys usually handle foreclosure actions. There is his fee,
the cost of document preparation and recording costs. Costs vary from area to
area, but the default cannot be cured until all outstanding monies due are paid
and that includes the cost of the foreclosure.
Until you know how the costs run in your area estimate that the total will
be about $1,500. Or better yet, talk to a real estate attorney or an escrow officer
and get their estimate.
12-12
Back where we were calculating various costs to deduct from the owner’s
equity we indicated this fee as "foreclosure attorney’s fees".
When negotiations get serious you can contact a title company or title
attorney and ask them to run a preliminary title check. This should uncover all
liens or mortgages against the property. These checks are nominal in cost and
after you have built a relationship with a title company they probably will do them
at no charge.
Gather all of the information you can from the homeowner, but double check it
very carefully. This document and accompanying materials are designed to provide authoritative information in regard to the subject matter covered in it. It is for illustration purposes only and presented with the understanding that the author and publisher are not engaged in rendering legal, accounting or other professional opinions. If legal advice or other expert assistance is required, the services of a competent professional should be sought. |
