The singular key to real estate investing is making lots of offers to motivated sellers. In order to make offers to motivated sellers investors first have to find them. An area of intense focus by investors is targeting people that have fallen behind on their mortgage payments. This period of time is often referred to as pre-foreclosure. It is not uncommon for people that go into default to start hiding from the bank by not returning phones calls, ignoring mail correspondence, etc. This is a big mistake. It is important to understand that banks do not want to foreclose on property. Let me repeat that, banks do not want to foreclose on property.
In an article published in the Washington Post dated 2/17/2008, Renae Merie says “The bottom line is the average foreclosure costs more than $50,000. It is cheaper and easier to lower the borrower’s interest rate and put them on a repayment plan or sell the home at less than is owed�
She further states that “Mortgage lenders are going door-to-door in some parts of the country to track down borrowers who are behind on their payments to help them work out a solution�
This is great news for investors, banks and lenders are motivated and willing to work out the mortgage or better yet, sell the home at less that what is owed. This is called a short sale. As you talk with people in default on their mortgage you want to communicate this to them and help facilitate this communication with the lenders. There are significant profits to be had when you can get the bank to accept a purchase price less that what is owed and less than the market value.
Posted by Carter Brown
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