How to Be Taken Seriously in the Foreclosures Market
Buying foreclosures like those listed on ForeclosedHomes.com is easy and anyone can do it. But if you plan to become a foreclosure investor, it helps to have some insight and understanding of what your role in the overall process will be, and how to present yourself in a professional manner.
Professionals with real estate experience offer these five tips on how to be taken seriously in the foreclosure market:
Observe Professional Planning and Etiquette:
There are various types of foreclosure properties. Some have not yet been foreclosed (pre-foreclosures), while others have already gone to auction and were purchased back by the banks that originated the loans (bank owned or REO). Understanding the different phases of foreclosure and the markets they represent will help you as a buyer to approach sellers accordingly.
Be mindful that homeowners caught up in the foreclosure process are bombarded by “get rich now” schemers and are often targeted by outright con artists. If you can distinguish yourself as a serious professional, your sellers will respond more favorably. Many homeowners caught up in the foreclosure process are already feeling pressured by banks or mortgage companies, and if you use high-pressure tactics they will most likely refuse to deal with you. But if you approach them with a legitimate business offer, you may be welcomed as a breath of fresh air during a time of adverse financial need.
Show them the Money:
Normally you must pay for foreclosure homes within days or weeks of purchase. Because most lenders take at least 30 days to process mortgage loans, you should plan ahead and get pre-approved for a loan. Then you can approach sellers armed with a letter from the bank showing that funds are available as soon as you find a qualified property and close the deal.
The seller gets reassurance that they will get prompt payment if they sell, which gives you more negotiating power. And it also helps protect you from having your property sold out from under you to a buyer with cash in hand while you wait around for funds.
Stay in Touch and Keep Promises on Time:
Provide personal contact information – a business card, for example – to every potential seller, and always offer flexibility regarding appointment schedules. Your seller may be juggling two jobs and find it difficult to make time for showing the property.
Be sure to have a voicemail or professional answering service to catch missed calls, so that when your phone does ring, the caller isn’t frustrated or disappointed. Foreclosure markets change quickly, and deals that move swiftly are generally more profitable. Stay on top of your transaction deadlines, and you can avoid costly delays.
Work with a Licensed Realtor
Most pros engage the services of a “buyer’s representative”, or a Realtor whose job it is to scout for foreclosures and then help negotiate them for the buyer. Because you pay them a commission at closing, you can use a representative without spending any out-of-pocket funds.
One of the largest sources of foreclosure inventory is the “REO” or Real Estate Owned market. Banks that have foreclosures on their books hire local real estate brokers to market them. If your buyer’s agent is also a REO representative, you can get an inside track on fresh foreclosure listings held by lenders.
Make Reasonable and Fair Offers:
Whether dealing with pre-foreclosures, foreclosures, or REO property, it is important to understand that sellers are in the market to save themselves money, not give away freebies. Offers that are unrealistic are rarely taken seriously, while those that represent fair value and reasonable terms and conditions are given serious attention and get a more favorable response.
Nobody ever went broke making a profit, and if you can negotiate deals that are profitable but also fair, you’ll be on a faster track to wealth than those whose offers are not even in the ballpark.
The more you are taken seriously in the marketplace, the greater your chances will be of closing successful deals. And when others working within the real estate community know that you work as a professional team player, they will be more inclined to contact you when new deals show up on their radar.
The more you gain experience, the more opportunity will come knocking on your door and the easier the entire process of making money through foreclosures will become.
Success breeds success. And by following these five simple tips you’ll have a great head start.