How to Find Foreclosure Property Early

Excerpted from How to Make Money on Foreclosures by Denise L. Evans ©2005

Unless some lender violates its customer’s privacy, you generally won’t be able to find troubled properties before they become public knowledge. The trick, then, is for those borrowers to find you. You want to generate prospects by making yourself easy to find.

There are three efficient and economical ways for people to find you:

1. word-of-mouth referrers (your fan club);
2. seminars and newsletters; and,
3. targeted advertising—small yard signs, etc.

Get to Those Who Need You
Word of mouth might not bring you the most inquiries, but it will bring you the most business. That’s because word of mouth generally carries with it an implied recommendation, so the borrower is already predisposed to believe you can help him or her. Unfortunately, if you’re just starting out in buying foreclosures, you don’t yet enjoy any word-of-mouth reputation.

Seminars and newsletters let you promote yourself without sounding really obvious about it. The recipients of your efforts pay attention because they have a problem, or know someone who has a problem. As a result, they’re predisposed to seek help, but you still have to convince them you’re the person who can deliver.

If you’re a people-person and can comfortably speak in front of groups, then a seminar is the best vehicle for you. If you enjoy meeting with people, but don’t like public speaking, then you can create a meet the expert seminar-type function. Someone else introduces you and then people mill about, eat cookies, and drink punch while you wander around and just talk. If you’re not comfortable with either one of these, then go with the newsletter or informative article route.

Some people will learn enough from you to avoid foreclosure. That’s okay—it’s a positive result for you. Every seminar attendee or newsletter subscriber who’s able to learn from you and solve their own problems is a powerful and motivated referrer totally convinced of your credibility and value.

Sadly, most people, for emotional or other reasons, will not be able to implement the advice you give them. Those people will become your pre-foreclosure customers.

The most calls, the fewest prospects, and the biggest expense, will come from advertising. That’s because most of your advertising-related calls will be from people who are merely curious, or who are only days away from losing their property. Also, you must work really hard to differentiate yourself from all the other pre-foreclosure advertisers, some of whom operate on a nationwide level.

Enlist the Lender
The first person to learn that a loan is headed towards foreclosure is the lender. You’d think the borrower would know first, when he or she fails to make the monthly payments, but borrowers are generally very optimistic people. They expect a miracle to happen, and everything will then be rosy. The lender knows better. But bankers have very strict privacy laws, and can’t go around discussing past-due accounts.

This is not to say that you shouldn’t talk to lenders. It just means that you must rely on two separate sales jobs. You must sell the lender on the idea that you can help. Then, you must rely on the lender to sell the borrower on the idea that you can help. You want the lender to encourage the borrower to contact you. Why would they do this? Because banks do not want real estate. They call it the owned real estate, or sometimes ORE, or even sometimes REO (real estate-owned) portfolio. It is a lot of work for the bank to own, insure, maintain, and generally fool with real estate they never intended to own in the first place.

Armed with the lender’s natural reluctance to foreclose, and then fortified with your personal professionalism, credibility, and sincerity, you are going to sell the lender on giving a single piece of paper to the borrower. That’s all—just one sheet of paper.

Before preparing your own flyer, however, you need to set up some relationships with lenders that will foster their giving your flyer to their troubled customers. You need to sell yourself to them. In the beginning, this is a numbers game, like most sales. You must get your product (meaning YOU) in front of as many people as possible. Some of them will buy. Most of them won’t. The more people you contact, the more sales you’ll have.

This is my personal, always successful, approach to sales:

• make contact
• establish credibility;
• create a relationship;
• ask for permission to sell; then,
• sell.

Here’s the blueprint for getting to talk to the lender.

Make Contact
The first thing you want to do is build a database of lenders. Call all the banks and credit unions in town and find out who’s in charge of their real estate loans for your area of interest. (Commercial lenders are separate people from residential lenders.) Many times they specialize by size, usually called small, mid-range, and large. It will change from bank to bank, so you just have to ask lots of questions. The vice presidents who handle subdivision development loans are different from the ones who make loans to homeowners, even though both involve single-family homes. In larger banks, there’s usually also a completely separate department for community redevelopment loans, also called affordable housing loans. Many, but not all banks have something called a Special Assets Department. Special Assets handles loans in default.

Put all of these names, titles, and lenders in some sort of database on your computer so you can easily merge them into a letter. Make a note of any names that might be male or female, like Terry Collins, Dale Robinson, or M. D. Smith. Ask the receptionist the gender of these people, so you can make a note. (Nothing will mark you faster as an amateur than addressing a letter to Mr. Terry Collins, who happens to be a woman.)

Establish Credibility
You might not use many of the concepts in your personal investing, but believe me, someone’s going to ask you questions about them. You’d be stunned how many people, upon finding out I’m a commercial real estate broker, ask me about current FHA home loan interest rates. “How should I know,” I want to say, “I don’t sell houses.” But, I don’t say that. I just keep up with FHA interest rates, so I don’t lose credibility when people ask me those questions.

Being familiar with matters that relate to your industry, if not directly to you, is a simple way to establish credibility with someone. The more credibility you have in general, the more you establish with a lender you want to help you. Some other ways this credibility is established includes the following.

Promote yourself as an expert
Go to your church, civic group, YMCA, or Chamber of Commerce and offer to give a speech or write an article about “Helping Loved Ones Who Might Be Facing Foreclosure.” The title shouldn’t be “Avoiding Foreclosure,” because that’s a little too blatant for most people. (Would you want a coworker accidentally observing you reading an article entitled “How to Avoid Foreclosure?”) Make the title of your talk positive and proactive. Remember, this is about helping people who may be in a crisis.

Build experience as a speaker or writer
You can do this pretty quickly—it doesn’t take very many speeches or articles. I think three would do the trick. Book clubs or retirement community newsletters might be good places to start.

Create a professional appearance

As Featured in the Book

How to Make Money on Foreclosures

Denise L. Evans, Attorney at Law

How to Make Money on Foreclosures covers everything from finding properties in foreclosure, to negotiating with sellers in financial distress, to reselling the properties with a healthy profit. Written from a real estate expert's point of view,

[More]

Other Article(s) from the book

No results were found

Forms from the book

No results were found