This is the 3rd part of a 3 part article on the stages of buying foreclosures. There are 3 stages to buying pre-foreclosures. These three stages, analyzing, hunting and convincing, are accomplished for the purpose of achieving one goal. That goal is to find an owner with sufficient equity, who is willing to sell his property before the auction and convince him to sell. Even those most dedicated to their task will may not be able to purchase every property analyzed for the auction. As disappointing as this is to one who has arduously toiled to come home victorious, it must be remembered that success is not achieved by processes of certainty. To be successful calculated risks have to be tolerated. The objective is not to buy every property analyzed but to buy enough properties to make the venture profitable. If enough time is spent you will be successful in the purchase of not one but several properties by this method. It is important to note that the 3 stages we are talking about today are for investors who wish to purchase a property for the long term or resale it for a profit. These stages could be used for short sales or loan modification programs with a few adjustments, but we will not specifically address those in this article.
The next essential ingredient to profitability is the current owner’s willingness to cooperate. It may seem unlikely that an owner would not cooperate given the owner’s situation, but it is actually far from it. Distressed people have a tendency to behave irrationally. Many have an undying optimism that their problem will be solved in a last minute miracle, which will render them financially sound. Sometimes the miracle happens. Sometimes it does not. Your next challenge then is to convince the owner of the gravity of his situation. This you do for his own benefit as well as yours. The biggest obstacle you will need to overcome is denial. Many homeowners believe that someone will help them solve the problem. One way to overcome this obstacle is to convince the homeowner that it is a good idea to have a backup plan. You will be the essential ingredient in this back up plan. If his 1st option goes though that is good, but if it doesn’t you will be prepared to purchase the property. Tell the homeowner that time is needed for you to purchase the property. Try to get him to sign a contingency contract. This is an earnest money contract that allows him an out, if his first option comes though. After this is signed you can start your due diligence and be prepared to purchase the property if the owner fails to resolve the problem.
