Foreclosure Forecast Newsletter

I’ve also listed many past Marketing Mania articles for you to review for more in-depth answers. (Please refer to the “Related Links” box at the top right of this column.)

1. Start by “Doing the Math” to determine the most you can offer the seller. Remember that the most you should offer is 70% of “fixed up” market value, including all costs.
2. Make sure you find out from the seller (preferably by phone before you meet with them) all the loan and lien information on their property so you can determine how much equity he has to sell you.
3. Use the right contracts to be sure you comply with your state’s Foreclosure laws. California investors should use our Equity Purchase agreement and Notice of Cancellation agreement as provided in our Mastering Home Study package.
4. Get the seller to accept and sign your written offer. (Read as much as you can find on “negotiation and selling strategies” in our past articles.)
5. Open escrow with a simple telephone call and order a preliminary title report on the property. Give the escrow officer a copy of the contract.
6. During the five-day cooling off period (a California Foreclosure Law) review your preliminary title report, to make sure there are no discrepancies between what the report shows to be owed on the property and what the seller has told you is owed.
7. If you are taking title “subject to existing liens and encumbrances” (as I train you to do) make sure you get from the sellers all loan payment books and/or loan statements so you can continue payments on the existing loans after you close.
8. If you have not seen a recent termite report on the property, order one right away (cost: about $100) and ask the inspector to include a bid for all termite damage repairs in his report.
9. Review your written termite report with your contractor, and ask him to walk the house with you. Review what remodel work you will need him to do, and ask him to give you an estimated cost to complete all repairs, including clearing all items in both Section 1 and 2 on your termite report.
10. Call for Fire Insurance and make sure it is in place at close of escrow.
11. Once you are ready to close (in California, after the cooling off period has ended) the escrow officer will ask both you and the sellers to come to the escrow holder’s office (at different times) and sign final documents.
12. Each seller will need to bring to the closing a valid driver’s license for the notary – there are no exceptions. (I’ve learned the hard way on this one!) Make sure you remind the sellers that everyone on title MUST be present at signing and present a valid drivers license!
13. You, as buyer, will need to bring certified funds for the cash needed to close your purchase. The amount typically includes the total cash needed to reinstate the delinquent loans, plus whatever cash you negotiated to give the sellers for their equity in the house.
14. Do one last “walk through” of the house before you sign final documents to make sure the property is in the same condition it was in when you signed the purchase contract, and that the sellers have moved out.
15. Call a locksmith to change the locks the minute you are “on record”. (Recording is typically done the morning after you have signed closing papers.)
16. Get working on your remodel and/or repairs. (Typically, it takes my contractor 2-4 weeks to complete needed work.)
17. Offer the property for sale on both the MLS offering a 3% commission to any buyers agent, and with FSBO (For Sale Buy Owner) advertising.
18. Make sure your prospective homebuyer has an adequate down payment (10-20%)and is pre-qualified for a new purchase money loan to cash you out entirely. Don’t waste your time with homebuyers who are not qualified!
19. Close your sale and take your money to the bank!