Foreclosure in Chicago>Question Details

Nicole, Home Buyer in Chicago, IL

What is the best way to contact an owner in pre-foreclosure? And what's the best way to get a dialog started?

Asked by Nicole, Chicago, IL Mon Jan 20, 2014

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21
- Hello, thanks for asking.

- I'm a starter investor who'd like to buy a duplex in my area where I can live in one and rent the other out. The area is fairly expensive and competitive when properties hit the MLS, so I'm exploring other options that might be available to see what might work for me. The location above is inaccurate - I'm actually looking in Chicago.

Thank you, Nicole.

Chasing pre-foreclosures is a bad idea.

Here's the thing. A seller who is in "pre-foreclosure" is almost certainly under water. If they could sell before foreclosure, they would. So bailing them out would mean overpaying for the property.

I know, it seems like, they owe $200,000 and the property is worth $250,000 - but in my experience, they haven't paid their mortgage in two years BEFORE they get the foreclosure notice, they owe closer to $250,000 with late charges, and since they've stopped caring about the property it is in such disrepair that it's really only worth $200,000.

Plus, with a duplex, you're inheriting a tenant (or two) that has come to hate landlords in general and the one who owns this property specifically, which means that you will likely have to allow the units to become vacant and bring them up to standard before re-renting them.

To my mind, you will do much better if you pursue a bank-owned property - one that has already been foreclosed on. You will receive clear title, and the price will be less than it would have been if you had tried to bail out the previous owner.

All the best,
2 votes Thank Flag Link Mon Jan 20, 2014
Nicole,

You've gotten a lot of good advice already, and you should certainly work with an experience realtor and attorney if you'd still like to pursue the pre-foreclosure idea.

However, one point that so far has failed to be made is that before ANY offer will be entertained, you're going to need to be approved for a mortgage. This pre-qualification process is especially important if you're going after short sales or bank foreclosures, as Mack mentioned, there may be problems with the property itself that would make getting financing more difficult.

It's very important that you know what IS and IS NOT possible before you go submitting an offer and tying up earnest money for a prolonged period of time.

When you get a chance, if you'd like to have a conversation about the different types of financing available for Starter Investors, please give me a call.

Matt Bukovy
Senior Mortgage Consultant
Blueleaf Lending
773-416-7107
1 vote Thank Flag Link Mon Jan 20, 2014
It depends on what you are trying to do. Once the filing becomes public, they are bombarded with mailings for lowball buyers, people claiming to help with the mortgage modification and credit, various lawyers and real estate agents offering their services. None of which they will look at.

If you knock on the door they will assume it is a process server or sales person and will not answer, or if it is a condo building, you will not get in. No one likes unexpected "guests" at they door, unless it is Publisher's Clearing House.

If you are interested in buying the property, draft a full offer, a letter of explanation and send it in a large envelop with hand written address.
1 vote Thank Flag Link Mon Jan 20, 2014
Do you already know the owner? If so, then simply reach out via any traditional method. However, the lender(s) will need to approve any deal you make with the seller, so this is only the starting point. If you don't know the owner, you can do public searches down at the Daley Center to see which properties have received a notice of foreclosure.
1 vote Thank Flag Link Mon Jan 20, 2014
Hi Nicole:

That's a difficult time for most people, so you want to make sure, first, that you are as genuine, gentle and as sincere as possible in approaching the owner.

I don't think there's any better answer than to make personal contact. A phone call about the matter may seem invasive and could turn out bad. A letter may turn out useless because they could read it and not respond to it; obviously they have more pressing concerns to be worried about. Truth is, people are in denial and however so much you may be able to help them, may not be able to see any value in you.

All that being said, the best way is to knock on their door and hope for a personal conversation. Leave a letter with a personal signature, and if you're serious about contacting that person, you'll have to visit them repeatedly until you get a conversation or formally rejected.

Perhaps you and I could talk and we can create an arrangement where I help you out as best as I can, as an agent. I'm all about helping people and being fairly and justly compensated therewith.

Hope this helps!
1 vote Thank Flag Link Mon Jan 20, 2014
Additionally, Nicole, one of my closest broker associates specializes in short sales. She does them 'all day' literally, she probably has no less than 10 deals moving at any given time. I can forward you to her if need be.
Flag Mon Jan 20, 2014
It won't be easy and you will most likely have to get a Realtor and an attorney involved eventually. My advice would be to talk to a good Realtor, explain the situation and have them at least guide you. I know with the low inventory that is out there, I am trying unconventional methods to find properties for my clients.
1 vote Thank Flag Link Mon Jan 20, 2014
Work with an experienced realtor and attorney who can help the distressed seller. Unless you are experienced with working with banks in allowing a seller to short sale, I believe this is your best bet. You can have an executed contract with the seller before his/her property hits the MLS.

Jeff Nobleza
Baird & Warner
773-677-5340
1 vote Thank Flag Link Mon Jan 20, 2014
Are you wanting to BUY the "pre-foreclosure"? What do you think is the process of buying a pre-foreclosure? It's not as simple as you think. Some people may want to try and do short sale, before it goes to foreclosure. It's difficult to just swoop in, and buy it from the owner. There are likely liens on the property that need to be cleared. (are you prepared to pay off these liens yourself?) If you're serious about this, I'd suggest you find a good Realtor who deals only in short sales or foreclosures.
1 vote Thank Flag Link Mon Jan 20, 2014
Knock and the door and/or send a letter and then take it from there.
0 votes Thank Flag Link Thu Feb 27, 2014
I would send a hand-written note then follow-up with a phone call.
0 votes Thank Flag Link Wed Jan 22, 2014
email me at jmichaels@remax.net and we can discuss
0 votes Thank Flag Link Wed Jan 22, 2014
The main thing to do, is find out if its real. A lot of these are fake.

Most likely, you just have to wait till it hits the market, if it ever does.
0 votes Thank Flag Link Mon Jan 20, 2014
Dear Nicole,

You may certainly look up the owner on the tax record and contact him or her. In the situation of a foreclosure the home is most likely upside down (current value to what is owed).

While the owner may still be living in the home until he is forced out the only way you can obtain the property prior to foreclosure is through a short sale which the owner must agree to do. You want to purchase the property at current prices and not the prices of 2006-2007.
0 votes Thank Flag Link Mon Jan 20, 2014
You can call or email or write a snail mail letter. I assume you want to buy the place. You first need a contract in the proper short sale format. You also need to be sure the lien holder has agreed to do or at least consider a short sale. Just because the owner wants to do it does not mean the bank will consider it.
0 votes Thank Flag Link Mon Jan 20, 2014
the owner is not able to help you in pre foreclosure.. the bank can help you..it's complicated of course but if your on this site and asking this question you are very far away from the bottom line..if you want to buy a good home in Chicago come into my office and get serious.. this is not a pair of shoes and shopping on line does not work
0 votes Thank Flag Link Mon Jan 20, 2014
its hard since the pre-closure means that the owner already stop paying and probably, the owner is not living in the building anymore. The best way is to contact the Bank.
0 votes Thank Flag Link Mon Jan 20, 2014
You should hire a good Realtor, and Attorney to help you.

Best,

Mike
0 votes Thank Flag Link Mon Jan 20, 2014
You should hire an experienced Realtor.
0 votes Thank Flag Link Mon Jan 20, 2014
Nicole, why do you want to do this?
0 votes Thank Flag Link Mon Jan 20, 2014
Hello, thanks for asking.

I'm a starter investor who'd like to buy a duplex in my area where I can live in one and rent the other out. The area is fairly expensive and competitive when properties hit the MLS, so I'm exploring other options that might be available to see what might work for me. The location above is inaccurate - I'm actually looking in Chicago.
Flag Mon Jan 20, 2014
You are better off finding a good Realtor and letting the professional do their job. It is free to you, the commission is paid by the seller of bank. If you do not want to use a Realtor then search the tax records on the internet, it is public record.
Good Luck
0 votes Thank Flag Link Mon Jan 20, 2014
Knock on the door? Give them a call? Sent them a text message? Send them a letter?
0 votes Thank Flag Link Mon Jan 20, 2014
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