- 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,
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.
Senior Mortgage Consultant
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.
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!
Baird & Warner
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.