Contacting the Owner in Default
Before you expend the time and effort to contact the owner, make sure you’re fully prepared to buy. See our Before You Buy section.
If the owner has decided to list the property for sale, you can simply contact the listing agent. Once the property is listed with an agent there may not be as much bargain potential, but you can still possibly negotiate a good deal because you know the owner has a limited amount of time to sell before the bank repossesses the property or sells the property at public auction. To check if a property is listed, you can use the MLS search on RealtyTrac, have your agent check the MLS or simply drive by the property.
In most cases, the owner has not listed the property for sale, so you will need to pro-actively contact them. In this case, contacting the owner can be tough, but the potential bargain is greater because you’ll be cutting out the listing agent’s commission.
We recommend contacting the owner by mail to start. Subscribers can use the Contact Owner tool on RealtyTrac to send a postcard to the owner. We have suggested text for the postcards, or subscribers can type in their own text. The basic message you want to communicate to the owner is that you’re interested in buying the property and you want to work out a purchase agreement that benefits both parties. If you send a postcard, we would suggest not mentioning the word “foreclosure” as this could be embarrassing to the owner if someone else saw the postcard.
Don’t be surprised if the owner does not respond to the postcard immediately. In most states, the owner has several months between the initial foreclosure notice and the public auction. During this time the owner will consider all the options available, including refinancing or selling. An owner’s first reaction is usually not to sell. But if no other options work out, selling is a better option than losing the property at public auction.
Many successful pre-foreclosure buyers and investors send out quite a few postcards to properties in their area before they find an owner who is interested. It’s not uncommon to send out several postcards to the same owner during the foreclosure process. The owner may be more interested to sell as the auction date looms closer. If the owner doesn’t respond to postcards, some buyers and investors will try to reach the owner by phone or in person. If you do this, be prepared for a possible rude response as these methods of contact are more inherently confrontational. And always keep in mind that the owner in default retains ownership rights to the property during the pre-foreclosure period. If they are not interested in talking with you, it’s time to leave.
If the owner rejects all of your contact attempts, you may still have a chance to purchase the property at public auction, which occurs if the owner doesn’t sell or pay off the amount owed during the pre-foreclosure period. RealtyTrac posts auction properties, and subscribers can keep tabs on that list to see if a property has been scheduled for auction. You could also call the trustee periodically to check if an auction has been scheduled.
To sum it all up remember these tips!
Be quick
You shouldn't wait too long to start contacting the home owner. Once you have prepared your resources, you will want to make contact for any property that you are interested in.
Be nimble
To contact the home owner you basically have three options: send a note or letter, make a phone call or knock on the door. You'll probably find you use some combination of these depending on the situation.
Contacting owners who are in default can be the most intimidating step in buying a pre-foreclosure. (If the property is an REO, then you will just be contacting the foreclosing lender directly for REO properties.) That's another reason inexperienced house foreclosure buyers should use an agent who has some expertise in a house foreclosure for sale and REO properties for sale.
If you do contact the owners yourself, just remember they have no obligation to work with you as a buyer. You need to let them know you want to give them an option that will be beneficial to them as well as to you as a buyer. You want to help the home owner walk away from the situation without the house foreclosure on their credit history, free of mortgage debt and hopefully with some additional cash in pocket to relocate and make a fresh start.
Be professional
Once you've made initial contact with the owner, try to set up a meeting with him or her at the house foreclosure for sale to discuss the situation and the options. Ideally, this can be a time where the home owner can get all the cards out on the table and you can evaluate the condition of the house foreclosure for sale property so you can make a better decision.
If the foreclosed home for sale owner doesn't express any interest in talking to you, leave your name and contact information and let them know you're still interested if they change their mind. You may want to follow-up with a letter or phone call later depending on how interested you are in the property and the extremity of the owner's response.
Tip: Expect to face some rejection from the foreclosed home for sale owners and try to be sensitive to the fact that they're going through hard times. It's your job to overcome their expectation that you may just be there to take advantage of them. In any case, be prepared to be respectful and move on if they are just not interested at this time
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