Learning Center Article

Article: Buying Foreclosure Homes - You Win by Offering the Homeowner Options

In teaching workshops on how to buy foreclosure homes (often listed on a foreclosure auctions report), I often write on the markerboard in big bold letters, "Gain They're Trust to Close More Deals".

The principle of gaining the trust of the homeowner threatened with foreclosure is a deal-maker. If they trust you, they are more likely to accept your offer. Besides that, if you have earned their trust by explaining their options to them, then if they choose to let the home go to auction where it will likely end up on a foreclosure auctions report (and you win it) they are much more likely to vacate the property without a fight.


Work with their Current Lender

Forbearance: An agreement between the lender and the borrower that reinstates the delinquent loan because the homeowner will put up an initial lump sum of the total delinquency and pay the rest over a period of time.

Loan Modification: A change in any of the terms of the original note. This includes decreasing the interest rate, re-amortizing the remaining balance, extending the term of the note.


Work with a New Lender

Refinance: Where a new lender loan the borrower monies to pay off existing debt. This option is generally open to borrowers that face a temporary setback in their financial situation and can prove that they can afford the new mortgage payment. Most financial institutions will not loan to people unless they have the above mentioned criteria and at least 20% equity in the residence.

Junior Mortgage: Where a new lender will offer a second loan or junior lien in order to make up any back payments, late fees and other charges necessary to reinstate the loan. Rates are typically 12%-18% and terms are 5 to 10 years.


File Bankruptcy

Bankruptcy is a way for people who owe more money than they can pay right now, to either work out a plan to repay the secure creditors over time in Chapter 13 filings, or wipe out (discharge) most of their bill in a Chapter 7 filing. While the debtor is working out a plan, or the trustee is gathering the available assets to sell, the Bankruptcy Code provides that creditors must stop all collection efforts against the debtor. What happens to your bills, debts and house will be controlled by the Bankruptcy Code and the Federal Rules of Bankruptcy(the owner will NO longer have control over any of their assets). Bankruptcy will have a serious impact on the credit lives for the next 10 years.


Sell Their Home

List with a Realtor on the MLS (Multiple Listing Service)- Due to the short foreclosure period in Texas, listing their home with an real estate broker and being able to close within 21 days is a very unrealistic task due to the new buyers financing. The process of lenders approving the buyers credit, appraising the house, completing underwriting, reviewing title, getting a new survey, getting payoff demands and drawing documents--can take 3-4 weeks to complete (assuming no problems pop up). Just because the property is under contract and scheduled to close will NOT stop the auction.

Sell to an Investor - Selling their house to an investor who offers " cash at closing"; no new loan contingencies; no repairs to be made (AS IS); fast escrow; a for sure sale providing a fresh start with reputation and integrity intact would be their best option. Although the investor's price is less, the investor can salvage the seller's credit, bring loans current, rebuild seller's credit by paying the sellers debt on time every month. This is a much BETTER solution than doing nothing and losing everything at the foreclosure auction.


Giving Up and Letting it Go

Deed-in-Lieu: Borrower voluntary conveys the title (property) back to lender in lieu of the lender foreclosing. Most lenders would rather go through with the auction and clean title by extinguishing inferior liens.

Let it Go to Auction: Obviously, nothing good can come from this, the owner loses their home with no money, credit problems, hard to find new housing due to past history and the lender can sue for any deficiency.

About the Author: George Roddy, Sr, owner of Foreclosure Listing Service, Inc., a privately owned research company, has provided timely, accurate, useful data regarding foreclosure real estate in Texas since 1964. Learn about their "How to Buy" workshops at their Foreclosure Auctions Report website.

Your Home Buying, Selling, and Real Estate Resource

Home Buying Intelligence Magazine provides comprehensive real estate articles, mortgage guides, and real estate quizzes, for everything about home buying and selling. Our core goal is to provide factual information that will help our buyers and agents gain knowledge and make intelligent real estate investment decisions. We cover a very broad range of real estate, mortgage, equity loan, and insurance topics and provide varying subject depths for the home buying novice to seasoned agent.

Real Estate Quiz Zone

We have a Real Estate Quiz Zone to test your knowledge! Home buying and selling is a big deal financially, how well do you really understand it? Take a quiz and see how many questions you can answer correctly! To complete the quiz, click on the radio button of your choice for each of the questions. When you are finished, hit the "Check Answers" button at the bottom of each test page. Our quizzes cover everything about real estate: home appraisal, estates, property laws, mortgages, financing, agents, brokers, and more!

Real Estate Learning Center

Does the world of real estate terms, contracts, and mortgages seem like a big puzzle to you? It really can be quite intimidating. See our Real Estate Learning Center, where we provide comprehensive learning guides for everything about home buying and selling! From real estate investment, appraisal, insurance, and selecting the right real estate agent and listing broker. Make intelligent decisions on residential home mortgage, refinance, equity loan, home improvement, and house selling.

Our Service

This Service is designed to provide a community based forum for the open and free flowing exchange of home buying and real estate agent comments, opinions, experiences, and information. Although Home Buying Intelligence Magazine attempts to provide accurate information, it assumes no responsibility for any errors, inaccuracies, omissions, delays or other defects in any of the information provided as detailed in the Site Policy. All information and resources contained in the Service are fully protected by applicable copyright and trademark laws.

Home | Learning Center | Quiz Zone | Glossary | Contact Us | Site Map | Site Policy | Find an Agent | Link Exchange | Link Partners | Resources | Learning Center Map | Quiz Zone Map

© Copyright 2005, eCohesion LLC (727.502.0420). All Rights Reserved | Privacy Policy | By using this site, you agree to our Terms of Service.
    email: support-team   phone: 727.502.0420

January Issue


»Home Buyer's Corner
»Seller's Know How
»Learning Center
»Quiz Zone


Selling Your Home?
Let REALTORS® Compete For Your Business!

Search MLS Listings
Homes101™ has a real estate agent waiting to help you find a home right now!

Find a Contractor
America's Premier Contractor Referral Service.

For Sale By Owner
Buy and Sell Real Estate Without Paying a Broker!


Free Estimates
Free Estimates from Qualified and Pre-screen Contractors.

Find a Painting Contractor
Professional Painters Referrals are Always Free. home improvement projects easier

Refinance your Home
Refinance your home to consolidate debt regardless of credit history.

Order Boxes Online
Next Day Delivery for Most of the USA.

Try a Pop Quiz
Home Buying Core Knowledge
Property & Ownership
Know Your Condos
Selling and Listing
Contracts, Terms and Condtions
Leasing & Rentals 101
Estates & Property Laws
Real Estate Valuation
Real Estate Terminology
All About Financing