Can You Make an Offer on a Pre-Foreclosure?
Earlier this year, Vulcan 7 added a Pre-Foreclosure leads database to its expanding menu of real estate prospecting tools.
For those of you unfamiliar with the foreclosure process, there are five general phases (NOTE: Agents need to learn the specific statutes on foreclosure in their state):
- PHASE 1: Payment Default-arises when a borrower fails to make monthly payments on their principle balance or interest on a home loan. Defaults can also arise for failure to pay property taxes or homeowners insurance, or transferring a title to another person without the lender’s approval.
- PHASE 2: Notice of Default (NOD)-NOD refers to a public notice filed with a court that states that the borrower of a mortgage is in default of the loan. Typically activated after three months of non-payment, the NOD is of the final action lenders take before placing a lien and seizing the collateral for foreclosure. NOTE: The NOD serves as the basis for Vulcan 7’s Pre-Foreclosure database.
- PHASE 3: Notice of Trustee Sale-Informs the homeowner and mortgage borrowers-of-record that their home will be sold at a trustee’s sale on a specific date at a specific location. The actual sale typically completes a non-judicial foreclosure in states allowing this type of foreclosure process.
- PHASE 4: Trustee Sale-Refers to the sale of the property via a public auction.
- PHASE 5: Real Estate Owned (REO)-The term for a property owned by a lender because it failed to sell in a foreclosure auction after the borrower defaulted on their mortgage. Typically, banks attempt to sell their REOs using a real estate agent or by listing the property online.
VULCAN 7 PRE-FORECLOSURE
Vulcan 7 now offers Pre-Foreclosure leads as a monthly add-on. For an additional, one-time payment, you can also get 200 enhanced Pre-Foreclosures (significantly more information about the properties, plus you select on the leads you want to enhance, with the remainder carried forward to future months).
The Pre-Foreclosure leads in your file are based on your FSBO zip and mile radius, and will go into a separate Pre-Foreclosure folder within Vulcan 7.
So, what is the value of having Pre-Foreclosure leads?
When considering the foreclosure process outlined above, once things progress to Phase 3 (Notice of Trustee Sale), the homeowner is essentially out of options. But here’s the thing: according to Realtor.com, most homeowners who have defaulted on their loans, and have received a NOD, don’t realize that they can still sell their property. Therein lies the benefit of prospecting Pre-Foreclosure leads.
By engaging those homeowners who have received a NOD, you give them an opportunity to avoid foreclosure and possibly net enough to pay off everything they owe the lender, including back mortgage payments, penalties and fees. Yes, they won’t own the house anymore, but by avoiding foreclosure they also avoid doing serious, long-term damage to their credit score.
In terms of prospecting Pre-Foreclosure leads, you would use the same Neighborhood Search scripts already included with Vulcan 7. You would, of course, not reveal that you are calling in reference to the homeowner’s foreclosure:
“Hi, we just sold John Smith’s home on Main Street for $X. We still have buyers interested in your neighborhood, and wonder if you have any interest in selling your home.”
Vulcan 7’s Pre-Foreclosure leads would make a valuable addition to your prospecting strategy.
Learn more about Vulcan7’s Pre-Foreclosure leads.
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