How To Wholesale Pre-Foreclosures Step By Step

Step-by-Step Guide to Wholesaling Pre-Foreclosure Properties

Hey, guys! Nicole Espinosa here, the Short Sale Queen. I want to walk you step-by-step from the very beginning, from when you talk to the seller, to how you close a pre-foreclosure. So, let’s jump right into it.

First things first, finding the seller is a whole other post. Check out my other posts where I show you how to pull the data and all of that. Today, I’m going to show you exactly how to wholesale this deal once you find the seller.

Key Questions and Information

Once you find the seller, there are key questions you need to ask and information you need to gather to ensure it’s a viable exit strategy. If you’re going to wholesale, you must ensure the numbers are right. Working with a house in pre-foreclosure adds a set of complications that could result in the seller losing the house if not handled correctly. Let’s break it down.

Step 1: Get the Payoffs

First, find out what the payoffs are. This might seem obvious, but it’s often missed. Remember, sellers who are behind on their mortgage typically don’t know the exact payoff amounts. The mortgage statement shows the unpaid principal balance, not the payoff amount.

Get an actual payoff from the bank, including everything owed on the property: homeowners association fees, taxes, and closing costs. Determine the all-in number that the seller needs to walk away without owing anything.

Step 2: Determine After Repair Value (ARV)

Next, figure out the After Repair Value (ARV). This is the value of the home if it were in perfect condition. Use comps and assess the property’s condition to determine this. Knowing the itemized repairs is crucial, especially in wholesaling.

Itemizing repairs and having realistic numbers will help with your credibility as a wholesaler. Good investors will keep buying from you if they trust your numbers.

Knowing Your Investors

When I worked with investors before I started investing, I knew exactly what each investor wanted. Some bought for their rental portfolio, others for flipping. This knowledge is crucial for a wholesaler. Match properties to the right investors to streamline your process and build trust.

Navigating Pre-Foreclosure

Let’s shift to the pre-foreclosure piece. Finding out the foreclosure date is crucial. Sellers often don’t know the exact date, so you need to get on the phone with them or have them call the foreclosure attorney. You can find the foreclosure attorney’s information through letters they sent or the lender.

The most critical tool is the Letter of Authorization. This allows you to communicate directly with the lender and the foreclosure attorney. Many wholesalers fail to close deals because they don’t have all the necessary information. Locking up a deal isn’t enough; you need to close it to make money.

Postponing Foreclosure

If a foreclosure is imminent, you need to act quickly. Send your contract to the foreclosure attorney and the lender, requesting a postponement to give you enough time to close. This step is essential in ensuring you have the time needed to finalize the deal.

Another important tip: take good photos. Don’t send zoomed-in pictures of random objects. Take clear, comprehensive photos of entire rooms and any needed repairs. Good photos help potential buyers see the property’s full potential, saving everyone time.

Key Takeaways

Time is of the essence. Ensure you have all the information and follow the process meticulously. So if you’re working on a deal and you need help because you’re stuck or you need help selling it, we buy properties and we also help facilitate if you want a partner to sell.