Preforeclosure Investing
Is Not For Everybody

Preforeclosure real estate investing is a very difficult method of investing.

Think about it for a moment. You are contacting homeowners at the most difficult time of most of their lives.

I understand this is made to seem simple and is supposed to lead to real estate riches. But really think about this situation in great detail.

Preforeclosure means the homeowner is about to lose their most prized possession. Foreclosures incite fear, anger, frustration, shame, embarrassment, helplessness, doubt and above all, deep sadness.

When first approaching someone in this situation, you will usually be met with denial and an attempt to maintain self-respect. Most will say either they are not in preforeclosure, or say they will catch up their mortgage payments before the foreclosure auction.

Even those who admit their dire predicament, will initially torpedo your suggested purchase price, by demanding something close to full retail value. After all, no self-respecting person will just give away their family home...so they rationalize.

Please listen to me as I detail this situation. I have lost my home before. Going through foreclosure with a wife and 3 kids was nearly unbearable. I cannot overstate the unbearable aspect. The thoughts which go through your head come from a very dark place.

Not one person who approached me at my soon to be foreclosed home, knew what the heck they were doing. They failed miserably and there was no way I was going to reach an agreement with them. Their obvious greed and not so subtle condescension was just too much.

Remember a few things when approaching a person in preforeclosure:

They are not idiots. They know the value of their property. Offering 50% of the value and $500 in moving money will get you absolutely nowhere. It is insulting and you will have killed your chance to negotiate in good faith.

Do not be judgmental. Truly uncontrollable things happen to people. One or both spouses get laid-off, one spouse dies and life insurance takes too long, prolonged illness after loss of health insurance, the list goes on. Bad things really happen to good people.

Other serious financial problems. Be aware that someone in preforeclosure can also have telephone or utility problems and you may never reach them again. The telephone may get disconnected. If it's winter and the heat gets disconnected, they will vacate the premises in most cases.

Automobile repossession. A person in this predicament will undoubtedly be at or near repossession of their automobile(s). If repossession is imminent, they will vacate the premises, never to be reached again. They will try to avoid repossession at all costs. Losing a property is one thing, but losing their means of transportation is more dire in many cases.

Never be pushy. This seems obvious, but a couple of people were pushy and aggressive. Understand that people facing foreclosures are on the edge. Some have and will become violent if pushed. You are at an extreme disadvantage if things get physical. You are in their home. The law is always tilted towards the homeowner.

Sincerely try to balance profit with help. If you approach this without a real desire to complete a fair deal, then you really should not pursue this form of real estate investing. The homeowner will see right through you and you will get nowhere. Homeowners in this situation would rather lose their home in the foreclosure auction than feel manipulated by a stranger.

Because I have been in this situation before, I have no desire to pursue this method of investing. The memories are very painful, til this day. I remember my frame of mind and could not bare to confront others in such a state.

That said, a great deal of money can be made this way. I feel the best people to pursue preforeclosure real estate investing would be those who have gone through it before. They will have a sensibility which is essential in having a high rate of success.

Most others in preforeclosure investing have a very low conversion rate. So think long and hard about this approach. It is far more difficult than it appears to be.


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