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     Foreclosure deals are still everywhere. That’s why it’s so important that you understand how to speak to a distressed seller about their options. You might be the very best chance they have at starting over without suffering from a foreclosure on their record and a severely damaged credit rating because they

Don’t Lose Your House in a Foreclosure Auction

When a distressed homeowner first talks to us about their property, they might not even be considering selling it. At that point, they know that they’re facing foreclosure, but they likely don’t know what their options are. As a real estate investor, our job is to help them understand all their options, which no one else may have taken the time to do.

That brings me to another important point. As an ethical real estate investor, our goal is always to help a seller find a solution that’s best for them. Sometimes that might mean selling their house to us, but other times it won’t. By helping them understand their foreclosure options, you can provide them with valuable information and a way out of their situation that enables them to start over, which might end up being a win-win scenario for you both.

Let’s discuss their possible options:

1. Keeping the House Through a Loan Modification

If a homeowner is adamant that they want to try to keep their house, talk to them about how loan modifications and foreclosure avoidance plans work. By staying in direct contact with their lender and working out a refinancing or payback plan, they may be able to avoid foreclosure and eviction.

The homeowner should be aware, though, that these modifications and plans come with very strict rules. A single late or short payment can result in almost immediate foreclosure. Often, lenders see loan modifications as a homeowner’s second chance. If a homeowner falls on hard times again, the lender is not going to be very understanding and is unlikely to offer them a second loan modification.

If the homeowner believes that they can get out of their financial rut and stick to regular monthly payments, a loan modification might be the right step. If you’re talking with them about this, be sure to let them know that you may be able to help them if, at any point, they decide that they want to sell their home and get out from under the burden of their mortgage.

If a homeowner wants to work with the bank through their loan modification process, don’t assume that that’s the end of it. This process is lengthy and highly stressful, and there’s always a significant chance that the bank won’t approve the modification. I recommend that you stay in touch with the seller throughout the process in case they aren’t approved and you end up being their only hope to avoid foreclosure.