Last Minute Foreclosure Tips

by: William Tingle

You have been in touch with this preforeclosure seller for weeks and during that time, they have put you off with “it’s taken care of, I am just going to list it, I am going to let it go back to the bank and I need to think about it.”

Now, it is 8:00 PM, the night before the auction and they call you, finally ready to sell. This is a great deal with a lot of equity…so it seems.

There is due diligence to do as well as stopping the auction. Do you know what needs to be done to save this deal? Do you have the proper things in place to be able to get it done?

What would you do?

In this scenario, there are several things you need to have in place to make it happen. If you are going to try and deal in the foreclosure arena, you need to have them in place because “last minute” happens all the time.

First, you need to know your state’s laws regarding dealing with people in foreclosure. Hopefully, since you are already working in that arena, you have an intimate knowledge of how they work in your state. Three-day cooling-off periods and such can make last-minute deals problematic. So know before you go.

Next, if you get that last-minute call, you are going to need documents. Do you have them? Do you have the right ones for the state you are working in? Do they have the proper wording that will keep that big deal from coming unwound right before the big payday you are expecting?

If so, you need them all signed off on ASAP. My first move after that call is a dash to the seller and signing of ALL the docs to close the transaction including the deed and POA. This means a notary will be required. Do you have a reliable 24 hours notary on speed dial? If not, you need one. When I invested locally, I and a good investor friend each got our licenses so we could do 24-hour notarizing for each other. It worked out well.

Next, you are going to need access to the funds to reinstate quickly. Do you have the funds yourself or a LOC or private lenders available who will lend on a moment’s notice? If not, you need to be working on it now.

Then, you will need to be able to run a fast title check unless you want to take a chance on buying a pig in a poke. I remember one deal where the lady literally called at almost midnight the night before. I hustled over to her place and got everything signed off on then down to the courthouse before daylight (I had an after-hours pass) and my title search turned up several additional loans and judgments that I guess she “forgot” about when she was telling me what she owed. This great deal vaporized before the sun was up.

You should know how to run your own title or have contacts that will do one for you quickly. Get to know a few of the title searchers who are in the courthouse every day. Sometimes they can do one for you in a pinch but the best thing is to learn how to do it yourself. It isn’t hard to do.

Check to see if your courthouse offers after-hours access. In Georgia, I could access the records room just about 24 hours a day with a special pass from the Superior Court clerk.

Then, you will need the ability to get reinstatement figures quickly. A lot of times, if you call up the attorney handling the foreclosure, they will tell you that it is too late to get the figures when the truth is, they just don’t want to make the calls to get it done.

Go to a few auctions, get to know the attorneys that handle the foreclosures, it is usually the same small bunch that does most of them. If they know you, they are much more likely to help you get what you need. I used to show up for almost every auction for at least a couple of hours even if there wasn’t anything I was looking to buy there. If you show up around lunchtime with a couple of bags of Krystals, before long everyone knows who you are.

Lastly, what about the seller? Are they still occupying the property? If so, just know that delivering a big check to that attorney for the reinstatement while the seller is still in the house takes your deal to a whole new level of risky. The absolute best scenario is when the seller is out of the house but last-minute deals are almost always ones where the seller is still there.

While you can navigate that minefield, only do so after careful consideration and evaluation of the deal. Is the possible risk worth the potential reward? I have and only would do these if there was a heck of an upside.

Finally, yes, there are things that can be done to stall the foreclosure. I hear bankruptcy thrown out a lot as a possible way to stop things but I would never, ever speak that word to a seller or encourage them in any way to do such. I don’t recommend that you do, either. Recommending such actions to someone only to stall a sale to help yourself out isn’t a position I would want to be defending myself from should the deal ever wind up in front of a judge for any reason.

You can get these deals done but there are things that need to be in place to pull them off on a regular basis so you don’t have to depend on the alignment of the planets and stars for it to happen.

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