By David ‘The Diamond’ Oswald—It’s not the walking dead but still Zombie Foreclosures are everywhere.
So what is this special type of foreclosure and how can you help a homeowner
that might be experiencing a situation like this?
Zombie Foreclosure is a term used to describe a property that was vacated and left abandoned by a homeowner during the foreclosure process. According to RealtyTrac, of all the homes currently in foreclosure, as many as 1 in 4 may be currently vacated.
There are a few ways to help people who are currently facing this hardship but one way that can really help to clear up the situation may involve the use of a short sale since many homeowners have left these zombie homes behind because they owe more on it than it is worth anyway.
Once you’re considering the use of a short sale, you may wonder just how you can talk to the homeowner and make them aware that it is a good idea for this ‘problem’. You may have found a house that is a short sale possibility from searching, or perhaps you have a friendly real estate agent who is on the lookout for you, and has given you a call to tell you about a possibility of a ‘zombie’ foreclosure.
Calling up the homeowner is the best way to get an idea of whether a short sale will work, and to start outlining the process to them. At the outset of the call, you need to emphasize that your aim is to create a win-win situation, which is in stark contrast to what the homeowner is facing with a foreclosure. With many of these zombie foreclosures, one of the challenges may be in finding the recent information on one ofthese homeowners. A quick search of the public record would reveal the homeowners name but a skip trace service might be needed from there to acquire a new address and possibly even a home or cell phone number.
With a short sale you will seek to prevent the foreclosure and salvage the credit of the homeowner. If you can get the banks agreement to your offer, the homeowner will not have to face the problems that a foreclosure on their credit report would cause.
From the lender’s point of view, the short sale will eliminate a bad debt from their books, and they will not be faced with having to market the house if it falls into their possession at the foreclosure auction. The bank will be able to get back to what they do best, which is deal in lending and borrowing money.
Of course, the situation must be a win from your point of view, and you need to express that your target is to reach a point in the negotiation where the finances work for you. In this way, all three parties can achieve a win-win-win situation.
You must explain that the realistic position is that the house contains no equity, as the mortgage is more than the house is worth. By a process of negotiation with the lender, the idea is to create equity for you to make it a worthwhile investment. If this succeeds, then the homeowner can be helped, and you need to be clear about this when you speak with them so that they can support your side of the negotiation.
The next thing you should explain to the homeowner is that you would like to put a contract on his property, and see whether the bank will agree to a price which makes sense for the short sale to go ahead. This may result in one of three outcomes. You may purchase the property as a long-term investment if the potential cash flow from rent would be sufficient to cover your investment. Secondly, you might find that you need to sell the property on quickly to another investor in order to make a profit. Lastly, you may need to withdraw the contract, but could facilitate finding a buyer, in which case you would request a fee on the sale statement for the deal.
My greatest success with short sales has come from putting the proper team together so that I only have to focus on the most important parts of the deal and do very little of the busy work. In an upcoming email, you will learn about the system I use to make shortsales shorter and easy through the use of the team concept.
Talk to you soon,