How do I Contact the Owner or Trustee of a Home and Make an Offer?

by Simon Lindsay on Foreclosures

For homebuyers and investors who want to break into the foreclosure market and grab a great bargain for a particular home, timing is important. Some of the best deals can be had through pre-foreclosures, or homes that are in default but have not yet been repossessed and sold at auction. In other cases, the best deals can be found with homes that have been repossessed but have not yet been sold. In either case, a homebuyer can maximize value through optimal timing by contacting the owner or trustee of the property prior to a foreclosure sale.

How and When to Contact the Owner

After a homebuyer has determined that a particular desired property is in pre-foreclosure status through property research, the next step is to contact the owner. An owner has a vested interest in selling a distressed property before foreclosure because he or she can avoid a nasty credit hit that comes with being foreclosed on (assuming the owner has equity in the home). Even if a home is underwater, meaning the owner owes more on the home than it is presently worth, a short-sale opportunity does not hurt the owner nearly as much as a foreclosure does.

For the homebuyer, the benefits – significant discounts from 10-40%, in many cases – are terrific incentives.

For these reasons, a homeowner will probably be favorable to entertaining a discussion about selling the home before the bank repossesses it. At this point, you can tender an offer, one that takes into consideration the amount of equity in the home, how much the home is worth (according to current appraisals), and how much the homeowner is looking to receive in exchange.

You will have already researched the property and know if any liens are on the title, so you can address those issues satisfactorily. If an agreement is reached, you can proceed; if negative equity is involved, you will have to have the approval of the lender.

Note that calling a homeowner or sending a written letter to the homeowner is always preferable to showing up to the homeowner’s doorstep asking about the home. Emailing is also fine. Be honest if the owner asks you how you found out about the property. Be open with the homeowner and he or she will be open with you. That is how great bargains are found.

How and When to Contact the Trustee

If foreclosure has already been initiated against the home, you will have to talk to the trustee of the property to determine the status of the auction. This opens up the possibility of working out a last-minute deal, or otherwise buying the property outright at a foreclosure auction.

If the home does not sell through foreclosure, it will become a bank-owned/real-estate owned (REO) property. REO homes are owned by the lender itself, and as such, you will need to talk to the lender to discuss possibly purchasing the home. After conducting title research, have the home’s value estimated and then contact the owner (the lender). Most financial institutions have loss control/mitigation officers who handle these types of transactions. At this juncture, in preparing and submitting an offer, it is recommended that you employ a real estate agent to help you. Also, when pricing the offer, it is best to submit a price below market value, to give yourself a solid bargaining position. It is in the interest of the bank to sell the property, in most cases; serious and reasonable offers are almost always considered.

Other specifics – such as inspection and title search contingencies in the purchase agreement – should be worked out between your agent and the owner – whether it is the original homeowner or the bank – before any agreement is finalized. In all situations, contacting the owner before foreclosure begins is highly recommended, as it gives you a better chance to obtain a good property at below-value price without the competition of an auction.