What is preforeclosure and how do you make money from it?

September 4, 2023

What is Preforeclosure?

You might be wondering what the heck is a pre foreclosure!  Well, it’s pretty simple, each day in each city across the United States people go through the pre foreclosure process and for the most part they don’t come out of it. The reasons are many.

Could be a loss of a job or it could be a property that they just can’t keep up with anymore, and now something in the house goes wrong and they just can’t afford to keep it up.  It’s actually really sad that people lose houses…but it doesn’t have to be and one can avoid foreclosure.  Just have a plan for or avoid these sitautions:

Loss of a job, failure to manage finances, drugs, drinking, divorce or a combination of bad circumstances!

In these or various other circumstances, there is a limited time before a owner defaults on the outstanding loan balance and mortgage payment on the home and the home goes into foreclosure. This is what we call the pre foreclosure period. As an investor, you must assess the now market value of the home, get a loan to prevent foreclosure proceedings, pay any missed payments, make any loan modifications, and close on time to get the cash and you usually have a few days up to a few weeks to get the foreclosure sale.

Yes, time is of the essence here.  I call it the Foreclosure Train, the train is leaving the station and the Foreclosure auction is happening whether you help the person or not, the Foreclosure does not stop and once it happens the sale is dead! But don’t get me wrong – there is a lot of money to be made here!

It’s one of the things I feel REI’s (Real Estate Investors) don’t pay attention to but can make you millions of dollars when done properly. In my coaching program, one of the strategies I teach is exactly this.

During the great recession/depression of 2008-2012, I personally sold over 2,000 Foreclosed Homes, these were homes that the homeowner did not catch up, and that nobody was able to help them and they lost it all.  They missed mortgage payments, loan payments, monthly payment, or interest payment, lost their credit, lost their home and in some cases filed Bankruptcy… A Foreclosure can be super traumatic, and on top of that you are marked as a delinquent borrower for at least 7 years.

And that’s why I love teaching people how to help people through Preforeclosures!  We focus on people who are losing their house, who have equity, but have not listed their house on the market… Sometimes these people have died, yes  and that’s how you learn how to do Probates, a sale where you need a court order to complete…. That is why I say that Preforeclosure is the best real estate strategy because you learn to solve every problem.

You hear a lot about Subto, these days, there a guy Pace Morby who has really made it famous, but the reality is that I have done many many subtos and I learned it by chasing down Preforeclosures…. A Subto is where you buy a house subject to the seller’s existing loan and a lot of the time that is the only way to do it, because you do not have time to get a loan to close or time to get the cash and you have literally days to stop the sale.

You may be wondering how the heck does this all work ok, I am going to break it down for you.

Step 1.  Find someone who is losing their home to foreclosure and has at least 40% equity or more.  You can do this manually by going to the your County Recorder’s office or you can use sites like, Property Radar, Propstream Auction.com just to name a few, but there’s many of these sites.

Step 2. Contact the person and say the following:  HI, “Name” My name is “Your Name” and I help people just like you!  I can stop the foreclosure from happening, allow you to stay in your house, and give you some cash, and save your good name and credit scores… Or a variation of “We can work with a mortgage servicer who will take over the mortgage default due to your financial trouble and present a few options involving still getting some cash for the home for you.” Now how are you going to do that…well you need to contact the bank or your loan servicer with a legal notice, reinstate the loan and then get the deed in your name.

Step 3.  Once you get agreeable terms for the person and you guys work out a deal for you and them, you are going to want to get a Purchase agreement signed stipulation the terms and then you get to work stopping the sale

Step 4.  Stopping the foreclosure proceeding is not hard, you just need to reinstate the loan!  Reinstate means catch up on mortgage balance, make any miss payments, negotiate new affordable payments, and agree to any future payments!

Step 5.  Catch up the loan, get the deed in your name, close the sale, hold back some money for when they move out and then on to the next one….

Now why is this a great strategy?  Well, you are literally helping people that were going to let their house go!  They decided not to sell it, not do anything about it…. You may think why?  Because they are embarrassed or scared or just going through a hard time and they NEED YOUR HELP!  You need to know that this is a way not only to help people but also make money and if you are good at this not only will you make a lot of money you will help a lot of people who had not very many options.  I have many many many many phone calls and emails of people thanking me profusely for helping them!  Bad Situations that they were stuck in!  And think, you get paid well, and get to solve their problem and get paid well for it.

Also, you’ll learn, probate, subto, how to buy off market deals.  How to deal with banks, title companies, escrow companies and most importantly you will help someone with their problem that they have been unable to, it’s rewarding and really fun!

BTW, we teach people how to do this exact thing in my Millionaire Mentorship Coaching program.  You can do it without our help or we can give you the cheat codes that have made a MultiMillionaire

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