Sources of Information

When a borrower does not live up to the terms of his or her loan agreement, the lender requests that the trustee file a Notice of Default with the County Recorder's Office. These public records are available to anyone who has the desire to seek the information. In most populated areas, a few enterprising businesspeople provide the service of researching and compiling lists of defaulting homeowners and foreclosure auctions and sales. These lists are usually made regularly to subscribers. The lists include information on defaults, trustee's sales and properties owned by the banks, known as REO (real estate owned). 

In the state of California at the time the trustee files a Notice of Default at the County Recorder's Office, the foreclosure time clock starts running. The homeowner/trustor is granted by law three months to reinstate the defaulting loan. The reinstatement process simply requires the full payment of past due payments and penalties such as late charges.

If the defaulting loan has not been cured in the three months, the home owner is issued a Notice of Trustee's Sale. The announcement of Trustee's Sale is the notification to the public that the property will be sold at public auction, often on the courthouse steps. The Notice of Trustee's Sale is issued to the homeowner / trustor at least 21 days before the actual auction / sale. This notice will be published three times in a newspaper of general circulation and posted on public bulletin boards. The 21-day period is referred to as the publication or advertising period. Sheriff's Sales and Trustee's Sales are open to the public and anyone qualified (with the cash or equivalent) may purchase property at the sale.

Detailed reports are helpful for property analysis and appraisal. The default reporting services list hundreds of properties being foreclosed upon weekly. You could easily spend all day, every day, driving from property to property trying to find that gem that will turn into a gold mine. 

Finding Properties

Your system for finding properties may include reviewing and tracking notices of default, notices of impending Trustee's Sales, and notices of real estate owned by the banks (REO). Many buyers of distressed property also follow the county tax sale auctions and the Small Business Administration foreclosure sales and auctions. Foreclosures on Housing & Urban Development (HUD) and Veterans Administration (VA) properties is a business in itself. Ask a broker to take you to one of the HUD auctions or VA property sales seminar. You'll find hundreds of brokers at those meetings.

Segmenting your market is probably the best way to start. After you review the defaults and Trustee's Sale listings thoroughly, you may decide to start with the defaults. Before doing anything else, review the foreclosure consultants law in your state.

Seeing the Clients

Armed with your knowledge of which properties are in default, you then contact the homeowner or person in default. Remember, you are in the problem solving business. You are there to solve, no sell. Try to discover the owner's reason for needing to sell. You're in the business of meeting needs, so it helps if you discover the seller's needs and wants.

What does the customer (in this case the homeowner whose loan is in default) want to know? The same things you want to know each time yuo buy something: What's in it for me? That's a realistic question to ask yourself, because the customer will. The customer will want to know what you can do for him. So tell him - more than once. Give him a good answer or your letter will be in the trash. What do you want him or her to do? You must tell him what you want him to do, exactly, specifically, and repeatedly. Will you pay cash? Or will the customer expect deferred payments? What about a guarantee? Do you offer consultation? Should you? You must make an offer your customer can't refuse.

Appeal To The Right Person

Once you have targeted your prospects, people who appear likely to be interested in your product and capable of using the services you offer, you know to whom you will be addressing your appeals and your qualifications. Having researched the county records or the default listing services, you'll not waste your time with people who are not motivated to use your service.

Letters That Bring Results

Use a series of letters, coupons, fliers, and seminars to inform prospects of your services and clarify for them the procedures of a foreclosure action. But mere information is not enough; repetition is important. Recognize that buying and selling decisions are emotional decisions, not necessarily logical decisions. This means that you'll need to be in the prospect's mind when he or she makes the decision to sell the defaulted property.

What Makes Customer Respond?

You must appeal to your customers' fundamental human needs. You experience these needs every day of your life, but it is sometimes difficult to reduce them to written form. The fear of loss is a tremendous motivator and, when the defaulted homeowner finally realizes that his house will be sold at auction and all of the funds will go to others, he will become motivated. That is the time when your letter should arrive.

Profitable sales letters will bring prospects to you. Write your letter to capture attention with the first paragraph. Get right to the point. Don't take a long time to promise an important benefit of your service. If you don't get attention and promise benefits in the first paragraph, you'll lose the prospect and yoru letter will be thrown into the waste basket.

FOLLOW UP - FOLLOW UP - FOLLOW UP

You will need to repeat your prospecting letters again and again. Most people are slow to react. They delay and hope a miracle will save them from foreclosure. the first three or four letters probably go into the waste basket. So you must try to build their confidence so that they believe that you are a reliable source of money and can solve their problems. Don't take it for granted that they know who you are.

Your letters should cover the following concepts: (1) The homeowner has a large problem hanging over his head. (2) The foreclosure clock is running. (3) Isn't it time to save face? (4) Do you need money? (5) You only have a limited number of days left till the Trustee's Sale or the Sheriff's Sale. (6) We care. (7) Here is what we will do for you. (8) You can't lose. This is a sure thing. The bank only wants its money and nothing else. (10) This is your last chance.

Remind Sellers of The Risks of Waiting

Your letters should be planned with an objective, convincing argument that moves the prospect to call you and makes him eager to sell to you. You've got to help your prospect make up his mind. Prove that this is the right time to sell. Point out that the prospective selelr will begin to enjoy the benefit he or she wants as soon as the sale is completed. Also point out the risks of loss if he does not sell to you. Keep in mind that your prospective seller is continually searching for ways to find money. Foreclosure actions don't spring up out of nowhere. Your prospective clients have had difficulties with money for a while. By the time the foreclosure notice comes, they know that they are at the end of the line. Your letter can be a lifesaver. If you want to be a great success, you'll help them find ways to solve their problems. Study their needs for your service and you'll gain them as your clients. Show them hwo they will get more of what they need when they sell to you.

Map Out Your Territory

When you have responses to your letter writing campaign, don't run haphazardly from one place to another. Get a clear picture of the location of your prospects. Get a map of your territory or territories. Plot your calls and know exactly where you are going to that you don't crisscross the territory and waste time.

Become the best known buyer in your territory. We have all heard the old saying: Out of sight, out of mind. In the foreclosure business, this is especially true. After all, your prospect is living through a time of great stress and tension. More than likely he is not thinking as practically and rationally as he should. You need to keep your name in front of him as a problem solver. Follow up with additional letters. Most people give up after the first refusal or even sign of resistance. Don't let this happen to you. Persistence will get you the great property pruchases. Most of your competitiors will only call upon the seller once. it is your job to prove you are superior and you'll do so by being persistent.

your letters will get results because they are planned with a methodical follow-up. Owners of distressed property will sell to you when you prove by persisitence that you are interested in solving their problems. Keep accurate reocrds of your letters and your follow-up. Such records let you evaluate just how motivated the sellers are.