Wednesday, October 15, 2008

Persistence Wins Again

Making the Fresh Start Presentation

So you are out and running your route and have found a homeowner home who wants to listen to a Fresh Start Presentation (FSP). Remember the Fresh Start Presentation is the Homeowner Options slide show that you have. It goes through the advantages and disadvantages of the seven (7) options available to the financially distressed homeowner. They are as follows:
1)Sell on the Open Market
2)Refinance the home
3)Restructure the mortgage
4)File bankruptcy
5)Borrow from friends and family
6)Let it go to foreclosure
7)Sell to an investor

Whether you have scheduled an appointment or have just knocked the door the opportunity to make the presentation will lead to money for you. So what is the best way to make the presentation? Do you start with the overview and then go through each option? Do you ask some preliminary questions and get to the homeowners present position or do you just get to the price we will pay for the home and leave it at that?

The answer depends upon the homeowner and your preparation for your visit with the homeowner. Remember ?Information is power and the key to a successful negotiation and purchase of your next home or investment property?. So if you have failed to prepare for your meeting with the homeowner your chances of success are diminished. We try to gather information for you and put it in the notes. Some information can be gathered by going over the pricing of the home when you have a scheduled appointment. The rest of the information will come from the homeowners? needs and wants and honest eyes.

What follows are typical situations you will run into in the field and what assumptions you should make if you run into these types of situations. They are 1) Research indicates that the home is on the market. 2) Home is vacant; 3) Homeowner just came out of Bankruptcy.

Home on the Market

What assumptions can we make if the home is placed on the market?
1) We know that they are willing to leave the home and move on with their lives.

2) The Homeowners have cut the emotional attachment to the home.
3) They have either eliminated or exhausted the following options: refinance, restructure and borrowing from friends and relatives.
From this we can make the following conclusion: The homeowner is left with the bankruptcy option and selling on the open market or to us. Here is a note from a locator regarding a house that is on the market.

Visited 8/12/06; 1PM. Met HO in driveway. HO's are divorced and selling the property. Home vacant. Property is listed with Briarwood Realty. Presented the Fresh Start Program to HO's. Interior of the home is broom swept condition already. Good condition. Husband was ready to give release, wife not willing to give release today. Wife indicated that she would like to take a few days and to talk with the bank on Monday. We agreed to contact each other on Tuesday 8/15/06. I left contact info with them and received their contact info as well. Will take complete set of photos when I get the release. Both HO's confirm that they have equity in the property.

Now what part of the FSP would you pitch to get the release? How do you begin the process? If I knew the number they had placed on the house, I would talk about market time, home inspections and the possibility of an unsavory investor tying them up until it is too late and purchasing at the auction. If I did not know the market number I would ask for the price and how long it has been sitting on the market. This type of presentation should begin with a back-up plan or safety net plan. It should inform the homeowners that we could possibly purchase the property in a quick fashion and net them some money for their fresh start. We would do this by making a deal with the listing broker to continue to list the property after we purchased it. Saving the homeowners the cost of the broker. We could also inform them that they would not have the carrying costs, insurance, taxes, and foreclosure costs that are currently stacking up on the property. All of this may add up to a less stressful conveyance than waiting out a slow market. If you are fairly new at locating just use the making the offer to the homeowner chart to walk you through the offer: This chart is located on the resource page of the website.

When a home is on the market it is fairly difficult to get a homeowner to agree to sell the property to an investor. Reasons are that some mortgage broker has told them that they can sell their home for a number we will not pay. Only time and an auction date will usually make this homeowner come around. A smart locator will make the pitch for the backup plan and wait until it is close to the auction to return for a final opportunity to purchase the property. In the meantime just call the homeowner every week or ten days to check in on their situation. This will allow you to have a continuing dialogue and build some type of relationship with the homeowner.


What assumptions can we make if the home is vacant?

1) We know that they are willing to leave the home and move on with their lives (they already have).
2) The Homeowners have cut the emotional attachment to the home.
3) That the house is costing the homeowner carrying costs each and every day. We can stop the bleeding by purchasing the home.
4) Homeowner should be happy to unload the property.

Here is a note of a recent vacant home visit:

Visited 8/12/06; 3:15PM. HO not home. Left into letter in the door with personal note. Spoke with the neighbor to get an update on this property. Mailbox is full. Shrubs and vines have overgrown the yard and cover the primary entrance to the house. Lawn has not been mowed in months. Neighbor says that the owner is a great person. He seems to think that the owner has another residence in Marshfield. This property had been up for sale. The HO has been trying to sell it for almost 2 years. He believes that the last listing was $249K. He also has been in the house and said that a lot of work has been done on the inside. Driveway is not paved. Otherwise, nice neighborhood. Dead end street with playground for children. This property is on the quiet end of the street directly across from the playground, corner lot. Looks like a good investment. We will need to track this person down.

Once the homeowner is found the pitch would be straight to the sale of the property to our company. There is little need to go through the rest of the options with this homeowner. It would simply be straight to the sale of the property. Again, this particular note tells us that he had it on the market for 249,000 dollars for two years or so. So we could easily tell him that the price of the property is too high and substitute it for the price that we would sell the property at. (see your manager or the index for the price). Next, I would use the Homeowner chart again to go through the price we could offer on the house and why. Once you as a locator get familiar with the costs associated with a home you can forego using the chart.

This vacant property purchase should be fairly easy once we have tracked down the homeowner. There is no emotional attachment, in fact the homeowner should be relieved to get rid of the property. I would stay on your manager to find these owners and provide you with the means to make a deal.


What assumptions can we make if the home just came out of bankruptcy?

1) We know that they are finished with most of the options. They can file bankruptcy again but it will not help them.
2) The Homeowners can try to refinance but the cost of the mortgage will be astronomical.
3) That the homeowner has tried everything to save the home and failed.

Here the homeowners have been through the entire process. They have borrowed money from friends and relative, tried to restructure, and refinance the home as well as save it in bankruptcy plan by forcing a payment plan on the bank. Nothing has worked. You need to allow the homeowner a way out with dignity if possible. That may come from you just purchasing the property and giving them enough to begin renting.

They only have two real options left: 1) sell on the open market or sell to us. Your job is to explain to them the problem of selling on the open market with only weeks to go to the auction is not a viable option. The real option is trying to get some equity out by selling to us.

This type of purchase has to be performed with surgical precision. You have homeowners who are emotionally drained from the process of trying to save the home. They trust nobody including the lawyer who took them into bankruptcy and feel like everyone has screwed them. If you are empathetic now would be the time to show it.

Here is a note on a property where this happened.

7/31 note: Relief from stay of auction granted.
11/05 note: In chapter 13 now. He isn't interested in hearing our option as the thought of selling his home makes him cringe. He did agree with me that selling is better than losing to auction. He has the auction stayed for some time now. Let?s keep an eye on his bankruptcy. This is a good home.

From the note the locator has been watching this house since early November 2005. Long time to check in on the property, but it is getting ready to payoff. The new note indicates that the bank has now received the right to foreclose upon the property. It is usually the step before the bankruptcy being dismissed.

The locator will now need to go out to the home and listen to the story of the bankruptcy and convince this homeowner that it is best to sell the home instead of losing it to the bank. This homeowner really does not want to sell the house in fact he would rather stay in the house. With that in mind it is going to be a tough sell.

Again, this pitch should be a straight up number crunching pitch going through the items on the chart. Remember you are going to have to deal with the emotional tie to this house. From the note it is quite evident that this particular homeowner has this tie. When I make the pitch I usually talk about the house as sticks and bricks which is not really a home. The home is his family and the memories which they get to bring with them to the new house they will be occupying. If you can get through the emotional you will purchase the house.


Do you know the story of Sisyphus? He was eternally condemned by the Greek Gods to push a rock from the underworld to the top of a mountain. Once he reached the mountaintop he watches as the stone rushes down the mountainside in a few moments back to the underworld. Sisyphus is then forced to walk back to the underworld and repeat this endeavor for eternity. An endless, mindless futile and hopeless labor with no chance of success.

Like Sisyphus our locators ceaselessly drive to a house to try to contact the homeowner only to have no contact. Homeowner was not home. Hiding in the house etc. It seems that the locator has been condemned by the managers to ceaselessly drive to the property leave a personal note and try again. Futile labor with no reward.

A locator could give up and stop running a property-nobody would blame the locator-we know it is a tough job requiring persistence and hard work. So here is our latest story of persistence with a reward.

This property came into the system on March 27, 2006-almost five months ago! (That is double the time a Massachusetts property usually stays in the system). The locator saw the property in April, May, June, without ever talking to the homeowner. Just taking a picture, leaving a note and waiting for a call back. Finally on July 13, 2006 the locator caught the homeowner at the door-the homeowner acknowledged receiving the letters and agreed to an appointment for Saturday on July 16, 2006.

The locator drove to the house for the appointment only to receive a note indicating that he could not meet today and requesting the locator to call on Monday. The locator set up a second appointment and the homeowner simply did not show up for the appointment. The locator had a telephone call to the homeowner and he could hear the homeowner state that he could not talk at the moment.

August rolled around and the locator went back to the house and met a friend of the homeowner and learned that the wife of the homeowner was very sick and was slowly recovering. Finally on August 14, 2006, the homeowner called to schedule an appointment. The locator went to the appointment and went through the FSP and secured the release. Here are the notes on the property. April 9 : nice hood no one home left paper work follow up with a visit May 7: went to the prop. and they were hiding in the home refuse to answer May 16: went to the prop. no one home send letter and follow up with visit June 10: went to the prop. no one home send letter and follow up with a visit they have three dogs June 17: Visited 6/17/06 - Not Home. Left letter requesting they call to set up an appt. June 30: went to the prop. they were home didn?t answer the door send letter and follow up with a visit no pics i thought i already had them sorry next time July 13: Visited 7/13/06; 6:30PM. Met HO, Paul, at the door. He acknowledged receiving the letters of intro that have left at the door. Said that he was heading out and asked if I could come by Saturday at 3PM. Set appt. for Sat, 7/15/06, 3PM July 15: Visited 7/15/06; 3PM. HO not home. HO left a note at the door indicating he could not meet with me today. Requested that I call his cell on Monday to schedule appt. for next week. July 18: Visited 7/18/06; 7:30PM. This was a scheduled appt. with HO. HO was not home. Waited until 8PM. Left letter at the door requesting call back to reschedule. July 25 : Tele-con at 9AM; 7/25/06. This is the second Tele-con since my last visit. Both times the HO (Paul) was in the background and instructed the person I was speaking with to tell me that he was unavailable at this time. How close is this situation to auction? August 5: Visited 8/5/06; 10:45AM. HO not home. Left letter with info to contact for appt. Spoke with Paul's friend that was at the house. Learned that the wife is still in rehab. Recovering from poisoning due to a burst abscess on her spinal cord. She has been down for 3MO. Slowly recovering. August 14: Paul called late last week message was lost now found August 17: property has a market value in pristine condition of 260k. i have put in the rehab budget of 16,500 allowing us to purchase right around 163k plus or minus last sale of houses on your way are at 1654 and 1737 Washington we should shoot pictures of those properties to show the differences for pricing August 17: Visited 8/17/06; 6PM. Presented Fresh Start Program; secured release, faxed to Admin 7:40PM. Property is in good condition. Overall, this is a big house. HO is ready to sell. HO would like to get as much of the equity as possible in order to create a fund for the two girls that he and Nancy have. The story is a sad one. He, Paul, is terminally ill with double lung cancer and diabetes. His doctors would like to remove his left foot but he is resisting. He has been given 6 - 9 more months to live. He told me that he has lost 60 lbs in the past 3 months and he can tell that his breathing is becoming a problem. His wife, Nancy, was being treated for a pinched nerve. In reality, a cyst had formed around her spinal cord and exploded destroying her spinal cord. She is now a quadriplegic and will never be able to return to the home. If she is release from the rehab facility, she will be cared for be her oldest daughter; hence, the fund. This property is ready to be purchased. I mentioned to Paul that there are a lot of options to think about and that we would get back to him by Wednesday with a status update and possibly a proposal by the end of the week.

Sisyphus was eternally condemned to continually fail at his mission, never to reap the rewards of success. A locator has a chance of success. This persistence is the key to a locator?s success. Keep pushing!! Good Hunting

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