If you’re new to the wholesaling space, you’ve most likely heard of the term pre-foreclosures. However, do you have an idea what it is and how you can use it to make tons of money?
In today’s episode, Mr. TTP himself, Brent Daniels, and Pace Morby shared how you too can make a massive killing through pre-foreclosures.
Nothing but pure instruction from two of the most successful men in the wholesaling space so you better have a pen and paper handy!
Wholesaling Masterclass – How To Get Rich With Pre-Foreclosures With Pace Morby
We’re talking about pre-foreclosures. Now more than ever, these deals are popping up, and they are turning into massive deals not only from a wholesale perspective but also from a buy and hold perspective.
Creative finances, money when it comes to pre-foreclosures.
This is what is incredible. The reason why I’m bringing this up is that everybody in every market is leaving so much money on the table because they’re not taking pre-foreclosure seriously, the ones that don’t have equity. There are eight options that Pace is going to break down, and I’m going to ask the questions. I’m going to make sure that we’re crystal clear on every single one of these options so that you can be confident going into any appointment with pre-foreclosures and be able to get the contract signed. Pace, let’s start here. What is a pre-foreclosure?
Pre-foreclosure means that somebody is falling behind on their mortgage payments, and they are in a situation where they have been notified that their house is going to be put up for foreclosure, which means they’re going to lose their house. They’ve got a big amount of pain.
Not only that, the interesting thing about pre-foreclosures is there is a specific timeline. If you were not making your payments to the bank, they will foreclose. They’ll take that property back. They’ll kick you out of the house. It is their property now. There is a date that they will take that to the auction. What happens in my experience is in Phoenix here, when you get a notice of default, you get a 90-day window to either make up those payments and get good with the bank again or they’re going to foreclose.
The sheriff is coming for the house.
The interesting thing is most people don’t start taking action until it’s at the last moment possible.
I feel like there are two camps. What are those two camps? I feel like you, and I have the same belief in that.
People don’t start taking action until about the halfway mark, and it gets scary really fast.
There are people that have equity, and there are people that don’t have any equity in their house.
In those two camps, it doesn’t matter. It is interesting, people don’t start taking action until the halfway mark, and it gets scary fast. The eight options which we’re going to go over are money. They’re game-changing. Most people are calling pre-foreclosures and saying, “I want to give you a cash offer.” You’re leaving so many opportunities on the table and you’re also getting a lot of doors, text messages and cold calls going unanswered because you’re not using the right methodology. Let’s get into it.
We had a seller one time where the husband had passed away and the wife hadn’t been in the workforce for ten years. What she needed was a personal loan. What we helped her do is gain the courage to go to a family member and get a personal loan for 2 or 3 months so she could get caught up on her payments. The right thing to do was to help that seller out in that situation to get the courage to stay in that house.
This isn’t always about buying the house. It is always about helping the seller. Asking somebody about the personal loan situation will get you customer-facing, where no longer will they have a guard and stop blocking your texts and cold calls because you’ve gone after truly helping them by giving them the confidence they needed to get a personal loan.
Are you saying that instead of, “Are you in foreclosure? Do you want to sell your house?” You would ask them, “Do you need a personal loan to help you out with this situation?”
It is money. Here’s the thing, we have a team of doorknockers. We do SMS and we do cold calling. Our conversion rates skyrocketed when we started saying we were going to be customer-facing. The first line we say to a seller is, “We have seven ways to help you keep your house.” They immediately go, “This guy is not trying to attack me. He’s not coming after me and trying to take my equity. He’s wanting to help me.”
We start by going and helping them get a personal loan if that is indeed what they need. Immediately, you start getting all the things about the story, all the situation, and the backstory of why they’re in the situation they’re in. Now you can start solving problems that no other competition is going to be able to do because they don’t have the right information.
What’s the percentage of people that get personal loans? These are people in financial distress. These are people that can’t afford their mortgage as it is, let alone a high-interest payment from a family or maybe the family member is not charging them interest.
The percentage is low. It’s less than 1% of the people we talk to. It’s probably 1% of 1%, to be honest.
It’s a way to get in the door.
It’s a conversation starter and an icebreaker. It’s also telling them, “We are here to help you. We’re not here to take advantage of you. If that is the best option, we’re going to help you get that option done.”
Pre Foreclosures: It’s nice to bring that fear to the forefront and have a conversation about it so you can step forward and get closer to helping them with a different method.
If you go in with the end game in mind to help this seller out, their best option is to get out of the property most of the time.
With all the questions I get personally, DMs or otherwise, the number one question we get is, “How are your SMS getting through to the seller whereas your competition is not?” That is number one, going at them with that approach of, “Can we help you around the personal loan size?”
Agent. If they have an agent that they’re talking to, you want to pull that to the forefront. You want to find out if they have a brother, a cousin, a sister, or whatever that is an agent that is going to be your competition on the other side. Otherwise, if you don’t bring that out and you’re starting talking about cash offers, which is what everybody’s doing, they start ghosting you. They start doing whatever and you don’t know why.
If you bring this to the forefront and you say, “Why haven’t you listed your property?” They’re going to tell you so many more things about why they haven’t listed the property. “I don’t have time.” That’s good info. “I have a job opportunity. I have to leave. I need these things. I don’t have an agent.” What if somebody doesn’t have an agent, what do you do? Refer them to an agent.
Here’s the thing, most of the time, people don’t want to list their property because they’re embarrassed. They’re embarrassed because this is a pre-foreclosure. They’re embarrassed in the condition of the property. They’re embarrassed if somebody comes into their house and their dog bites them or something. A lot of people don’t want to list. A lot of people don’t trust real estate agents to have their best interests in mind.
Especially with the timeline looming, the 90 days is getting closer. They’re fearful of it. It’s nice to bring that fear to the forefront and have a conversation about it so you can step forward and get closer to helping them with a different method.
Loan modification. This is something that happens so many times where we would talk to the seller and we’d get this close to getting a contract, and all of a sudden, the seller would ghost us. A month later, we touch base with them and found out they were no longer in foreclosure. It’s because they were working on a loan mod the entire time we were talking to them.
Loan mod means loan modification. What the bank does is take what you owe and they put it on the backside of the loan. They reduce your payments but the amount that you’re not paying them now, they tack onto the back of the loan. It’s a win-win for the bank if they feel like the people can afford to be able to do that and go through the process. It is a delicate process. You got to put a lot of paperwork together. A lot of these people that are in pre-foreclosure don’t necessarily follow through.
Here’s the funny thing, on my Instagram, I post when I get certain contracts and I’ll say, “I got a contract,” and I’ll have a picture of the house in the background.
It isn’t always about buying the house; it’s always about helping the seller.
What’s your Instagram?
My Instagram is @PaceMorby. Follow me. One of the other wholesalers in town goes, “I’ve been working with that seller for three months. How’d you get that contract?” I said, “It’s because I was talking to them through the whole process of their loan mod, checking in on them, ‘How’s going with the loan mod?’” Never once did I bring up a cash offer or anything else. I was there as moral support. I created an ecosystem where that seller and I worked through this loan mod. They got rejected on the loan mod. Who did they call first? Us. You guys got to get customer-facing, seller-facing, and get in their trust zone.
You get into their trust zone by providing all the options for them to stay in the house or to sell it and get out cleanly before the foreclosure happens. The whole idea of these steps here is to go through as much effort as possible to provide as much value to them as possible so that they can get out cleanly. If all these things don’t happen, all of a sudden, you’re down here in 5 and 4, but let’s not skip ahead. Let’s go to the rental.
I’ve never had a seller one time do a rental, but I always bring it up as an option. The reason being is because I want to make sure that the seller knows all their options, and I want to tell them why a rental’s not a good idea. Essentially, we’re going to go, “If you’re behind on your mortgage, why not get a renter in here and cashflow a little bit and catch up your mortgage?” They go, “I don’t want to deal with a renter. I’m so stressed out as it is.” That is a good sign that they’re in enough pain that you can come in and solve their problem with a cash offer or maybe a creative financing solution.
This is the most typical. This is what most people go at right off the bat, give them a cash offer. If they have equity, if there’s enough in there, let’s get the cash offer. Let’s get it locked up. Let’s assign that deal as wholesale. This is traditional wholesaling that we talk about a lot. This is bread and butter on how you make the biggest spreads from an income standpoint.
What’s crazy about this is most wholesalers or real estate investors start here. I’ve built rapport by the time I’m here, which takes about 30 to 45 minutes to get to this point. I know their dog’s name. I know their daughter’s favorite color. I know everything about their family, and why they’re in the situation they’re in. By the time I even go to the cash offer, we’re already friends. You guys, as non-educated, go to them immediately as a cash offer, “I’m a cash investor.” They need help and moral support. Getting a call from a cash investor isn’t going to warm them up.
This is everything. If you’re going after pre-foreclosures, this is the blueprint. Nobody does more of these than Pace. He’s doing 2, 3 a week. This is critical.
Number six, let’s say that you go to the cash offer and you talk to the seller and they say, “I would love to sell. I need to get rid of this house. I don’t have any equity. In fact, if I took the offer you gave me, I’d have to write you a check for $50,000. If I had $50,000, I’d catch up my mortgage.” We go at them with a subject to create a finance type of model to get in the house and still cashflow for long-term wealth by solving the seller’s problem and buying a house that nobody else would have been able to buy.
Pre Foreclosures: Make sure that the seller knows all their options.
This is where everybody falls off. Everybody that’s looking for this cash offer, wholesaling falls off right here and there is so much to be made.
We had a meetup, and what happened was we had a couple of guys in that group that had been wholesaling for a year. After we opened up their eyes and talked about these creative options, they immediately went back to their phonebook, and they got fifteen sellers that they turned away last year. We called those sellers together, and we got three contracts from sellers that said, “Not a deal. Trash.”
No equity. What happens is, typically, you look at a property, and you’ll see if it has equity. If it is, great, follow up. If it doesn’t, gone. You’re saying, “I want all those, and I’m going to convert those into a subject to or creative financing.” Number seven.
Nobody ever has taken me up on this. However, they go, “Are those my only options?” I go, “As a home flipper, I can help you renovate the house and list it and we can split the profits.” They go, “There’s not enough time for that.” If they didn’t take you up on these offers, we come back in with another one that would help them but they still won’t take it and they go, “I don’t have any other options besides 5 and 6.”
Equity and no equity, this could be both. With this, you need equity. Equity or no equity, these are the options. You’re pulling through the filters of all these to get to this. Eight is bankruptcy and we don’t do bankruptcy. You’re not an attorney.
We will refer them to an attorney if that’s ultimately the way they need to go. Through bankruptcy, they can stay in their house for a longer period of time. Less than 2% of people ever go that route. Every once in a while, we’ll get an agent that we refer a deal to.
There are no secrets. There are things that you don’t know yet. Now you know. Here is the blueprint and the plan. Layout these eight options put them on a piece of paper. Put it in a presentation and bring it to them and say, “Which one of these looks like something that you’d be interested in?” See what happens. Start the conversation.
From there, you’re going to get the people that are going to be willing to work with you, and that’s how you make an impact in your community. These are the people that are under the most distress possible, and you can help them out, but you’ve got to listen to Pace and go through the eight steps here and implement it. Don’t just see this as education. This is pure instruction.
You have to talk to people. You have to do it.
If you’re interested in joining the most proactive group in real estate investing, it is the TTP. Go to WholesalingInc.com/TTP. Check out all the testimonials, check out what the program is about. If it feels good in your gut, sign up for a call. I look forward to working with you personally. Until next time. I love you.
About Brent Daniels
Brent Daniels is a multi-million dollar wholesaler in Phoenix, Arizona… and the creator of “Talk To People” — a simple, low cost, and incredibly effective telephone marketing program…
Also known as “TTP”… it helps wholesalers do more, bigger, and more profitable deals by replacing traditional paid advertising (postcards, yellow letters, bandit signs, and PPC) with being proactive and taking action every single day!
Brent has personally coached over 1,000 wholesalers enrolled in his “Cold Calling Mastery” training, and helped 10,000’s of others who listen to him host the Wholesaling Inc. podcast, watch his YouTube channel, and attend his live events…
A natural leader, Brent combines his passion for helping others with his high energy, “don’t-wait-around-for-business” attitude to help you CRUSH your wholesaling goals as quickly and easily as possible!