Posted on: December 29, 2020

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!

Key Takeaways

  • What pre-foreclosure is
  • Why it’s all about helping others as opposed to buying the house
  • Percentage of people that gets personal loans
  • Why you need to go in with the end game in mind
  • Why you need to assess if you are in competition with an agent
  • What loan modification means
  • Why it’s important to get in the seller’s trust zone
  • How to get in the seller’s trust zone
  • Why it’s important to build rapport

RESOURCES:

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Episode Transcription

Brent Daniels:
Hey guys, it is Brent Daniels and we’re talking about pre-foreclosures, and 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.

Pace Morby:
Absolutely. Creative finances, money when it comes to pre-foreclosures.

Brent Daniels:
Now a lot of people, this is what is incredible. And the reason why I’m bringing this up is because I think everybody in every market is leaving so much money on the table because they’re not taken pre-foreclosure seriously the ones that don’t have equity, and we’ll get into that.

Pace Morby:
Absolutely.

Brent Daniels:
But truly 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. So, Pace, let’s start here. So pre-foreclosure. What is a pre-foreclosure?

Pace Morby:
Pre-foreclosure it means that somebody is falling behind on their payments. They’ve been given-

Brent Daniels:
What payments?

Pace Morby:
Their mortgage payment.

Brent Daniels:
Their mortgage.

Pace Morby:
They’re 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 some pretty big amount of pain, right?

Brent Daniels:
Yeah. Well, not only that, the interesting thing about pre-foreclosures is there is a very, very 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, and there is a date that they will take that to auction.

Pace Morby:
Absolutely.

Brent Daniels:
So what happens is 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.

Pace Morby:
Knock, knock, knock. The sheriff is coming for the house. That’s absolutely true.

Brent Daniels:
So in that 90 days… But the interesting thing is most people don’t start taking action until it’s at the last moment possible.

Pace Morby:
It is crazy. I feel like there’s two camps. What are those two camps? I feel like you and I kind of have the same belief in that?

Brent Daniels:
There’s people that have, and there’s people that don’t have any equity in their house.

Pace Morby:
Right. So in those two camps, it really doesn’t matter. It is very interesting, people don’t start taking action and tell about the halfway mark. And it gets scary really, really fast. So the eight options which we’re going to go over today are money. They’re game-changing. Most people are just calling pre-foreclosures and saying, “I want to give you a cash offer.” Guys, you’re leaving so many opportunities on the table and you’re also getting a lot of doors and a lot of text messages and cold calls going un-answered because you’re not using the right methodology. So let’s get into it.

Brent Daniels:
Let’s go. Option number one.

Pace Morby:
Option number one, guys. Sometimes… We had a seller one time where the husband had passed away. The wife hadn’t been in the workforce for 10 years. And so really what she just needed was a personal loan. And so what we helped her do is gain the courage to go to a family member and get a personal loan for two or three 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. So this isn’t always about buying the house. It is always about helping the seller. I can tell you that right now, and 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. Stop blocking your cold calls, because you’ve gone after truly helping them by giving the confidence that they needed to go get a personal loan.

Brent Daniels:
So, are you saying that you go instead of, “Hey, 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?”

Pace Morby:
Right.

Brent Daniels:
That’s brilliant. I mean, that is so-

Pace Morby:
It is money. So here’s the thing, guys. We have a team of doorknockers, we do SMS and we do cold calling. Our conversion rates skyrocketed when we started saying we’re going to be customer facing. And the first line we say to a seller is we say, “We have eight ways to help you…” Actually tell them, “We have seven ways to help you keep your house.” And they immediately go, Oh my gosh, this guy is not trying to attack me. He’s not coming after me and trying to take my equity. He’s actually wanting to help me. And we start by going and helping them get a personal loan if that is indeed what they need. And immediately you start getting all the things about the story, all the situation, the backstory of why they’re in the situation they’re in. And 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.

Brent Daniels:
And what’s the percentage of people that actually get personal loans? Because 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, but-

Pace Morby:
The percentage honestly is very, very low. It’s less than 1% of the people we talk to. It’s probably 1% of 1% to be honest.

Brent Daniels:
But it’s a way to get in the door.

Pace Morby:
It’s a conversation starter. It’s an icebreaker, and 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.

Brent Daniels:
I am telling you, if you go in with the end game in mind to help this seller out, most of the time, truly, their best option for them is to get out of the property.

Pace Morby:
With all the questions I get personally, DMs or otherwise. The number one question we get is how are your door knockers, how are your SMS is getting through to the seller whereas your competition is not? And guys, that is number one, going at them with that approach of, can we help you around the personal loan size?

Brent Daniels:
All right. Number two.

Pace Morby:
Agent. So guys, again, 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, 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, but if you bring this to the forefront and you say, “Look, why haven’t you listed your property?” They’re going to tell you so many more things about why they haven’t listened the property. “I don’t have time.” That’s good info. “I have a job opportunity. I have to leave. I need these things…” Whatever. Or, “I don’t have an agent.” What if somebody doesn’t have an agent? What do you do?

Brent Daniels:
Refer them an agent.

Pace Morby:
Refer them an agent.

Brent Daniels:
Refer them an agent.

Pace Morby:
So those are the things-

Brent Daniels:
But most of the time… Here’s the thing guys. Most of the time, people don’t want to list their property a lot of times because they’re embarrassed. They’re embarrassed because this is a pre-foreclosure, they’re embarrassed maybe in the condition of the property. They’re embarrassed by if somebody comes into their house and their dog bites him or something. A lot of people don’t want to list. And a lot of people don’t really trust real estate agents to have their best interest in mind.

Pace Morby:
A hundred percent, especially with the timeline looming, the 90 days is getting closer and closer. They’re fearful of it. And so it’s nice to just bring that fear to the forefront, have a conversation about it so you can step forward and get closer to helping them with a different method.

Brent Daniels:
Love it. Number three.

Pace Morby:
Loan modification. Guys, this is something that happens so many times where we would talk to the seller and we’d get this close, this close to getting a contract, and all of a sudden the seller would ghost us. And then a month later we touched base with them and find 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.

Brent Daniels:
So loan mod means loan modification. Basically what the bank does is they take what you owe, they put it on the backside of the loan. They reduce your payments, but you still… 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 actually afford to be able to do that and go through the process. But it is… I mean, it is a delicate process. I mean, you got to put a lot of paperwork together. And a lot of these people that are in pre-foreclosure, they don’t necessarily follow through.

Pace Morby:
Here’s the funny thing is on my Instagram, I post when I get certain contracts and I’ll say, “Just got a contract,” and I’ll have a picture of the house in the background.

Brent Daniels:
What’s your Instagram?

Pace Morby:
My Instagram is Pace Morby on Instagram guys. Follow me. So one of the other wholesalers in town goes, “Oh my gosh, I’ve been working with that seller for three months. How’d you get that contract?” And I said, “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? How’s it going with the loan mod?'” And never once did I bring up a cash offer or anything else. I was there as moral support. I basically created an ecosystem where me and that seller worked through this loan mod. They got rejected on the loan mod. They called who first?

Brent Daniels:
You.

Pace Morby:
Us. You guys got to get customer facing, seller facing, and get in their trust zone.

Brent Daniels:
And 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. So that whole idea on 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 so that if all these things don’t happen, all of a sudden you’re down here in five and four, but let’s not skip ahead. Let’s go to the rental. Rental.

Pace Morby:
Rental. I’ve actually never had a seller one time do a rental, but I always bring it up as an option. And the reason being is because I want to make sure that the seller knows all their options, one, and two I want to tell them why a rental’s not a good idea. So essentially we ahead and go, “Well, if you’re behind on your mortgage, why not just get a renter in here and cashflow a little bit, cash up, catch up your mortgage or whatever.” And they go, “Oh my gosh, I don’t want to deal with a renter. I’m so stressed out as it is.” So 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.

Brent Daniels:
Love it. Cash offer.

Pace Morby:
Cash offer. We know where that is.

Brent Daniels:
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.

Pace Morby:
Yes.

Brent Daniels:
This is traditional wholesaling that we talk about a lot. This is a bread and butter how do you make the biggest spreads from an income standpoint.

Pace Morby:
So what’s crazy about this is most wholesalers or real estate investors start here.

Brent Daniels:
Start here.

Pace Morby:
By the time I’m here, which takes about 30 to 45 minutes to get to this point, I’ve built rapport. 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. So by the time I even go to the cash offer, we’re already friends, but you guys as non-educated go to them immediately as a cash offer, “Hey, I’m a cash investor.” Guys. They need help. They need moral support and getting a call from a cash investor isn’t going to warm them up.

Brent Daniels:
Guys, this is everything. If you’re going after pre-foreclosures, this is absolutely the blueprint. I am telling you. Nobody does more of these than Pace. Nobody does more of these than Pace. He’s doing two, three a week. Guys, listen to what he’s saying. This is critical. Number six.

Pace Morby:
So 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 actually sell. I just need to get rid of this house. I don’t have any equity. In fact, if I took the offer you just gave me, I’d have to write you a check for 50 grand. And if I had 50 grand, I’d just catch up my mortgage.” So what we do is we then go at them with a subject to create a finance type of model to get in the house and still cashflow for longterm wealth by solving the seller’s problem, and buying a house that nobody, nobody else would have been able to buy.

Brent Daniels:
This is where everybody falls off. This is where every other… Everybody that’s looking for this cash offer that’s wholesaling falls off right here. And there is so much to be made.

Pace Morby:
It is crazy. We just had a meet up. And what happened is we had a couple of guys in that group that had been wholesaling for a year, and after we opened up their eyes and talked about these creative options, they immediately went back to their phone book and they got 15 sellers that they turned away last year. And we called those sellers together. And we got three contracts from sellers that they said, “Not a deal. Trash.”

Brent Daniels:
No equity.

Pace Morby:
No equity.

Brent Daniels:
Because what happens is typically you look at a property. 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 our creative financing. Love it. Number seven.

Pace Morby:
Nobody ever has taken me up on this. However, they go, “Are those my only options?” And I go, “Well, I, as a home flipper, I can help you renovate the house and list it and we can split the profits.” And they go, “Oh my gosh, there’s not enough time for that. There’s not enough time for that. There’s none that time for that.” So all of these guys, if they didn’t take you up on these offers, we come back in with another one that actually would help them, but they still won’t take it. And they go, “Man, I guess I really don’t have any other options besides five and six.”

Brent Daniels:
And these, equity and no equity. This could be both. But this you obviously need equity in, but equity, no equity. These are the options. You’re pulling through the filters of all these to get to this. Obviously eight is bankruptcy and we don’t do bankruptcy. You’re not an attorney.

Pace Morby:
I’m not an attorney, but we will refer them to an attorney if that’s ultimately the way they need to go is we’ll refer them to an attorney. And through bankruptcy, they can stay in their house for a longer period of time. And I’d say less than 5% of people ever go… Maybe even 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.

Brent Daniels:
Yep. Guys, listen, there are no secrets. There’s just things that you don’t know yet. Now you know.

Pace Morby:
I like that.

Brent Daniels:
Now you know. Here is the blueprint. Here is the plan. Lay out these eight options. Put it 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?” And see what happens. Start the conversation. Because from there, you’re going to get the people that are really 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 absolutely help them out, but you’ve got to listen to Pace and go through the eight steps here and really implement it. Don’t just see this as education. This is pure instruction.

Pace Morby:
You have to talk to people guys.

Brent Daniels:
That’s right.

Pace Morby:
You have to do it.

Brent Daniels:
TTP guys. So, that is it. If you’re interested in joining the most proactive group in real estate investing it is the TTP.

Pace Morby:
TTP.

Brent Daniels:
Go to wholesalinginc.com/TTP, wholesalinginc.com/TTP, scroll down, check out all the testimonials, check out what the program’s about. If it feels good in your gut, sign up for a call. I look forward to working with you personally until the next time. Love you.

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