myEmpirePROIn this lesson, we will discuss the reason why lis pendens create a great opportunity to tap into an endless pull of motivated sellers for your wholesaling business.
Before we go too far, what is lis pendens in real estate?
Lis Pendens simply means a pending lawsuit and in this case, we are talking about foreclosure lawsuits.
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When a property owner stops mortgage payment on a house, one of the few options left for the mortgage lender is to foreclose on the property designated as a collateral.
That process is initiated with a foreclosure pending lawsuit (a.k.a lis pendens) which represents a notice or legal intention to foreclose.
In my opinion, this stage in the foreclosure process presents the best opportunity to pick up a cheap house because…
1* This was the list that created my $3 million story.
2* The owner is still in control of the decision to sell the property or not.
3* You can inspect the property before sale unlike if it had already been foreclosed on.
4* There has been enough time between the time they stopped paying and the publishing to public record… indicating enough motivation to sell.
5* It is proven that the house is actually more of a liability than it is an asset.
List of properties on lis pendens is public records and these days, there are vendors that actually publish them online for easy access.
Try the best one in the market out at:
The trick to real estate investing is to buy low and sell high right.
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But “low” with respect to what price point as a standard?
Who or what is determining the standard to measure what price is low or high?
The Market
The market refers to the people and the people get to determine what a house is worth…
Not just by the mere utterance of their opinion but by their action and what has been logged into record as far as what people were willing to pay for a house or types of house.
As you know in wholesaling, we go further.
We only deal with how much they actually paid, we use sales comparable only.
Back to lis pendens and here is an example…
Dina called us from one of our marketing outreach with a simple marketing message:
WE BUY HOUSES
One of the questions we asked her during the initial consulting session is this…
Is everything in good standing… mortgages, tax liens etc?
She confessed instantly that she received a lis pendens notification 2 weeks before.
It’s not like we didn’t know; this is public records as I said earlier.
But the last thing you want to do is come off as a weird creep who knows everything about them; that can make them uncomfortable.
With the right quality questions, they will volunteer the information.
What Happens After Lis Pendens is Filed?
People like you and I get to offer a solution to these distressed owners.
The list is published for the public by the county sheriff and vendors can also make it available online for next-to-nothing.
Also, the owner is now in a state of urgency which is a monumental aspect of any sales process which makes your effort even easier.
This is why you don’t have to act like a snake oil sales person; simply show up to the call like a normal person with intentions to see how you may be able to help.
Build rapport, evaluate the property for market value.
Use this free tool to come up with a maximum allowable offer:
www.DealEstimator.com
Tender your offer, negotiate and get it accepted and lock it up in a purchase contract or assignable purchase contract if you are a wholesaler.
Can you sell a property with a lis pendens?
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Yes you can because, lis pendens is not a lien.
Its just a notice of intention to foreclose if the property owner doesn’t do anything to catch up with a defaulted mortgage payment.
The owner is still very much in control of the property ownership and can sell as long as all liens are satisfied.
Likewise, you and your investor partner can buy a house in lis pendens.
In certain parts of the city, a property may be under water. What does that mean?
When you owe more money to the mortgage bank than a property is worth, you as the property owner is doomed.
For example, you used www.DealEstimator.com to come up with a value of $223,000 for a property.
But the owner owes $405,000 on the property.
The property cannot be sold simply because no one is willing to pay $405,000 for a $223,000 piece of crap.
But the mortgage bank is also doomed and here is why…
If the bank follows through with foreclosure, the starting bid has to be $405,000 (the money owed) and no one is willing to pay that right?
So the bank is forced to buy the property back into their books before they can sell and that’s why you have the REOs… (Real Estate Owned by the Banks)
In the next video, we will cover more details on REOs and some details. So be sure to like, subscribe and share this video for best chances of notifications.
When you catch a prospect at the lis pendens stage, the owner is motivated enough to want to get rid of it but a shortsale approval is needed from the bank when the property is under water.
Guess what…
The bank is also motivated enough to review for a shortsale because they can accept whatever you offer and save the time to come back to the same square one later.
What is shortsale?
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When a mortgage bank accepts the sales of a property for less than what is owed in principal balance, it is called shortsale.
In the meanwhile, check out the next video as seen on this screen.