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How To Wholesale Pre-Foreclosures – Help Distressed Homeowners For A Good Profit!

How To Wholesale Pre-Foreclosures - Help Distressed Homeowners For A Good Profit - The Future Is Your Creation

In this blog post, I will present to you how to wholesale pre-foreclosures and help distressed homeowners for a good profit.

Foreclosure is an unfortunate and scary process for homeowners, but as a real estate investor, you can help people who are facing foreclosure, while also making a good profit. As a wholesaler of pre-foreclosure homes, you put distressed homeowners together with a buyer/investor and get an assignment fee for doing so.

Sounds pretty good right?!

How To Wholesale Pre-Foreclosures – Help Distressed Homeowners For A Good Profit!There is an advantage to reaching homeowners that are going through foreclosure quickly before they are inundated with letters, emails, and phone calls from collectors or competitors.

Because after being chased by too many collectors, there is a big chance the homeowner goes into hibernation and hides from the outside world. You should try approaching them before this happens.

After all, you have to take into consideration that many people are in denial about the foreclosure process, and will tell you they DO NOT need any help.

“I don’t have a problem!”, is a common reply when calling them.

People in these situations are often embarrassed and do not want to admit they have a pending problem.

For this reason, you have to gain their trust and try educating them about what will happen if their home goes into foreclosure.

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With that said, let’s take a look at what foreclosure means and how to wholesale pre-foreclosures next.

What Does Foreclosure Mean?

Before going through the process on how to wholesale pre-foreclosures, let me explain the foreclosure process and what foreclosure really means, so you understand what you are dealing with. As well as and when it is too late to help the homeowner.

Foreclosure is a legal process, where a creditor (i.e. a lender or mortgage holder) can repossess or sell a property for the purpose of repaying the debt owed on the property.

Mortgage holders can foreclose on a property at any time after the borrower starts missing making payments unless otherwise is set out in the mortgage or in the state where the property is located.

This blog post will especially focus on the foreclosure process in Texas, and how to work pre-foreclosure leads in the state of Texas.

However, the process is more or less the same for other states. The only difference is the minimum time frame between notices, which is shorter for Texas than most other states.

In Texas, lenders/banks may foreclose on deeds of trusts or mortgages in default, using either a judicial or non-judicial foreclosure process. The judicial process of foreclosure, which involves filing a lawsuit to obtain a court order to foreclose is used when no power of sale is present in the mortgage or deed of trust.

When Does Foreclosure Begin?

How To Wholesale Pre-Foreclosures - Help Distressed Homeowners For A Good Profit - The Future Is Your Creation
The foreclosure process begins when homeowners get behind on their mortgage payments (illustrated as 1 PM on the foreclosure clock). If the homeowner has not been able to pay the mortgage for a couple of months, in some cases just a single month, the lender/bank will start sending letters and make phone calls.

When this happens, the homeowner has an option to try to work out payment plans with the lender/bank or modify the loan.

More importantly, the homeowner needs to get up to date with his/her mortgage payments to stop the foreclosure process.

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How Long Before The Bank Takes The Home?

According to the federal law that regulates banking, the homeowner must be delinquent for 120 days before a lender can serve a notice of foreclosure.

However, there are some independent lenders that do not fall under this law’s jurisdiction and can begin foreclosure at any time after the loan goes into default.

At this point, pre-foreclosure starts (3 PM on the foreclosure clock).

During the pre-foreclosure period (illustrated from 3 PM to 6 PM on the foreclosure clock), the homeowner will get a demand letter and later a complaint. This is when we need to start reaching out to offer them our solution (more about this below).

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Notice Of Default And Acceleration Clauses

If the lender/bank chooses to proceed with foreclosure after the minimum delinquency period has passed, they will send the homeowner a “Notice of Default” (7 PM on the foreclosure clock).

This means that the homeowner has a specified time period to pay back what he/she owes, usually a legally mandated period of 20 days (occasionally up to 30 days).

Texas mortgage agreements often include acceleration clauses. The clauses give the bank the right to demand immediate payment of the entire balance if the homeowner violated the terms of the loan.

If the mortgage includes an acceleration clause, and the homeowner goes into default, the lender may ask to pay off the remainder of the loan or face foreclosure.

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How Long Before The Foreclosure Auction?

If the homeowner has not yet managed to pay the amount due or modified the loan/s, the bank will send a “Notice of Sale”. This means a written notice stating that the bank will sell the home at auction.

The foreclosure rules in Texas require a written notice of a minimum of 21 days before the bank/lender can sell the home.

The bank/lender must also post the “Notice of Sale” at the door of your county courthouse and file it with the clerk of that respective county. And the notice of sale must include; the location, date, and time of the planned auction/sale.

What Happens At The Foreclosure Auction?

In Texas, foreclosure auctions (9 PM on the foreclosure clock) take place at the courthouse of the county in which the property is located.

The proceedings are held on the first Tuesday of every month and might be scheduled any time between 10 AM and 4 PM.

Additionally, a representative of the lending entity/bank must be present at the auction.

State law permits the lender/bank to purchase the home as the highest bidder at auction. In bidding, the lender/bank receives as credit the value of any outstanding debt on the mortgage.
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With that said, let’s take a look at the consequences of foreclosure.

What Are The Consequences Of Foreclosure?

There are many uncomfortable consequences for the homeowner after the foreclosure is a fact:

  • First of all, the homeowner’s credit will be completely damaged for 7 to 10 years – impacting his/her ability to get new housing, credit, and maybe even potential employment. Only on-time payments of three years or more will restore the credit score.
  • Second of all, a foreclosure on the credit report can make it difficult to rent a new home. A landlord’s opinion: “Why would you pay rent if you did not pay your mortgage payments?” A bank loan is rarely even a question.
  • Third of all, there may be a deficiency balance after the foreclosure sale that you still owe.
  • Forth of all, the homeowner will lose any relocation assistance or leasing opportunities that may be available with other options.
  • Fifth of all, forfeit ability to get a Fannie Mae mortgage to purchase another home for at least 7 years.
  • Sixth of all, most homeowners do not realize that by losing their home to foreclosure, there are likely going to be tax implications.
  • Last of all, many years of expensive and limited credit are the long term consequences of foreclosure, making financial recovery very difficult, if not nearly impossible. The components of a FICO score consist of payment history, amounts owed, length of credit history, new credit, and types of credit used.

Now that you know what foreclosure is and what can happen if a homeowner’s home is foreclosed on, we’ll move on to how you as a real estate investor can help them. And for a good profit too!

How To Help Distressed Homeowners In Pre-Foreclosure For A Good Profit?

Scam Watcher - Make A Living From HomeLike mentioned earlier, the homeowner needs to still be in the pre-foreclosure process for us, as real estate investors, to be able to help them for a profit. When the home goes into the foreclosure auction, it is already too late.

At least, when using creative real estate investing with no money up-front.

But if you have cash capital, you can go to the foreclosure auction and purchase the home for hopefully less than market value.

What To Do If You Do Not Have Any Cash Capital?

This is where creative real estate investing comes into the picture, which will use more creative options/strategies to help pre-foreclosure homeowners.

This option, or real estate investing strategy, is called wholesaling.

With that said, the basic idea with wholesaling is to get in, get out, and get paid. The turnaround time is often quick, which is good. I am presenting this strategy a bit closer here:

⇒ Want To Become A Real Estate Investor But Don’t Have Money To Invest? Start Wholesaling Houses!

Wholesale Pre-foreclosure Homes

Want To Become A Real Estate Investor But Don’t Have Money To Invest? Start Wholesaling Real Estate!
When wholesaling pre-foreclosure homes, you present a solution to the homeowner that you can offer him/her a cash offer for the property or catch-up on the back-payments on the mortgage and stop the foreclosure process.

This, in turn, will save the homeowner’s credit and make it possible for him/her to move on with his/her life.

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But How To Do This Without Money?

It is not you, personally, who are catching up on the back-payments or making the cash offer. You do not need to put in any capital – except for $10 in earnest money when signing the purchase agreement with the homeowner.

Better yet, it is the buyer/cash investor you are assigning the contract to that will get the mortgage current and stop foreclosure.

You are only putting the homeowner and buyer/investor together and are making an assignment fee for doing so.

Pretty amazing, right?!

A pre-foreclosure sale is a little bit different than a regular sale of a distressed property. In most cases, you and the buyer/investor will use seller financing to acquire the home.

With seller financing means the buyer/investor takes over the mortgage payments in exchange for the deed to the house, also called: “Subject To”.

The same process is applied for pre-foreclosure homes, but the buyer/investor also has to catch-up on the back-payments and get the loan current to stop the foreclosure process.

For this reason, a cash investor will most probably rehab the home and then sell it for retail value and make an even bigger profit. For this to be possible, there has to be enough equity in the home (20 percent or higher, at least).

It is up to you, as a real estate investor/wholesaler, to ensure there is equity in the home before reaching out to the homeowner. There may also be liens or encumbrances against the property, so it is important to run a good title check with an investor-friendly Title Company before purchasing the home.

Always do your due diligence before acquiring pre-foreclosures.

And if you get a homeowner to agree to sell their home to you, it is critical to get the previous owner to sign a Quit Claim Deed. Equally important, this deed should be recorded with the county or parish once the bank has accepted the catch-up payment.

You Are Not Only Helping The Homeowner

How To Wholesale Pre-Foreclosures – Help Distressed Homeowners For A Good Profit!
When wholesaling pre-foreclosures, you help the homeowner to avoid foreclosure and to ruin his/her credit. But you also help the buyer/investor to purchase a house without needing to make a huge cash investment.

Because the buyer/cash investor does not need a large cash capital to purchase the home, the buyer/cash investor does not need to get a loan to purchase the property, which means the transaction will not show up on the buyer/investor’s credit report.

Also, if the back-payments are not too far gone (too costly) you can offer people who cannot get a traditional bank loan the opportunity to own a home.

Instead of the normal 10 percent down-payment when acquiring a traditional bank loan, they can make up the back-payments of the foreclosure home in exchange for the deed.

For this reason, seller financing of pre-foreclosure properties works because the lender/bank never cares who is making the mortgage payments. They only care about receiving their payments on time, no matter the name of the payer.

First of all, the lender/bank does not necessarily want to foreclose on a home since it is costly. Second of all, lenders/banks are not in the real estate business.

Also, the lender/bank will have to list the property on the MLS and pay a realtor to sell it. Maybe even rehab the property to make it competitive on the market.

These are costly efforts the lender/bank rather avoid. In most cases, the bank just wants to lend people money and get interest.

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With that said, let’s move on to what to think about when wholesaling pre-foreclosures next.

Things To Think About When Wholesaling Pre-Foreclosures

There are a few things you have to pay extra attention to in regards to pre-foreclosures:

#1. You ALWAYS have to double-check the monthly mortgage payments with the lender/bank. Do not just trust what the homeowner tells you. You need to check with the actual bank.

To do this, you should get the current owner to write, witness, and notarize a Durable Power of Attorney, allowing communication with the mortgage holder. This needs to be written to enable full communication with the mortgage holder and his/her assigns for the entire term of the mortgage.

#2. ALWAYS use an attorney to go over all contracts. Doing this yourself can be risky and can cost you tons of money if something would go wrong.

#3. ALWAYS research the neighborhood of the pre-foreclosure home. Keep in mind that what is attractive in regards to a neighborhood, may be different for a fix and flipper. Or even to a buyer or tenant who wants to live in the home.

For example, if you would hold and rent the property as either a vacation rental or a long term rental, a quiet street might be more desirable for a long term renter. But an Airbnb guest might want a busy street closer to restaurants and night clubs.

Next, let’s move on to something that is important if you want to succeed with your real estate investing business.

Take Your Real Estate Business To Another Level – Get Distressed Homeowners To Contact YOU!

If you have not thought of how to get distressed homeowners/sellers to contact YOU yet, you have to start today!

This is what is going to make or break your real estate investing business.


Because it takes time and extra effort to cold call pre-foreclosure lists and chase for distressed homeowners who are willing to sell their home to you, as an investor, to a highly discounted price.

Believe me, I have done the tedious cold calling, and it only gave me about a 2% conversion rate. You will need a lot of patience, sales skills, and a bit of luck on your side to grow your real estate business this way. Especially, if you want to get ahead and contract the BIG profitable deals FAST.

However, I am not saying you should not do cold calling at all.

But you need to get distressed homeowners who really need to sell their homes to contact YOU instead!

For this to happen, you need to learn how to create professional lead capture funnels that collect distressed homeowners/sellers’ contact information in order for you to contact and start processing them.

You know they are interested in selling their home when they are contacting you and not the other way around. It will save you lots of headaches and frustration.

Here is an example of a lead capture funnel I used on my website:

Get distressed homeowners to contact you - Traffic Secrets
Get distressed homeowners to contact you - Traffic Secrets
The second tier idea with lead capture/sales funnels is to get access to distressed homeowners’ email addresses so that you can email them over and over.

For instance, you can set up autoresponders that will send out your pre-composed emails automatically. And you only need to configure this once, and never again have to worry about it.

In this sense, distressed homeowners will receive reminders that you exist and can solve their problems.

What is best, they will then contact you when they are ready to sell. Instead of you calling and calling and get hung up on because they are not ready to deal with the problem just yet.

There is a very affordable program, called Builderall, where you can create lead capture/sales funnels, email autoresponders, websites, landing pages, etc.

In fact, I am using this program myself, and I doubled my leads in the short period of two months.

Builderall is extremely user friendly and has pre-designed lead capture/sales funnels that you can customize with easy drag and drop functions. Besides, the support is also top-notch and always there for you if you get stuck. The longest I have ever waited on a support ticket is one hour.

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If you want to get a more comprehensive introduction of lead capture/sales funnels (with the common name, ClickFunnels), I highly recommend the FREE 30-Day Summit.

This FREE digital summit has gathered 30 incredible marketing experts from different fields, and you will learn the blueprints for how they got their business back up and rolling again, as well as generating income and leads in just ONE MONTH.

Better yet, you will also get help creating your first lead capture/sales funnel.

Sounds great right? But more importantly, you NEED TO DO THIS if you want to create a profitable real estate business FAST!

Invest a little bit of time in learning about ClickFunnels, build your first lead capture/sales funnel in a heartbeat, and score that BIG DEAL!

I hope this blog post showed you how to wholesale pre-foreclosures and help distressed homeowners for a profit. Even more, I hope it gave you the means to crush it as a real estate investor!

Feel free to show me some love and leave a comment in the comment section below. It will help this blog post to rank better on search engines, as well as make it possible for more people to find out about creative real estate investing.

I would really appreciate it if you also shared the article with someone who would benefit from this information. It is all about paying it forward!

Remember this: The Future Is Your Creation!

Stina Pettersson
The Future Is Your Creation
Email: [email protected]


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About The Author

Stina Pettersson - The Future Is Your CreationStina Pettersson is an aspiring entrepreneur who is working on achieving her goals as an Internet Marketer.

Stina was tired of her corporate job as a Marketing Specialist and wanted to stand on her own two feet.

Stina is originally from Sweden but has resided in the U.S. for the past seven years.

“My main goal is to maintain a flexible lifestyle, where I set my own schedule. Even that I work hard, I love what I do every day, and I also have the opportunity to help other people which is a huge gift.”


  1. Bridgedale

    You need to contact a real estate agent who will figure out what can be done for the property. This is the only way you can expect a good profit to be achieved from it in the end.

    • Stina Pettersson

      thank you for your comment, I appreciate feedback from Bridgedale. However, that is not correct. You can work this out as an investor together with the house owner, lender and attorney. Depending on the amount of back payments and the equity in the home, you can buy the house “subject to”, catch up the back payments, and assign the contract to a fix and flip investor or you can buy and hold, rent, lease option or whatever is your exit strategy. You do not need an real estate agent to do this. I understand that you are hunting for people, but please don’t mislead my readers.

      Stina Pettersson
      The Future Is Your Creation

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