According to Melvin Feller MA buying foreclosures is not as easy as most people think, and there is absolutely no one better way" to buy foreclosures. Melvin Feller is President of Melvin Feller Business Group in Oklahoma and Texas and a thirty-year veteran investing in foreclosure properties. He has spent his entire professional life in business and real estate! The key to any "profitable purchase" is find a truly motivated seller. Someone who wants cash more than they want to keep their house or someone who wants to sell you their home more than you want to buy it. Once you have a motivated seller, you are more than half way to your goal of buying a house below market value.

1. Melvin Feller MA Rules for Wealth Planning Using Real Estate Foreclosures
According to Melvin Feller MA
buying foreclosures is not as easy as
most people think, and there is
absolutely no one better way" to buy
foreclosures. Melvin Feller is
President of Melvin Feller Business
Group in Oklahoma and Texas and a
thirty-year veteran investing in
foreclosure properties. He has spent
his entire professional life in
business and real estate!
The key to any "profitable purchase"
is find a truly motivated seller. Someone who wants cash more than they want to keep their
house or someone who wants to sell you their home more than you want to buy it. Once you
have a motivated seller, you are more than half way to your goal of buying a house below
market value.
So, I'll illustrate three ways to buy foreclosures. Which of these is the best? Well, again, it's up
to you to decide. I'll just lay the basic foundation and then you can determine which option is
the best fit for you and your wealth plan.
The first one is Pre-foreclosure owners:
Once a Notice of Default, or Lis Pendens, has been filed, the owners are now in foreclosure and
must do something or risk losing their property, all their equity, and their credit. Months before
the auction (trustee or sheriff sale), contact the owners directly and offer to purchase their
home by "paying them cash for their equity."
Mention the benefits they will realize when they decide to sell, such as stopping the
foreclosure; preventing further damage to their credit; and getting a fresh start. Be friendly and
unintimidating. Do not insult or offend them with patronizing comments like, "How did you get
Wealth and Foreclosures and Melvin Feller

2. in such a mess?" or "Why in the world did you do that? We are here to create a win/win
scenario. We are here to help them out of a bad situation and at the same time turn that house
in into a wealth plan profit center.
Remember that you are buying their home, and you need them to like you and want to sell you
their home. You must show them how your offer is a win/win proposition. If they are not ready
to sell now, discuss all their
options with them. Keep the
door open for future discussions.
You never know when someone
in foreclosure will decide it’s
time to sell the home that has
been a major frustration for
them recently.
But when they do decide, you want them to talk to you and no one else. This relationship must
be established early on, starting with your first contact and reinforced through your repeated
follow-up visits. The number one reason investors do not succeed in buying pre-foreclosure
houses is that they simply do not follow up with the motivated sellers! Do not make this
mistake.
How much should I pay?
Once the homeowners agree to sell you their home, you will determine the most you can afford
to pay for the property before you meet with the sellers. Make sure you have enough cash
available to make up their back payments (and stop the foreclosure), plus give them some
"walking money" to close the transaction and move them out.
The amount of cash you give the seller is totally based on your negotiation skills. Obviously less
is better from your standpoint, but not too low. Getting rejected outright and NOT buying the
property at all isn't good either.
Make sure your offer is contingent upon and subject to all existing liens, loans, etc. as listed in
your purchase agreement and that it is the entire list of all debts. Make certain that the terms
Melvin Feller sees foreclosures everywhere.

3. for repayment are accurate and that you have the right to approve or disapprove the current
status of all loans and of title.
Successful foreclosure purchases must conform to your state foreclosure laws. Make sure you
read up and become familiar with these state laws in advance of writing your offer. Normal
purchases include full title insurance provided by the seller, as well as the buyers' complete
inspection of the property's physical condition.
The best part of buying directly from the owner is that you have an exclusive deal. Contrary to
popular belief, there is rarely any competition when you buy a home in foreclosure directly
from the owner. Once a motivated seller decides to sell his property, he just wants to get it
over with quickly and easily.
The idea of the seller calling many investors to get the best offer just isn't reality. Once you are
in, chances are that you will be their primary contender! There won't be the "pack of bidders"
that you will encounter if you wait for the foreclosure auction.
The second way to purchase Foreclosures is at a Foreclosure auction.
A few weeks or in some areas a few months, prior to the auction, the lenders representative
(Trustee or Attorney) files an Auction Notice (Trustee's Sale or Sheriff's Auction) of intent to sell
the property to the highest bidder at a public sale.
The opening bid is set by the lender and is based on the full amount owed on the loan
(including principal, interest, late charges, penalties, and foreclosure fees allowed by law) as of
the date set for the auction.
Often the auction is delayed by mutual consent of the lender and the borrower, and a new
auction date is scheduled. Make sure you check with the lender's representative the morning of
the auction to confirm that it is still scheduled and to confirm the amount of the minimum
opening bid.

4. Before you attend any foreclosure auction, you'll need to do a ton of research. Since these
purchases are "as is" with no warranties given, no title insurance provided, and in most cases
varies state by state you need all cash, in the form of certified funds, you really know very little
about what you are about to bid on.
You must do a complete title search to examine the state of title and to determine what
position you are bidding on at the auction. You can do this yourself but do not expect help from
the county clerks, or you can hire someone to do it for you.
A reputable title officer charges $300 to $400 for each preliminary title report they complete
(these are NOT the same as a "property profile," which is free and usually done for Relators and
not that important). This can get very
costly, especially if you decide NOT to
buy a few houses.
Most professional foreclosure auction
bidders are also very good title
researchers, and they have learned
from another professional how to do
this very tedious task.
If you are planning to bid at a
foreclosure auction for a "first mortgage," most junior liens will be wiped out at the auction,
and you will not be responsible for them. This is great news if the owner in foreclosure had a
ton of loans and, therefore, not enough equity for you to be able to purchase from him directly.
Now you have a chance to buy the house for less money at the auction!
BUT some liens are NOT wiped out, such as Property Tax Liens and any Federal Tax Liens plus
other exceptions that cannot be described here.
This is also important information for you as the bidder, isn't it? What if you are planning to bid
at a foreclosure auction, and you thought that opening bid of $75,000 sounded GREAT on a
$400,000 house? You may be highly mistaken.
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5. Your $75,000 winning bid, could be for the second mortgage. The winning bidder at this auction
pays the $75,000 cash and automatically assumes the debt of all senior liens on the property.
What if the first mortgage on this house was $400,000? OOPS! You just paid $475,000 for a
house worth $400,000.
You will also need to inspect the property to determine the number of repairs needed and the
cost of repairs. If you are buying from the owner directly, you are invited inside and can easily
do your inspections. But if the owner losing his home at the auction is hostile and won't talk to
you, are you prepared to peek inside windows and hope for the best? What if the house is
totally wrecked when you finally buy it?
Finally, you can expect competition at the foreclosure auctions. Anyone with money who is
afraid of or not good at talking to owners in default will go to the auctions. Often a crowd of
people may bid up the same property. In hot real estate markets, investors will pay more for
houses at auctions than I would. As a point of reference my maximum is 70% of market value.
The third way to obtain foreclosure is REOs: Real Estate Owned by the lender.
These are properties that went to
sale at foreclosure auctions but
nobody wanted. Most likely the
minimum bids exceeded what a
savvy investor would pay. This is the
way lenders take ownership of
defaulted properties, and these
properties are known as REOs. The
lender no longer has a bad loan to
collect on; they now have a non-
performing asset that they must sell.
In hot real estate markets, REO lenders simply fix up the property, list it with a Realtor, and sell
it to a home buyer for full market value. The REO lenders have essentially become our
competition. But once they start getting more and more properties back and can't keep up with
the fix-up for resale process, they will start selling their properties "as is" for a discount again.
Foreclosures and Melvin Feller MA

6. When will that happen? It's hard to say. But I can say this: -- it is not happening now, and I
would recommend you NOT work REO leads at this time. REO lenders currently are NOT
motivated sellers. They will not be motivated sellers until they have a ton of bad loans and a
large REO inventory, which they don't have at this time.
If you found an REO property in your area, and it is not in the MLS. Multiple Listing System of
agents, contact the lender directly by phone. Ask for the head of the REO Department or
request the name of the actual REO asset manager handling this property.
Ask the asset manager if the bank is selling the property "as is" and if they'll discount for an "all
cash" offer. If you get a yes, then
that's great! Continue to pursue
the property and line up your
money lender or equity partner. If
you've structured the deal so you
do not exceed 70% of the market
value total of purchase price and
all repairs, you'll have no problem
finding money partners.
Which way is the better way for
you to buy a foreclosure? If you ask me, my preference in today's market is buying from the
pre-foreclosure owner. As the market changes, so will my preference. Which is best for you?
That's hard to say, but hopefully now you know why a "quick answer" just wouldn't work. As a
long time, investor, I firmly believe in wealth planning using foreclosures.
Melvin Feller MA and Foreclosures