Mailed 40 rural pre-foreclosures for 3 replies and one real conversation

How did you get three replies out of 40? I'm at 300 letters and 4 calls, all of them angry. Was it the acreage filter or is your letter different?

I'd spend the next 48 hours on the value question and nothing else, because every other decision here changes if the number is 215k instead of 190k.

On 11 acres, the thing I'd check is whether the parcel can split under the county's minimum lot size and whether it has enough road frontage for two access points. If it splits into a house on 3 and a 8 acre piece you can sell separately, your exit stops being one comparable sale. Arbor, you do land, so you know how to pull that faster than I do. If it can't split, you're valuing a house with a big yard and the acreage adds maybe 15 to 25k over a 1 acre version in most rural markets I've looked at.

The part I'd want in writing before spending another hour is the payoff. Owner said 138k, and owners are usually wrong about that, because they're quoting the principal they remember and not the fees, advances, and escrow the servicer has added. Get an authorization signed so the servicer will talk to you and get the written payoff and the written reinstatement figure. Those two numbers can be 4k apart from what anyone remembers.

I don't understand why the owner gets 20k. Doesn't he lose the house in six weeks either way? Genuinely asking, not being harsh about it.

rigging, because he has equity and no time. If it sells at auction for 190k the surplus above the debt and costs goes back to him under most state procedures, so his alternative isn't zero. That's exactly why he can ask for 20k. Whether he'd actually collect a surplus and how long that takes varies by state and by whether junior liens claim it first, which is the part I'm still confused about myself.

arbor, has anyone checked for junior liens or judgments? At 138k against a 190k value there's room for a second, and if there's an old judgment or a tax lien attached, your 173k gets bigger.

This is the thread that's making me realize pre-foreclosure isn't the friendly version of auctions. I thought talking to the owner was the low-risk entry point and it turns out you inherit every lien and every servicer conversation.

Counter him at 8k and see what happens. Not because 8k is fair, because the difference between his ask and what the deal supports is 12k and someone has to say it out loud. Motivated seller six weeks from a sale date is going to hear a real number.

And arbor, wholesaling this is harder than you think. A rural house on 11 acres with thin comps is a narrow buyer list, and the buyers who do want it will underwrite the land themselves and cut you out on price. I've tried to move two rural contracts and both took longer than the deadline allowed.

Six months of pulling notices here and the thing I learned is that most of them resolve before the sale. Owners reinstate, servicers modify, family steps in. Out of the last batch I tracked, more than half never made it to auction. So don't build your plan around this one closing. Build the list bigger.

Nobody's costed the holding. If you close, you own an 11 acre rural property with a well and a septic and a house that needs flooring. That's insurance on a vacant dwelling, which is a different and more expensive policy than an occupied one, plus taxes, plus whatever the well pump does. Add 4 to 6 months of that to your 173k and the 190k exit gets uncomfortable. If your plan is rent it and hold, say what the rent is, because that changes the whole conversation.

tally's point is the one I'd want answered before the price. If this is a hold at a rural rent of, say, 1,450 against 173k all in, you're looking at a very different asset than a 17k flip spread, and the value uncertainty matters much less because you're not selling into it.

If you do need outside cash for six weeks, know that the private money I've seen quoted for short bridge on rural collateral prices well above what the same lender does on suburban, and some won't touch acreage with a well at all. Get an actual term sheet in writing before you sign anything with a deadline in it.