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Foreclosure Consultant Business Idea

In a troubled economy, a foreclosure consultant can develop a successful career while helping people survive financial trouble.

While some foreclosure consultants seek to buy property that has been foreclosed, others work more as a credit consultant, helping clients discover bankruptcy alternatives.

What is Foreclosure?

We’ve all heard the term, and know it’s not a good thing, but what exactly does it mean to foreclose on a home?

When a homeowner is not able to make mortgage payments (typically for several months) the bank, which provided the loan, will try to get its money back.

If the homeowner cannot repay the money, the bank will start the foreclosure process. At the end of a foreclosure process, the homeowner could lose his home and have a bad credit rating that would affect his ability to make future purchases.

The foreclosure process has roughly three stages: pre-foreclosure, auction and real estate owned (REO).

It’s during the pre-foreclosure process that a consultant can help. At that point, the bank notifies the homeowner that the debt needs to be paid, and gives a certain amount of time for this to happen. If it does not, the bank takes ownership of the house, and will put it up for sale at an auction.

If it is not sold during the auction, it is REO or owned by the lender who will try to re-sell the home.

Foreclosure homes cost banks money and time, so lenders would prefer to avoid the process. Foreclosure consultants who come in during pre-foreclosure can help the owners figure out other methods to settle the debt.

How a Foreclosure Consultant Works

A consultant can access a listing of foreclosures and contact the homeowner with an offer to help. The consultant can help negotiate with the lenders to find a win-win solution for all of the parties involved. Realtytrac.com is one website that provides foreclosure lists.

As a consultant, you will need to have strong negotiation skills in order to bring about an agreement between the lenders and the homeowners. You’ll also need an understanding of loan documents and the laws that pertain to them.

The U.S. Department of Housing and Urban Development (hud.gov) has a website with useful information about foreclosures and options in addressing it.

It’s important to be sensitive to the homeowners. Many are going through an additional crisis in their lives that has led to the lack of money: divorce, illness or death.

Be aware, however, that the homeowners may be approached by other foreclosure experts who seek to move the foreclosure process along quickly so they themselves can buy the properly cheaply. They may also be contacted by disreputable businesses attempting to scam the homeowner by claiming to buy the house, yet still leave the homeowner responsible for the mortgage.

In order to develop your reputation as a credible resource for homeowners, you can provide classes on how to avoid foreclosure, or give budgeting lessons to those you have helped successfully negotiate the foreclosure process. Getting referrals is one of the best ways to build a reputation as a reliable consultant.

It’s a tough job, but if you have tenacity, excellent communication skills, compassion and the desire to bring about a solution from chaos, you will have great opportunities as a foreclosure consultant.

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