How to Stop a Foreclosure and Close More Wholesale Real Estate Deals

Spencer Weinberg (00:00)
Yeah, we did one where there was it was three days before the the auction date. We got on the phone with it was Rocket Mortgage and they had another lien holder on there. So we were going in and we ended up negotiating another 30 day extension. So, you know, a lot of times they have this situation, they had federal tax board liens, IRS liens. So it wasn’t like we could just get the property and close in a week. We had to clear up a lot of other baggage that they had attached to that property as well.

Dylan Silver (02:00)
Hey folks, welcome back to the show. Today we’re joined by Spencer Weinberg, investor in Southern California and founder of Home Offer Direct. Spencer, thanks for taking the time today.

Spencer Weinberg (02:12)
Thanks for having us, Dylan. Appreciate it.

Dylan Silver (02:13)
Acquisitions as a whole can be challenging, especially when conducted at volume. What’s been an acquisitions channel that has worked for your team lately?

Spencer Weinberg (02:24)
Yeah, I mean, that’s a great question. And I feel like acquisitions, finding deals is always a revolving, a moving door, revolving target, revolving door. I mean, we we’re we’re cold hard cold callers. So I mean, you gotta look at the numbers from, you know, luckily we’ve been in business a long time. Just the history of cold call has always worked well for us. We do do a lot of p pay-per-click, but we also notice, you know, the the return on investment for pay-per-click is a lot less.

than than cold calling.

Dylan Silver (02:52)
Now cold calling, this is something that people have talked about comes and goes, but you mentioned pay-per-click also comes and goes, right? And so you’ve had the ability to sustain cold calling as a functional channel for you. How much of this is the skill of the people that are on your team and then also maybe some targeted lists and targeted areas that you may be calling specifically?

Spencer Weinberg (03:17)
Yeah, so the the cost per conver or the conversion rates on cold call gonna be a lot lower than a a pay per click, but those are the best deals that we found in our opinion, where you know you get the biggest deals because it’s it’s a lot harder than someone picking up the phone and calling in your website. So to answer your question, ⁓ you gotta be lethal on the phones from a cold calls perspective and it’s just

We just found out throughout the years that, you know, that’s been our best channel. it’s just something that’s always been ⁓ effective throughout the years.

Dylan Silver (03:50)
Now when we talk about distress and reasons why folks would be looking at cash offers, there’s so many things that come to mind between high days on market for a listing that’s sitting, the property itself may be distressed and not pass, you know, an inspection, a buyer’s inspection, but also too, there could be seller distress, right? Death, divorce, disease, et cetera. Are you commonly seeing one form of distress or is it really across the board?

Spencer Weinberg (04:17)
Yeah, I mean that’s a great point. We’ve been seeing a lot of divorce sales. Majority of what we do is ⁓ trust like inherited properties, and then people obviously in California, they’re looking to move to lower cost per living. So from to answer your question on the data aspect of it, it’s yeah, pre-foreclosures, absentee owners, tax liens. Anytime something happens with the property with this when the city gets involved, we’re all over that. HOA liens. So

AI data’s been so good recently that, you know, we get updated lists daily of people that have that those pain points and are the most likely to sell.

Dylan Silver (04:52)
Now when folks are up against any kind of a time crunch that can kind of accelerate the emotions in the deal but it also makes it so much more critical to have someone like yourself on the other end of the line who understands this process and has done this dozens of times. You mentioned pre-foreclosure but you also mentioned like situations where people might be inheriting a property that they don’t want or wanting to move. So these are different kinds of time deadlines. If we just look at let’s say pre-foreclosures

In particular, there’s a definite time deadline like hey, we’ve got an auction that’s coming up What’s the latest that you’ve seen? ⁓ An acquisition happen where let’s say, you know The auction is in however many days and you acquired it under contract however many days beforehand

Spencer Weinberg (06:25)
Yeah, we did one where there was it was three days before the the auction date. We got on the phone with it was Rocket Mortgage and they had another lien holder on there. So we were going in and we ended up negotiating another 30 day extension. So, you know, a lot of times they have this situation, they had federal tax board liens, IRS liens. So it wasn’t like we could just get the property and close in a week. We had to clear up a lot of other baggage that they had attached to that property as well.

So to answer your question, acquisition time typically is faster, but there’s a lot of layers to the onion to get the deal actually to the finish line with these pre foreclosures. It’s not just it’s not just we’re defaulting on the mortgage, it’s all the other baggage that that’s associated with the property as well.

Dylan Silver (07:10)
That’s very tricky. You mentioned being able to go to the mortgage company and get an extension on the date of the foreclosure because I’m short sale and foreclosure certified through NAR and there’s a lot of realtors who aren’t able to do that. And so when you’re in those types of situations, each one is different. Walk me through what your steps and what it looks like in your head when you’re in a pre-foreclosure deal and you realize that

Hey, there’s a definite time and we are up against the clock.

Spencer Weinberg (07:43)
Yeah. So first thing we tell the seller, like, look, we’re we can’t promise we’re gonna stop the sale, right? We’re not we’re gonna do our best and everything in our power to stop the sale. But first thing we need to do is open up we need to get the agreement signed. We need to open up escrow. We need to pull the title report. And then I need you to call or have your your payoff or your mortgage statement ready so that way we can jump on the phone with the lenders and try to negotiate future future delays on the the sale dates.

So sometimes we have sixty days, sometimes we have thirty days, sometimes it’s very urgent. but those are the first steps. Open escrow, get the title ordered ASAP, and then start working with the ⁓ the payoff companies and the mortgage companies to get the extensions.

Dylan Silver (08:27)
Now, one of the things that is also challenging is once there’s an auction date set, it seems like everyone is calling the same list, right? And so there’s a lot of competition. And when you talk about an auction date being imminent, even more so. So how do you separate yourself when talking to sellers knowing that there’s a lot of people that are reaching out to them?

Spencer Weinberg (08:47)
Yeah, I mean, again, we have a channel of inbound and outbound. So sometimes they inquire first. But if it’s a cold call lead, it’s it’s again, it’s bringing a human element to the transaction. It’s it’s being solutions oriented and really leading from a place of of trying to help. Cause at the end of the day, we’re doing a service. We get compensated for it, obviously, but the end goal is to clear up all their issues first, and then we, you know, we’re able to close the deal and get paid.

So it’s we do have to help in order to move the needle in the transaction. So to answer your question, Dylan, it’s leading from a place of of giving and trying to understand the situation and solve the problem.

Dylan Silver (09:29)
If it’s okay with you, I’d like to talk about the other side of this game, which is dispositions, right? And having a buyer’s list that’s ready to go. Because if we talk about, you know, a date is three days and we’re getting an extension, this is something that’s very time sensitive. And so you really have to have buyers that are ready to go. That has become more challenging over the last, you know, let’s call it five years or so. How have you been able to manage having a captive audience and a buyer’s list?

Spencer Weinberg (09:57)
That’s a great question. And and it and to be honest with you, that’s why we only focus in Southern California, because we have relationships over the past seven years of buyers that work with us. So if I make a phone call, you know, we say we put it out, right? Like we we make the deal, we package it, photos, marketing, we put the deal out. We have all of our investors that look at the deal call in and buy the deal. So to answer your question, we’re very focused in a specific market and we have

You know, we have clients, investors that trust us with our deals and they know the situation, they know exactly what’s going on. It’s in foreclosure. We’re working on the ex extension. We need a wire, we need ⁓ contingency removals, the whole nine. That way the deal’s locked in and then on the back end and then on the front end we can go negotiate and do what we need to do on the front side. Front side meaning with the seller.

Dylan Silver (10:49)
One of the things that doesn’t get spoken about enough is the way referrals can assist the scale of a business, right? Especially when we’re talking about this type of business being a deal finder. If you successfully are able to purchase and assign a contract, right? That seller is going to be grateful. And if they know anybody in a similar situation, they’re going to refer you. Talk me through that, you know, how important

is this often overlooked area of this business.

Spencer Weinberg (11:21)
Yeah, I mean we’re we’re very big on referrals, Google Reviews, Better Business Bureau. So when we successfully close transactions, we offer incentives to sellers to refer us out to, you know, their people that they know in their network. So our brand, our reputation, doing what we say we’re gonna do is is has scaled our business tenfold. People come back to us, their family needs to sell, their brother needs to sell. So it it just becomes a big web of deal flow.

I’m I’m not saying referrals are every day, but when they come in they they come in.

Dylan Silver (12:28)
And that’s a huge bonus, right? Because that’s gonna be something if you’re tracking KPIs and you’re getting referrals, this is gonna be someone who has a higher degree of trust than someone else who has no exposure. Now, you’re in Southern California, pivoting here. You’re in Southern California. The acquisitions cost for single family homes, even the stressed homes in Southern California is going to be higher than other areas of the country. What’s the range of…

⁓ price point wise that you’re looking at getting these properties under contract.

Spencer Weinberg (12:57)
Like from a sales sales price or a cost per acquisition.

Dylan Silver (13:02)
I would say the contract amount. So when you’re going out there and you’re getting a property under contract, what’s the range that you’re getting these properties under contract for?

Spencer Weinberg (13:10)
It varies, but usually it’s between six hundred thousand and a million dollars is is kind of our sweet spot.

Dylan Silver (13:16)
So this is interesting because investors who are listening to this and they’re thinking, a million dollars, you know, that’s going to be a very substantial project, right, for an investor to come in. But that’s what it is, right? I mean, if you’re a flipper in Southern California, that same home that might be, let’s call it a $500,000 home is well, it could be well over a million dollars in your neck of the woods. Yeah.

Spencer Weinberg (13:37)
For sure. Like I went and walked a house today. We offered one one. It’s worth about one four, one four five. So that’s kind of the number range that we’re trying to, you know, acquire and and sell for.

Dylan Silver (13:48)
Now I know this isn’t the space that you operate in entirely but certainly your investors are very active here. When they’re getting ⁓ funding for these deals will hard money still work in these cases if they’re getting you know very large loans over a million dollars in these single family homes.

Spencer Weinberg (14:05)
Yeah, I mean they’re they’re using hard money. ⁓ some pay cash, but I would say eighty percent’s hard money. And a lot of our, you know, VIPs, they’re getting a hundred percent financing, they’re getting ninety, ten, ninety percent financing, ten percent down. So the terms are really aggressive right now. They can close fast. But to your point, yeah, a lot of it’s it’s very leveraged hard money loans from from the invest the investor side.

Dylan Silver (14:29)
Now one of the tricky things that people have seen in other markets, and I haven’t spoken to anyone in Southern California about this, is if you’re flipping homes, you’re in some cases now competing with ⁓ builders, corporate builders, who are able to build new homes for much less than the cost of a flip home, but you’re in a different kind of market, a very much more established market. Is new homes a thing out there? It’s pretty much if you’re buying a home, it’s gonna be a pre-owned home.

Spencer Weinberg (14:56)
Yeah, I mean a majority of what we do is single family condos, townhouses, pretty quick cookie cutter deals. We don’t really we’re not really development people. Like we we we look at deals, but a lot of the the teardowns, you’re buying it for a million five, two million dollars, you’re putting a million into it and you’re trying to get five or six million. We we we stay away from that because the cost of building in California is so much more expensive than other places. Like

To it for an example, we just did a deal. She was selling her home in California. She was buying a new build in Texas, like right outside of Houston, and a brand new house was $280,000. Yeah. Yeah. Like you can’t in California after school fees, builder fees, ⁓ permits, architectural plans, your ⁓ utilities, you’re already at $200,000 just for all that, and you haven’t even broken ground yet.

Dylan Silver (15:49)
This is something that we’ve talked about quite a bit on the show and this idea of affordable housing, right? And also, know, geo arbitrage, right? If you could sell your home in California and then move to a place where it’s more cost effective. Well, now you’re sitting on a pile of cash as someone who’s out there. Do you see this being something that is becoming more and more common? It’s always happened. We’re always aware that folks are in California or the coast, the parentheses, if you will, you California and New York and selling properties and moving to the Sunbelt.

But is this becoming more common?

Spencer Weinberg (17:01)
It’s I mean, it’s been common. I I would say half of our clients are selling their house in California quickly. We’ve owned it for fifty years. We didn’t keep up with it. We’re buying a brand new house in Tennessee, in Kentucky. Look at my house, Spencer. Brand new. It’s being built right now. You know, we’re coordinating with the builders over there to let them know we’re buying it and and the money’s gonna come in in the next sixty days or whatever it is, you know.

Backs up to a lake. It’s two thousand square feet. Brand new on a on a quarter acre lot. You know, it’s these guys are just they’ve maxed out the equity in their home. They don’t have to do any repairs. They’ve basically ran the house to the ground as much, you know, they’ve lived in it their whole life. And, you know, here’s the keys. We’re we’re out of here.

Dylan Silver (17:46)
You know, I’m a realtor so I feel like I can say this without casting blame towards realtors but one of the ways where I think realtors miss is people don’t necessarily want to have to deal with the process, right? And so that’s why someone would decide to sell their house for cash quickly because they realize, if I’m gonna have to list this with a realtor, I know that I’m gonna have to pay fees, I know that I’m gonna have to find someone, I don’t necessarily have someone in my contacts or my Rolodex.

I just don’t want to have to deal with it. How much or how often do you come across that type of seller?

Spencer Weinberg (18:18)
Yeah, a great question. And and the first question we ask when we get on the phone with the seller, have you talked to a realtor? Are you are you looking at listing the house on the open market? First question we ask.

Dylan Silver (18:28)
Because again, know, it’s a different type of thing, right? If someone is willing to wait, they’re gonna get a higher offer if they wait however long, but they could be waiting. And if they’re trying to move to Tennessee to get this new build, that new build’s gonna be gone if they don’t make the move. And so people are under a little bit of a time crunch, certainly in that situation. Now, when we look at the whole landscape of buyers and sellers and the way that this arena, cash offers, has adapted over time, we were talking in the green room about

cold calls and about different types of marketing techniques to find sellers and distress sellers and motivated sellers and one of the things that I’d say has changed over time is people were very heavy on pay-per-click, people were very heavy on cold calling and then some people say direct mail. You’ve been able to really leverage consistency with ⁓ cold calling. Has there been any one key to that or has it just been having great people?

Spencer Weinberg (19:24)
Yeah, I mean it’s it’s a mixture of both. Like we’ve been using the same cold call company since we started about five years ago. So again, it’s like every marketing channel you do will work. We’ve done mailers, we’ve done ⁓ radio and TV, we’ve done pay-per-click, we’ve done cold call text, ringless voicemail, we’ve all those channels do work. It’s just where do we want to put our time and effort and our energy and our resources that pays the biggest return on investment?

P PPC is the highest intent lead you can get, in my opinion, the highest intent, and they convert the fastest. But the cost per deal, the cost per acquisition is very high. Where cold call is a very low cost per acquisition, but the sales cycle and the process takes a lot longer.

Dylan Silver (20:12)
like to actually talk about scaling a business right in this space and before you had hundreds of transactions you had a hundred transactions and before that you had ten right in order to get to the point where you’re at now you have to be a systems guy and you can’t just be a cowboy although I know I’ve seen it I’m sure you’ve seen it there’s a lot of guys who are successful just not at scale because they do have that cowboy mentality how did you approach systemization and really developing processes as you scale

Spencer Weinberg (20:40)
Yeah, I mean it happens when you get more people. You you naturally have to implement more strategies and more systems in place. You know, I was talking to, you know, one of the guys that’s been here with me forever. I remember when it was just me, I had a business partner, my brother-in-law, and a VA. We were spending $10,000 a month, $5,000 PPC, the rest was cold call and texting. And this was 2021, and it was our most profitable time we’ve ever had.

And it was so simple, it was so easy. We weren’t doing 10, 20 deals a month, but we were doing three to five. And it was just it was life, was I guess it was a lot easier back then. And then we scaled, we had more people, we had operations, helping build out systems, more you know, softwares we had to spend, more just it it it snowballs. So to answer your question, when you grow.

fast and we used to have 20 people in the office. You know, you you you naturally have to adapt and and build out more systems. Obviously we weren’t perfect, but we we built what worked for us when we were doing, you know, 15, 20 transactions a month.

Dylan Silver (21:48)
We are coming up on time here, Spencer. Any new projects that you’re working on and then also anything you’d like to mention directly to our audience.

Spencer Weinberg (21:55)
Yeah, I mean new projects. We we started a fund, ⁓ LPGP fund. So we’re flipping very specific properties. So we are buying, but you know, we have a very strict buy box of years of flipping houses and doing wholesale and deal finding. So ⁓ yeah, we’re we’re looking to ⁓ you know, just ⁓ build that arm out as well.

Dylan Silver (22:16)
Spencer, thank you so much for joining us today. Thanks for your time.

Spencer Weinberg (22:18)
Time.

Yeah, thank you so much.