(Enter date contract signed)

You may cancel this contract for the sale of your house, without

penalty or obligation, at any time before . To

cancel this transaction, personally deliver a signed and dated copy of this cancellation notice, or send a telegram

to (buyer) at (address)

NOT LATER THAN

I hereby cancel this transaction (date)

(Sellers signatures)

Benefits and Drawbacks of the Notice of Default One benefit of the notice of default is the sense of urgency it creates for the property

cancel this contract for the sale of your house without any

penalty or obligation at any time before (AM/PM) on ,

20 . See the attached notice of cancellation form for an explanation of this right.

NOTICE OF CANCELLATION

owner. Once the foreclosure process has begun, it is only a matter of time before the property will be sold to the highest bidder. Coupled with the ever-shrinking equity that remains for the owner as time goes by, you can often make a good investment if you can get in touch with the owner during this time period.

Of course, every other real estate investor who follows the notice-of-default postings is now aware of these properties. This can be a huge drawback to you because you now are competing with many other investors for the same properties.

However, you can turn this potential drawback into an advantage once you get in front of the owner and make your foreclosure options presentation. No one else will be interested in helping the owner like you are.

Phase 3: At the Sale

For those of you who wait until the day of the foreclosure sale to get involved, preparation is of the utmost importance. The time you spend in researching both the property and the title will pay huge dividends when you are bidding. Again, we reiterate that you must know value before you make any bids.

We suggest you attend several foreclosure sales as dry runs to get a sense of how things occur, especially with regard to the trustees conducting the sales. Perhaps even more important is going to foreclosure sales to observe your competition before you actually start bidding.

While at the foreclosure sales in which you wish to participate, observe the habits of the successful bidders. Some of these faces you will see again and again. Note their habits and what they do when they enter the bidding.

On properties bidders want, do they enter the bidding at the beginning, middle, or end? Are some of the bidders working together to squeeze out the competition? Also take note of what a bidder does when he or she folds.

The advantage of buying at the foreclosure sale is the finality of it. You will receive your money back if the owners can exercise their right of redemption. All junior liens will be wiped out. You have the protection of your states foreclosure laws for the winning bidder. It is a cant-lose proposition for you. And you have an upside potential because you bought the property wholesale.

The big disadvantage of buying at the foreclosure sale is the fact that you have to pay cash, and a lot of it. The other disadvantage is the sheer number of other investors you may encounter who want to bid on or buy the properties you are interested in.

Phase 4: After the Foreclosure Sale

When a property does not sell at the foreclosure sale, the lender will take it back. If the lender is an institutional lender, the property will become an REO (real estate owned). Lenders are anxious to liquidate these properties. Because they are not in the resale business, lenders sometimes mishandle these properties.

To find out about a lenders REOs, dont rely on the branch manager of a bank for much help. REOs are kept quiet, and it will take some probing to discover the pearls.

Your best source for REOs may be a real estate agent who handles them in your area. An agent may specialize in REO properties and have useful contacts already in place with several lenders. Do some calling around to find out who these real estate agents are.

If you have no other contact, establish a rapport with the branch manager of your bank or savings association. Ask the manager to make an introductory call to the REO manager.

This manner of making the appointment will give you a personal introduction to the person in charge of the banks REOs. You will not have to waste your time going up the food chain over the phone.

Private REOs What if the lender who winds up with the property after the foreclosure sale is a private lender? A private lender may have even less motivation to own the property than the institutional lenders. Typically, these lenders were owners of the property in the past. They sold the property and helped the buyer with seller carry-back financing in order to make the deal work.

They may have moved out of the area. The private lender may not want to take the time to remarket the property. What about the expenses of holding the property while the lender resells it? And the private lender certainly doesnt want to have to find a tenant and become a landlord.

We recommend you talk to the lender or the lenders representative immediately after the foreclosure sale. They may have gotten title to