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A pre-foreclosure listing is a type of property, typically sold at auction in an effort to recoup the costs from unpaid mortgage loans. These listings are often advertised on newspaper classifieds and online listings, making it easy for potential buyers to find them.
Pre-foreclosure leads are properties that are in the process of being foreclosed on. The borrower has fallen behind on their mortgage payments, but they may still retain the house, sell it, or do a short sale. Online directories, real estate brokers, public records, local newspapers, lawyers, and real estate wholesalers are all good places to look for pre-foreclosure listings.
Pre-Foreclosure Leads
For both rookie and seasoned investors, there are a variety of techniques to discover pre-foreclosure leads. How much time and effort you’re willing to put into the procedure will determine where you hunt for pre-foreclosure leads.
There are five platforms where real estate investors may locate pre-foreclosure listings:
1. Directories on the internet
Pre-foreclosure and foreclosure ads may be found in online directories, along with important property information such as interior images, the state of the home, and the number of bedrooms.
Zillow is a fantastic place to start. They provide you access to pre-foreclosure listings, foreclosure information for each property, and the contact information for the agent representing the property after you join up for a free account. You may simply contact the agent directly via the website, ask any questions, and set up a time to visit the home.
Foreclosure.com and REDX are two other easy-to-search directories. Foreclosure.com provides a free seven-day trial and then charges $39.80 a month after that. REDX offers a number of premium subscription options, starting at $39.99 a month. You may search for pre-foreclosure properties by county and get up-to-date lead information with REDX.
Pros & Cons of Using Online Directories to Find Pre Foreclosure Leads
The following are some advantages and disadvantages of utilizing web directories to find pre-foreclosure leads:
Benefits of Using Online Directories:
- The least amount of effort is required while using these foreclosure listing databases.
- They provide a large number of pre-foreclosure leads.
- The agent’s contact information is shown next to each property.
- You’ll deal with a knowledgeable real estate agent who can help you through the sales process.
Disadvantages of Using Online Directories:
- Due to the fact that this is the most prevalent method of locating pre-foreclosure listings, there may be some competition for the homes.
- It’s possible that the information is out of date.
Who Should Use Online Directories?
These web databases are excellent resources for real estate investors looking for pre-foreclosure properties. Before driving someplace or doing a significant investigation, the directories may be consulted. You may seek REO properties and foreclosure properties in addition to pre-foreclosure houses.
2. Real Estate Agents
Real estate professionals can assist investors in locating pre-foreclosure opportunities. They have access to the Multiple Listing Service (MLS), a local database of properties for sale that only real estate agents have access to. Real estate professionals will be able to limit their MLS searches to exclusively include pre-foreclosure properties.
When you hire a real estate agent, you’re hiring an expert who will handle the majority of the effort for you. A real estate agent will look for pre-foreclosure properties on your behalf, make visits, and negotiate bids. They’ll supply thorough property information and images, such as the most recent sale price, square footage, and annual taxes.
Pros & Cons of Using a Real Estate Agent to Find Pre Foreclosure Leads
The following are some advantages and disadvantages of employing a real estate agent to find pre-foreclosure leads:
Advantages of hiring a real estate agent include:
- You’ll spend less time researching since the procedure is more efficient.
- Having a professional on your side who is an expert in the field
- An expert will complete the documentation for you, ensuring that it is complete and accurate.
The disadvantages of utilizing a real estate agent include:
- To cover the real estate agent’s commission, the property may be listed at a higher price.
- You’ll have to work around the timetable of the real estate agent.
Who Should Hire a Real Estate Agent?
For a first-time investor, working with a real estate agent is perfect since they will walk you through the whole process, from discovering the preforeclosure property to acquiring it. You won’t have to deal with any haggling or paperwork. A seasoned real estate investor might benefit from the assistance of a real estate agent since they will have access to more information than the general public. Real estate brokers can assist any investor who is short on time and planning to purchase a house outside of their current neighborhood.
3. Access to Public Records
Pre-foreclosure listings are available for free at your county recorder’s office’s public records department. During the foreclosure process, these notifications are sent to the homeowner and are publicly recorded.
The property location and the name of the owner are both available in public records. They usually contain the name of the bank that is foreclosing and the amount owing on the property. They will not mention any other liens on the property. For this information, you’ll need to do a title search. Neither images nor a full property description is available in public documents.
Because there isn’t a real estate agent listed next to the property, you’ll have to locate one who specializes in working with investors. It’s critical that they understand the foreclosure process so that they can determine if dual agency may be employed and whether any special conditions need to be included in the contract. Obtain a real estate agent reference from a real estate investment group, your attorney, or contact a local real estate firm and request a foreclosure specialist.
If you are a seasoned real estate investor, you may acquire the pre-foreclosure listing yourself. You’ll need to do everything a real estate agent does, such as identify a title firm, schedule a house inspection and appraisal, and write a contract, among other things.
When buying pre-foreclosure properties, keep in mind that you’ll be up against other investors. The seller will value your offer higher if you can close fast. Consider utilizing a hard money lender if you need a lender who can finance the property.
Your job isn’t done after you’ve generated a list of pre-foreclosure leads from public sources. Denise Supplee, a real estate investor, and SparkRental co-founder, says:
“Look for symptoms of a troubled property, such as overgrown grass, stacks of newspapers in the driveway, and evidence of abandonment, as you drive about.” Drive-by at various times to check whether the house is still occupied. Inquire with the postal carrier. Consult your neighbors. Send a handwritten message to the owner expressing your interest in the property.”
Pros & Cons of Using Public Records to Find Pre Foreclosure Leads
The following are some advantages and disadvantages of utilizing public data to find pre-foreclosure leads:
Advantages of Public Records:
- The most up-to-date information on pre-foreclosure homes is available.
- Before the property is advertised and a real estate agent’s commission is added to the sales price, you may be able to negotiate a better offer.
- When you use public records, you will face less competition.
Disadvantages
- Searching through all of the data takes a long time.
- You may have to travel to the courts in person to get a list of pre-foreclosure residences, depending on how technologically advanced your town is.
- Because the property may not be for sale yet, you will have to drive around looking for it and contact the owner yourself or engage a real estate agent to assist you.
Who Should Use Public Records?
For a skilled investor with the time, energy, and know-how to put into identifying a preforeclosure property, searching through public records for pre-foreclosure leads is great. Because public records have minimal information, it will need a great deal of study, as well as traveling around looking at houses and setting up visits with residents. It’s better if you’re a seasoned investor who knows what to look for in a property and what questions to ask the owners.
4. Newspapers in Your Area
The addresses of properties at any stage of the foreclosure process are published in local newspapers. When the pre-foreclosure procedure starts, the homeowner will get foreclosure notifications, including Lis Pendens, which are also published in the legal section of the local newspaper. The court uses this method to notify the public about foreclosures.
The same information is also available in most local newspapers’ internet editions. Look for newspapers published in the county where you want to buy a house. Examine the legal area and compile a list of any properties that are the subject of current litigation. You’ll have to conduct your own investigation since the publication won’t include any photographs or details of the pre-foreclosure properties.
Finding the pre-foreclosure home’s address is just the first step. Jarvis Team Realty owner and real estate investor Joshua Jarvis recommends:
“Driving for Dollars,” in which you drive around the communities where the homes are located and knock on doors to see if any other homeowners wish to sell. It’s also an excellent time to seek for properties that have been abandoned and contact the owners to see if they want to sell.”
Pros & Cons of Using Local Newspapers to find Pre Foreclosure Leads
Even if reading local newspapers may seem outdated, there are many advantages to consider; just be aware of the disadvantages as well.
Advantages of Local Newspapers include:
- Information that is up to date; notifications are published as soon as they are received by the property.
- Online or in print, it’s simple to find.
- There is less competition since most investors start with real estate directories.
Drawbacks:
- There are no property descriptions or images in the article.
- After you’ve found the pre-foreclosure leads, you’ll need to do a lot of research on the property.
Who Should Read a Local Newspaper?
For fix and flippers with some real estate knowledge, using local newspapers to obtain pre-foreclosure leads is suggested. Without the help of a real estate professional, you’ll have to figure out what questions to ask homeowners. If you decide to make an offer on one of these pre-foreclosure properties, this strategy will also involve time, effort, and understanding of real estate contracts.
5. Attorneys & Real Estate Wholesalers
Attorneys and real estate wholesalers are other good places to look for pre-foreclosure leads. These individuals already have a background in real estate and have experience with pre-foreclosure listings. Once you’ve built a connection with them, they could be willing to share their pre-foreclosure lead sources with you.
Attorneys may represent clients whose houses are in the process of being foreclosed on or who have inherited residences that they cannot pay, known as probate leads. Working with an attorney, in any case, will offer you important pre-foreclosure listings that other investors do not have. These lawyers may be found via a real estate agent recommendation or by joining an investing club. Look for lawyers who specialize in real estate, bankruptcy, foreclosure, and probate.
Real estate wholesalers will have access to pre-foreclosure listings simply by investing in and being in areas where individuals are looking to sell their houses. These wholesalers compile buyer and seller lists to use in future fix-and-flip ventures.
They will not only be able to present you with pre-foreclosure listings, but they may also be able to assist you in reselling the home after you have purchased it and fixed it up. Joining a real estate investing club or contacting a real estate agent or an attorney for a reference are two ways to locate real estate wholesalers.
Pros & Cons of Using Attorneys and Wholesalers to find Pre Foreclosure Leads
When using the services of real estate lawyers and wholesalers to seek pre-foreclosure listings, there are benefits and drawbacks to consider.
Attorneys and wholesalers have a lot of advantages.
- There isn’t much competition, therefore most investors seeking pre-foreclosure leads overlook these pros.
- Take advantage of the expertise and advice of seasoned experts.
- Working with reputable pros will give your sales presentation more credibility to potential buyers.
Disadvantages.
- You must locate specialists who are eager to collaborate with you.
- For the leads you acquire from these specialists, you may be obliged to pay referral fees.
- You will still have to perform your own research on the houses after obtaining the pre-foreclosure leads.
Who Should Use Attorneys and Wholesalers
Attorneys and wholesalers are a significant resource for locating pre-foreclosure leads, but they are underused. They are more appealing to experienced investors since there is still study to be done on the properties after obtaining the leads. Attorneys and wholesalers are likewise more confident in directing leads to experienced investors. As a result, it’s advisable to approach them after you’ve completed a few sales.
Steps to Take After You’ve Found Pre-Foreclosure Listings
You must take these 6 steps in order to browse and buy pre-foreclosure properties.
- To receive answers to your queries, contact the listed agent. If the property isn’t mentioned, contact the owner directly by looking up their phone number in public records or knocking on the door.
- Schedule a walkthrough of the pre-foreclosure property to confirm your interest, since there may be differences between the information you’ve received and the actual status of the home.
- Make an appointment for a home inspection. Although a seller in pre-foreclosure normally does not pay for or make any repairs, it is crucial to understand what needs to be repaired in the house and if there are any hidden flaws that might become a problem later.
- If there are no deal-breakers during the home inspection, arrange an appraisal to find out how much the house is worth.
- Keep in mind your property purchase budget as well as your repair budget and timetable.
- If the figures add up, have your real estate agent assist you in putting together an offer for the pre-foreclosure property. If the property isn’t listed with a real estate agent, it’s a good idea to have the contracts drawn up by an attorney.
Advantages of Purchasing Pre-Foreclosure Listings
Buying pre-foreclosure listings offer the advantage of coming from a distressed homeowner. The homeowner is motivated by a desire to get out of a financial bind. This means you’re more likely to get a deal on a property that’s under market value. The property may need upgrading, which, if completed, might result in increased equity in the property.
If you have cash on hand, you may be able to work out a deal with the homeowner in which you simply pay off the homeowner’s existing mortgage debt and own the property free and clear of any liens. Having cash on hand gives you an edge over other purchasers who may have to wait for financing. It will also assist the homeowner in overcoming their financial difficulties while minimizing the bad influence on their credit.
The buyer will get a property disclosure if they purchase a home in the pre-foreclosure stage. This will include any known property flaws, as well as the age of the HVAC system, the age of the roof, and whether or not it is covered by a warranty. None of this information would be accessible if the home had already gone into foreclosure. This implies that the buyer is aware of the flaws in the property and can make an educated choice about whether or not to purchase it.
According to Stephen Chip, Director of Business Development for Foreclosure.com, another advantage of purchasing a pre-foreclosure is that there is less competition than when purchasing a foreclosure or an REO property. Because many pre-foreclosure properties aren’t listed with real estate agents, finding them takes more effort.
It can be a lengthy process, and you must consider the seller’s emotions, as the property was most likely put into foreclosure as a result of a negative event. If you can overcome these obstacles, you will be able to assist the homeowner while still getting a fair bargain.
Final Thoughts
Online directories, real estate brokers, public records, local newspapers, lawyers, and real estate wholesalers are all good places to look for pre-foreclosure listings. Once you’ve found a pre-foreclosure lead you like, you’ll need to call a real estate agent to schedule a showing and make an offer. You now know where to look for a pre-foreclosure home.
Frequently Asked Questions
How do you find pre foreclosures before they are listed?
A: The best way to find preforeclosures is by going on Google and searching the pre-foreclosure list. You can also call the phone number or email address that’s listed for a particular state. That will give you an idea of what types of properties are available in your area, with prices ranging from as low as $10,000 up to around $100,000.
How do I get a list of foreclosures in my area?
A: There are many ways you can find out the foreclosures in your area. You could check with a local legal professional or use online tools like ForeclosureListings.com to search for information on listings in your state and county that have been repossessed by banks, those going through foreclosure proceedings, and those who owe more than 80% of the property value
