Pre foreclosure leads are properties in the beginning stages of the foreclosure process. The borrower has defaulted on their mortgage payments, but still has the opportunity to keep the property, sell it, or conduct a short sale. Investors find pre foreclosure listings through online directories, realtors, public records, local newspapers, attorneys, and real estate wholesalers.
One way to find preforeclosure, as well as FSBO and expired leads, in the county you are looking to invest in is with REDX. You can get up-to-date lead information, including homeowner contact info starting at $39.99 a month.
5 Places to Find Pre Foreclosure Leads
There are many different ways to find pre foreclosure leads for novice and experienced investors. Where you look for pre foreclosure leads will depend on how much time and energy you’re willing to invest in the process.
Real estate investors can find pre foreclosure listings in 5 places:
1. Online Directories
Online directories provide pre foreclosure and foreclosure listings, along with pertinent property details such as interior photos, condition of the property, and number of bedrooms.
A good place to start is with Zillow. Once you sign up for a free account, they provide you with access to pre foreclosure listings, the foreclosure information on each property and the contact information for the agent representing the property. You can easily click to contact the agent directly on the site and ask any questions and then schedule an appointment to see the property.
Other easy to search directories include Foreclosure.com and REDX. Foreclosure.com offers a free 7 day trial period and then it is $39.80 per month. REDX has several paid options that start at $39.99 per month. With REDX, you can search for pre-foreclosure listings by county and get up-to-date lead information
For more information on other online directories and to better understand the foreclosure process, read our in depth article on how to find REO properties.
Pros & Cons of Using Online Directories to Find Pre Foreclosure Leads
Below are some pros and cons of using online directories to identify pre foreclosure leads:
Pros of Online Directories:
- These foreclosure listing directories require the least legwork
- They offer hundreds of pre foreclosure leads
- The contact information of the agent is right beside each property
- You will work with a realtor who is an expert and can guide you through the sales process
Cons of Online Directories:
- Since this is the most common way to find pre foreclosure listings, there may be competition on the properties
- Information may be outdated
Who Online Directories are Right For
These online directories are ideal for real estate investors starting the search process for pre foreclosure listings. The directories can be accessed before having to drive anywhere or do extensive research.In addition to researching pre foreclosure homes, you can look for REO properties and foreclosure properties.
Realtors can help investors find pre foreclosure leads. They have access to the Multiple Listing Service (MLS) which is a local database of properties for sale accessible only to real estate professionals. Realtors will be able to narrow down the MLS search to identify only pre foreclosure listings.
By using a realtor, you are enlisting the services of a professional who will do most of the legwork for you. A realtor will find pre foreclosure listings, schedule appointments, and negotiate offers on your behalf. They will provide detailed property information and photos including how much the property last sold for, the square footage, and the yearly taxes.
Pros & Cons of Using a Realtor to Find Pre Foreclosure Leads
Below are some pros and cons of using a realtor to identify pre foreclosure leads:
Pros of using a Realtor:
- More efficient process, less research for you
- Having a professional who is an expert in the area on your side
- A professional will fill out the paperwork for you ensuring everything is correct
Cons of using a Realtor:
- The property may be listed at a higher price to compensate for the realtor’s commission
- You will be working around the realtor’s schedule
Who Realtors are Right For
Working with a realtor is ideal for a first time investor because they will guide you through the entire process from finding the pre foreclosure listing to purchasing it. You won’t have to worry about negotiating or paperwork. A realtor can also help a seasoned real estate investor because they will have access to more information than is available to the public. Realtors can help any investor who is short on time and who may be buying a property outside of the area they live in.
3. Public Records
Pre foreclosure listings can be found for free, in the public records section at your county recorder’s office. Search for Notice of Default, Lis Pendens, and Notice of Sale. These notices are issued to the homeowner and publicly recorded during the foreclosure process.
Public records include the property address and the homeowner’s name. Generally, they include the bank’s name that is doing the foreclosing and how much is owed on the property. They will not include what other liens are owned on the house. You will need to get a title search for this information. Public records don’t provide photos or a detailed property description either.
There isn’t a realtor listed next to the property, so you will need to find a realtor that works with investors. It’s important that they are familiar with the foreclosure process so they know if dual agency can be used and if there are any specific clauses that need to be put in the contract.Find a realtor referral from a real estate investment group, your attorney or call your local real estate agency and ask for someone that specializes in foreclosures.
You can purchase the pre foreclosure listing yourself if you are an experienced real estate investor. You will need to do everything that a realtor does, including finding a title company, scheduling a home inspection and an appraisal, and writing a contract etc.
Remember that you will be competing with other investors when purchasing pre foreclosure listings. Being able to close quickly makes your offer more desirable to the seller. If you need a lender that can finance the property, consider using a hard money lender.
Once you’ve compiled a list of pre foreclosure leads from public records, your work is not done. According to Denise Supplee, real estate investor and co founder of SparkRental:
“You need to drive around and look for signs of a distressed property, such as overgrown grass, piles of newspapers in the driveway and signs of abandonment. Drive by at different times and see there’s any life in the home. Ask the mail deliverer. Talk to the neighbors. Send a handwritten note, letting the owner know, you are interested in the home.”
Pros & Cons of Using Public Records to Find Pre Foreclosure Leads
Below are some pros and cons of using public records to identify pre foreclosure leads:
Pros of Public Records:
- The most updated information on the pre foreclosure properties
- You may be able to negotiate a better deal before the property gets listed and a realtor’s commission is added to the sales price
- You will have less competition using public records
Cons of Public Records:
- Time consuming to search through all of the data
- Depending on how technological your municipality is, you may have to go to the courthouse in person to retrieve a list of pre foreclosure homes
- You will have to drive around and find the property and contact the owner yourself or hire a realtor to help you, since the property may not be for sale yet
Who Public Records are Right For
Searching through public records for pre foreclosure leads is ideal for a savvy investor that has the time, energy and know-how to put into locating a preforeclosure property. Since the information in public records is limited, it will require a lot of research and driving around looking at properties and making appointments with homeowners. It is best to already be an established investor so you know what to look for in a property and what to ask the homeowner.
4. Local Newspapers
Local newspapers publish the addresses of homes that are in any stage of the foreclosure process. Once the pre foreclosure process begins, the homeowner will receive notices of foreclosure, including Lis Pendens which are also published in the local newspaper in the legal section. This is how the court gives public notice of foreclosures.
Most local newspapers also have an online edition where the same information is published. Look for newspapers that serve the county you are looking for properties in. Check out the legal section and make notes of the addresses of any properties that have litigation pending. The paper won’t have any photos or descriptions of the pre foreclosure listings, so you will have to do your own research to find this out.
Finding the address of the pre foreclosure home is just the first step. Joshua Jarvis, real estate investor and owner of Jarvis Team Realty recommends:
“Driving for Dollars, where you drive around the neighborhoods that the properties are in and while you’re there, go door-to-door to see if any other homeowners want to sell. It’s also a good time to look for abandoned properties and contact the owners to see if they want to sell as well.”
An alternative to driving for dollars is mailing yellow letters. They’re an informal, inexpensive way to contact potential sellers.
Pros & Cons of Using Local Newspapers to find Pre Foreclosure Leads
Even though checking out local newspapers may seem archaic, there are plenty of pros to consider; just be mindful of the cons too.
Pros of Local Newspapers:
- Up to date information, as soon as the property receives notices they are published
- Easy to access online or in the paper
- Not as much competition since most investors turn to real estate directories first
Cons of Local Newspapers:
- The paper doesn’t include property descriptions or photos
- After finding the pre foreclosure leads, a lot of research on the property will be needed
Who Local Newspapers are Right For
Using local newspapers to find pre foreclosure leads is recommended for fix and flippers with some real estate experience. You will be speaking to homeowners without a realtor and will need to know what questions to ask. This method also requires time and effort and knowledge of real estate contracts if you decide to make an offer one of these pre foreclosure listings.
5. Attorneys & Real Estate Wholesalers
Other valuable sources for finding pre foreclosure leads include attorneys and real estate wholesalers. These professionals already specialize in real estate and work with pre foreclosure listings. Once you establish rapport with them, they may share their pre foreclosure lead sources.
Attorneys may represent clients whose homes are in pre foreclosure or they may represent clients who inherited homes that they can’t afford, which are called probate leads. Either way, working with an attorney will provide you with valuable pre foreclosure listings that other investors don’t have access to. You can find these attorneys as a referral from a realtor or by joining an investment group. Look for real estate, bankruptcy, foreclosure and probate attorneys.
Real estate wholesalers will also have access to pre foreclosure listings just from investing in and being in neighborhoods where people want to sell their homes. These wholesalers create buyer and seller lists which they save for their future fix and flip projects.
They will be able to not only provide you with pre foreclosure listings, but they may be able to help you flip the property once you purchase it and fix it up. You can find real estate wholesalers by joining a real estate investment group or asking for a referral from a realtor or an attorney.
Pros & Cons of Using Attorneys and Wholesalers to find Pre Foreclosure Leads
There are pros and cons to consider when utilizing the guidance of real estate attorneys and wholesalers to locate pre foreclosure listings.
Pros of Attorneys and Wholesalers:
- There isn’t a lot of competition; most investors looking for pre foreclosure leads don’t think to utilize these professionals
- Gain knowledge and guidance from experienced professionals
- Legitimize your sales pitch to sellers by working with respected professionals
Cons of Attorneys and Wholesalers:
- You need to find professionals that are willing to work with you
- You may be required to pay referral fees for the leads that you receive from these professionals
- After receiving the pre foreclosure leads, you will still have to do your own research on the properties
Who Attorneys and Wholesalers are Right For
Attorneys and wholesalers are a valuable, but underutilized tool for finding pre foreclosure leads. They appeal more to experienced investors because after receiving the leads, there will still be research to do on the properties. Attorneys and wholesalers also feel more comfortable referring leads to investors who know what they’re doing. So, it’s best to contact them after a couple deals under your belt.
Next Steps After Finding Pre Foreclosure Listings
In order to view and purchase pre foreclosure listings you need to follow these 6 steps in order. They will let you know what to do after you’ve found pre foreclosure listings you’re interested in.
- Contact the listing agent to get your questions answered. If the property isn’t listed, then contact the homeowner directly by using public records to find their phone number or knocking on the door.
- Schedule a walk through of the pre foreclosure property to ensure you are still interested since there may be discrepancies between the information you have received and the current property condition.
- Schedule a home inspection. A seller in pre foreclosure usually does not pay for or make any repairs, but it is important to know what needs to be fixed in the home and if there are any hidden issues that may be a problem later on.
- If the home inspection doesn’t have any deal breakers for you, then schedule an appraisal to see what the home is worth.
- Keep in mind your property acquisition budget and your budget and timeline for repairs.
- If the numbers make sense, have your real estate agent help you draw up an offer on the pre foreclosure listing. If the property isn’t listed with a realtor, then it is advisable to hire an attorney to draw up the contracts.
Ready to start the search for your next investment property? Visit REDX and access up-to-date preforeclosure listings in your area, including homeowner contact information.
The Main Benefit of Purchasing Pre Foreclosure Listings
The benefit of purchasing pre foreclosure listings is that you’re buying from a distressed homeowner. The homeowner is motivated to relieve themselves of a financial hardship. This means you are more likely to buy the property below market value. The property may need updating, which once done, can lead to having additional equity in the property.
If you have cash available, you may be able to negotiate a deal with the homeowner where you just pay off their outstanding mortgage balance and own the property free and clear of any liens. Having cash on hand will give you an advantage over the competing buyers who may need to wait for financing. It will also help the homeowner get out of their financial hardship and not negatively impact their credit as much.
By purchasing a property at the pre foreclosure stage, the buyer will receive a property disclosure. This will list any known property defects and how old the HVAC system is and the age of the roof and if it has a warranty etc. If the property had already gone into foreclosure none of this information would be available. This means that the buyer knows what is wrong with the property and is able to make a well informed decision in regard to purchasing it.
Another benefit of buying a pre foreclosure, according to Stephen Chip, Director of Business Development for Foreclosure.com, is that there isn’t as much competition as buying a foreclosure or an REO property. Finding pre foreclosure properties take more work, since many of them are not listed with realtors.
It can be a long process, and you need to take into account the seller’s emotions since a negative event most likely triggered the property to go into foreclosure. If you can get through these hurdles, you will be able to help the homeowner out and get yourself a good deal.
Bottom Line: Pre Foreclosure Leads
Pre foreclosure listings are found through online directories, realtors, public records, local newspapers, attorneys, and real estate wholesalers. Once you find a pre foreclosure lead you are interested in, it is time to contact a realtor to see the property and make an offer on it. Now you know where to purchase a pre foreclosure property.
When you are ready to start looking for pre-foreclosure properties, be sure to give a look at REDX. Not only can they hook you up with great pre-foreclosure leads, but they can also get you other motivated seller leads like FSBO, FRBO, and expired listings. Check them out to see what listings are available in your preferred investment county.