How To Find & Invest In Pre Foreclosure Listings

Gavin Finch
Written by Gavin Finch 


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The real estate market gets more and more competitive every year, and it isn’t difficult to see why this happens. Property investment is a great way to make a return if you are willing to put the work into understanding how to best monetize each investment. If you want to stay ahead of the competition, you will need to look beyond regular listings and into places like pre-foreclosure lists, auctions, and other methods of finding properties outside the traditional marketplace listings.

What is a pre foreclosure?

When a property owner can no longer make their monthly payments and falls at least three months behind, they receive a notice of default from their lender and enter pre foreclosure. The pre foreclosure stage is one of the first steps in repossessing property and recovering the cost of a loan in default for lenders. It’s designed to give property owners the chance to catch up on their mortgage payments, save their credit score, and maintain ownership of their house.

If they can’t catch up on their payments, the pre foreclosure period also gives the homeowner the chance to sell the property and pay off their mortgage. Many people take the chance to move into a less expensive setting even if the sale only covers the loan costs because that can help change an underwater financial situation.

One final option that a homeowner with a pre foreclosed home has is called a deed in lieu of foreclosure. In this scenario, the homeowner will simply surrender the property to the lending institution in exchange for forgiveness of the debt.

Where can you find pre foreclosure listings?

Pre foreclosure announcements are public notices, so every county clerk’s office maintains a public list of pre-foreclosure properties that you can check. This is a great way to find pre foreclosure listings for free. Of course, if you want to speed up your search or expand it to more than one county, you need an alternative.

The best alternative is to use real estate lead generation software. The right platform will give you access to public record data like pre-foreclosure listings and skip tracing data so you can contact their owners. You’ll also get access to nationwide record searches, marketing tools, and list management features that will help you capitalize on opportunities once you locate pre foreclosures.

Pre foreclosure vs. foreclosure

There is a big difference between shopping the pre-foreclosure list and buying a foreclosed property. When real estate enters the foreclosure process, the lender is preparing to repossess the house. At this point, the homeowner is evicted and can no longer sell the property. The lender usually sells it at a property auction.

The good news for homeowners is that federal legislation prohibits lenders from initiating foreclosure and repossession until a homeowner is more than 120 days behind on their payments. This means that if you’re working to buy a home from someone in pre foreclosure, you have some time to make the deal work, just not much.

Benefits of investing in pre foreclosed properties

Apart from investors shopping for off-market properties that do not appear on the Multiple Listings Service (MLS), what are the benefits of buying pre-foreclosure? 

  • Motivated sellers need to close fast, so they may sell for below-market value
  • Pre foreclosures are great investments for wholesalers and other real estate investors
  • These properties are usually off-market, so you won’t have to work with a real estate agent

When you consider all of these benefits, investing in local pre foreclosures is an excellent strategy for your real estate business.

Steps to investing in pre foreclosure properties

Closing on a pre foreclosure sale is not complicated, but it does take a certain finesse to open negotiations. Here’s how the process works:

  1. Sign up with a lead generation and management service like BatchLeads and use map and lead generation tools to find pre foreclosures.
  2. Add promising properties to your lists and skip trace their owners.
  3. Launch a marketing campaign. This can be a combination of cold calling, SMS, and direct mail.
  4. Make an offer that works for all involved parties, and be ready to negotiate to get the right price.

Just remember that these deals usually start with a cold call. While cold calling is a staple of real estate investing, calling a seller in financial distress can be a delicate situation. Remember to be tactful and present a solution that works for everyone involved. 

Investing in pre foreclosures

Pre foreclosures are a great investment strategy, whether you’re a wholesaler or a fix and flipper. They’re fairly easy to find, and owners are usually highly motivated to sell, so securing them for the right price is typically easy to do. 

The most important thing to remember when investing in pre foreclosures is that home owners aren’t selling because they want to. They’re experiencing some level of financial distress, so be understanding and remember that you’re negotiating about buying someone’s home. The quickest way to lose a pre foreclosure deal is to lose sight of the ways you can help the homeowner. However, if you can find a way to meet their needs and secure the home at the right price, you can create a win-win situation for everyone.

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