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How to Find Pre-Foreclosure Homes and Capitalize on Them

Batch Service
Written by Batch Service 
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There has never been a more competitive time to be a real estate investor. With interest rates rising and inventory shrinking, conventional on-market routes to property ownership have become clogged. As a result, purchase prices for homes are at an all-time high with nearly every house that hits the Multiple Listing Service (MLS) receiving an astounding number of offers.

Because of these changes, investors who want to make optimal returns wholesaling or flipping houses need to avoid entering into bidding competitions. Today, one of the only ways to reliably avoid these bidding wars is to dive into the world of off-market properties. 

There are many different kinds of off-market properties and many different ways to find them, but one of the types that provides the greatest profit potential is pre-foreclosures. Pre-foreclosure properties often sell for deep discounts, and they’re growing in availability as lay-offs and economic distress grow. 

So to help you prepare for an influx of profitable properties in your local market, this guide will show you what pre-foreclosed properties are, why they make great deals, and how you can get started finding them right now.

What is pre-foreclosure?

Before we explore how you can start investing in pre-foreclosures, it’s important to understand what they are. When banks loan money for property purchases, they hold the house as collateral for the loan. This means that they technically buy the house and let the owner pay them for it over time. However, if the owner stops paying their mortgage, they’ll enter foreclosure and the bank will repossess the house.

However, foreclosure doesn’t happen automatically. When a homeowner falls at least three months behind on their monthly mortgage payments, the house enters the pre-foreclosure stage, which is the first step in the foreclosure process. At this point, the bank issues a lis pendens, which is a public notice that’s also known as a notice of default. 

Why do pre-foreclosures make great investment properties?

When a homeowner has received a notice of default, they have a limited time to catch up on their payments. If they don’t, the bank will repossess their property and sell it in a foreclosure auction to recoup their investment. 

Unfortunately, many property owners don’t have the resources to catch up on their payments, so they have a limited set of options. The first is foreclosure, which is far from ideal because it has disastrous effects on a person’s credit. The second option is to refinance into a different mortgage product, but this doesn’t solve the problem that caused the owner to default in the first place. That leaves them with one option that solves their problems and allows them to move on: selling.

Selling on-market is usually a long, drawn-out process, though. Owners in pre-foreclosure don’t have time to shop around for real estate agents, list on-market, entertain offers, and then wait through a lengthy closing process. They need to clear their debt immediately, which is where you come in as an investor. You can help these owners sell quickly by making a cash offer on their property. In exchange for the convenience you’re giving them, you’ll get a discount on the property. 

Where can you find pre-foreclosure lists?

Since pre-foreclosures are a matter of public record, finding properties to invest in is relatively simple. Every county clerk’s office around the country compiles pre-foreclosure lists. Generally speaking, if you want to find pre-foreclosure listings for free, you just need to submit a request through this office in your city.

Of course, this is a time-consuming and labor-intensive way to find deals. There could be a hundred or more offices to consult, even in a single state. Multi-state investors can assume the work is multiplied for each new state they work in.

If you want to find deals more efficiently, a real estate lead generation platform is the best option. With it, you can easily search for pre-foreclosures, build lists, and evaluate individual properties with the click of a few buttons. 

Find pre-foreclosures in BatchLeads is as easy as selecting an area and the choosing the pre-foreclosure quick filter.

How do you capitalize on pre-foreclosure leads?

Finding pre-foreclosure leads is easy, but taking a list of properties and turning it into a list of workable leads is a whole other process. However, BatchLeads can help you make this easy as well. Once you’ve checked out the property and confirmed its status, you need to get contact information for the owner. Then you need to connect with the property owner. Luckily, you can do all of this from the app.

  1. Locate pre-foreclosure addresses
  2. Evaluate properties and narrow down your list
  3. Skip trace the owner’s contact information for phone numbers or email
  4. Reach out via click-to-dial or a direct mail campaign

Now it’s just a matter of repeating these simple steps over and over again to continue landing deals. If it seems simple, that’s because it is. By combining all the tools you need in one place, BatchLeads boils the pre-foreclosure investment process down into a few easy steps.

Key takeaways

In today’s real estate markets, some of the best deals aren’t listed for sale. They’re owned by people who are in deep financial trouble and have no idea where to turn. Luckily, as an investor you can rescue them from their situation and profit at the same time by buying their house. 

The best part is that pre-foreclosures are easy to find. If you have a reliable real estate lead generation platform in your toolbox, then the properties you’re looking for are just a few clicks away. Once you learn how to build rapport and negotiate with the sellers, there won’t be anything stopping you from capitalizing on pre-foreclosed homes


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