There has never been a more competitive time to be a real estate investor. As a result, conventional markets for investment properties are clogged with competition, especially for short-term rehab or development opportunities. As a result, investors looking to make optimal returns on a flipped home now need to avoid entering into bidding competitions, and the only way to reliably do that today is to figure out how to access off-market properties.
Among the many sources for leads for off-market houses and commercial properties, the most popular are pre-foreclosure lists and tax defaults because they indicate that an owner may be motivated to sell to clear that debt. It’s not always the case, but it does increase the odds. With foreclosures rising sharply, more homes than ever are on the pre-foreclosure list. In the third quarter of 2021, the foreclosure rate was up 60% from the previous year, according to ATTOM, one of the top providers of data on home foreclosure nationally.
What is Pre-Foreclosure?
When a homeowner gets behind in payments to the point where a default triggers, the home does not immediately enter foreclosure. Instead, a notice of default is given by the lender to provide that owner one final notice and chance to recover from the financial predicament. Owners can still sell the property during that time or use other methods to satisfy the outstanding debt, so it is advantageous to sell during this window if they know they will not get the loan back on track. Otherwise, they lose all financial interest in the house if default leads to repossession.
Investopedia points out that pre-foreclosure is a legal process, and default notices have to go through the courts to be valid. This is why they are a matter of public record and how they wind up getting compiled into pre-foreclosure lists. Quicken Loans also points out that owners may be able to refinance into a different mortgage product or modify the existing loan through negotiations, which is often why potential sellers choose not to do so.
Where Can You Find Pre-Foreclosure Lists?
Since they are a matter of public record, pre-foreclosure lists are compiled by county clerk’s offices all around the country. Generally speaking, it just takes a simple request for the list to the appropriate office to get it. Of course, that is time-consuming and labor-intensive for investors looking broadly for opportunities. 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.
Data collection companies do the work of pulling and amassing those lists, databasing them to make searching easy, and then licensing the lists out to real estate sales and lead generation platforms. Platforms like BatchLeads provide the user interface and other features that make a valuable list for lead generation.
How Do You Get Pre-Foreclosure Leads?
Moving from a list of the property addresses and owners currently in pre-foreclosure to workable leads is another step, but it is also one that BatchLeads can help you take. Once you have checked out the property and confirmed its status, you need to get contact information for the owner. Then you need to reach out and open communications. Luckily, all of that can be done within the app.
- Locate pre-foreclosure addresses.
- Skip trace the owner’s contact information for phone numbers or email.
- Reach out via direct mail or cold call.
From there, it’s just a matter of working the lists at volume until you find the people who are ready to sell a distressed house to walk away from it. The process feels simple because the software does a lot of the work that used to be time-consuming before it was accessible digitally.
Key Takeaways
The place to avoid bidding wars with other investors is off-market properties, but the fact that they are not on the market makes them hard to find. Pre-foreclosure lists represent some people most motivated to seek a sale because there is a time limit before the foreclosure process takes the house from them for good. Timely outreach can help homeowners avoid financial catastrophe while providing you with your next real estate deal. So, what are you waiting for?
Sources:
https://www.investopedia.com/terms/p/pre-foreclosure.asp
https://www.quickenloans.com/learn/pre-foreclosure
