Finding off-market homes for your next investment is not just necessary; it’s an essential skill set. There are many places to look for opportunities, and no one investor winds up working them all. The key is finding the niche that suits your style to close deals at the volume you need to reach your income goals.
For many in the market for single-family homes, pre-foreclosure is the single best source of off-market leads. It can also benefit commercial properties in the right market, but house flippers routinely find pre-foreclosure lists to be excellent sources of motivated sellers.
What Is Pre-Foreclosure?
This is the first stage of the foreclosure process, and it is designed to give the current owner a chance to correct the loan default by catching up on payments, selling the property for enough to cover the debt, or refinancing. In many cases, the lender will modify a mortgage or refinance it into another instrument if the homeowner has the means to pay in the long term and the issue is just a short-term cash crunch. Many owners choose to sell if they can find a deal that covers the debt and provides some cash they can use to take care of moving expenses, even if it is not a lot.
How Does It Work?
Every county clerk’s office produces lists of homes in pre-foreclosure within that county. Should things go that far, it is a matter of public record, as is the rest of the foreclosure proceeding. Publicizing the list provides credit reporting agencies and lenders with a record of the debt’s status during the proceeding. Still, it also produces a public record that investors can use to locate people who may find it is in their best interests to sell that home now, while they still can. Once you know which homes are in pre-foreclosure, it’s just a matter of finding a way to persuade the owner to sell.
How To Buy a Pre-Foreclosure Home
Moving from a list of pre-foreclosure properties to a closed deal is not a simple process, especially for newcomers. It helps to break things down and consider your options for accomplishing each step.
Finding the Right Properties
When it comes to searching for pre-foreclosures, you have a few options. You can procure the lists directly from county offices in the areas you’re investing. This has been a tried-and-true method, especially for those working locally. You can also check out online search options that incorporate foreclosure and pre-foreclosure lists from all over the country, allowing you to hone in on the perfect deal in any neighborhood, even if you are located out of state.
Build Your List of Pre-Foreclosure Leads
The next step is working up a lead list. You’ll need to contact homeowners in high volumes to find the right deals. Some owners will find solutions that do not involve selling. Some will go to foreclosure. You will often find them open to selling but then find negotiations stall out on a price. The key is always working more leads because the right deals are out there if you sort through enough prospects.
Listing potential pre-foreclosure purchases allows you to sort them by neighborhood, home size, or price range for more detailed follow-up processes. The best part is that you can add properties to your lead list right from the map search with the right lead management software. That makes it easy to use a platform like BatchLeads to find properties and build lead lists.
Make Contact With Potentially Motivated Sellers
Direct mail is a popular way to reach out when you have identified property owners who might be motivated to sell. It avoids the restrictions found in federal telemarketing laws and provides the homeowner with a convenient way to open the conversation. The best part is that it does not take long, especially not when you use the templates and direct mail management features in BatchLeads.
You can send out postcards with custom messaging and contact information that includes your SMS list opt-in number for just a few cents per lead. From there, it is easy to set automated follow-up texts as you welcome potential sellers to your lead network. Customize messages with templates, set conditions for responses, and scale your operation without putting in a lot of extra labor. It’s all about the tools you bring to bear on the situation.
Negotiate Your Next Deal
Once you have the lines of communication open and a potential seller is ready to talk numbers, it’s time to finesse the deal with personal communications. Make appeals to the advantages they get from selling, and remember to point out that it is not just about getting out from under pre-foreclosure. Your offer should put some money in the seller’s pocket where possible to incentivize a quick sale.
While there is a definite art to finding and closing on pre-foreclosure houses, you can help yourself a lot with the right tools. Software like BatchLeads organizes everything to focus on the personal touches; it also provides you with easy ways to scale your operation as you add team members. Remember that with any lead generation method you embrace, the key will be using tried and true methods while working at volume.
Luckily, BatchLeads provides more than just list management. Smart templates with customizable fields provide you with everything from eye-catching postcard designs to appealing automated text communications. Plugin your data or import it with accessible interoperability features to get yourself started in just a few minutes, and you will quickly see just how much the right software can do.
From there, it’s just a matter of testing the map search, finding your first round of pre-foreclosure leads, and working the process that has already proven to be such a great success for so many other investors. Give it a chance and see for yourself.