Pre-Foreclosure Lists and How to Use Them to Find Deals
Learn how to ethically reach families before probate filings become public record.
Austin Beverigde
Tennessee
, Goliath Teammate
Are you looking to score great real estate deals but feel overwhelmed by the process? Understanding pre-foreclosure lists can be your secret weapon in finding properties before they hit the market. This guide will walk you through how to find and effectively use these lists to source lucrative deals.
Quick Answer: To find pre-foreclosure lists, start by checking local county records, online databases, and real estate websites that specialize in distressed properties. Once you have your list, reach out to homeowners directly, offering solutions to their financial challenges. This proactive approach can lead to favorable deals before properties go into full foreclosure.
What Are Pre-Foreclosure Lists?
Pre-foreclosure lists contain properties that are in the early stages of foreclosure. Homeowners have typically missed several mortgage payments, and the lender has filed a notice of default. This stage presents a unique opportunity for investors to negotiate directly with homeowners before the property is sold at auction.
How to Find Pre-Foreclosure Lists
1. County Records
Your local county recorder's office is a goldmine for pre-foreclosure information. Most counties maintain public records that list properties with notices of default. You can often access these records online or visit the office in person.
2. Online Databases
Several online platforms aggregate pre-foreclosure data from multiple sources. Websites dedicated to real estate often provide filters to search for pre-foreclosures specifically. Some may require a subscription, but the investment can pay off with access to valuable leads.
3. Real Estate Agents
Connecting with real estate agents who specialize in distressed properties can also be beneficial. They often have access to pre-foreclosure lists and can provide insights into the local market.
Using Pre-Foreclosure Lists Effectively
1. Analyze the Properties
Once you have your list, research each property. Look at the property's value, condition, and the amount owed on the mortgage. This will help you determine if a deal is worth pursuing.
2. Contact Homeowners
Reach out to homeowners on your list. Be empathetic and offer solutions that can help them avoid foreclosure. This could be a cash offer, helping them find a buyer, or even assisting with a loan modification.
3. Make Offers
When you find a property that fits your criteria, make an offer. Be prepared to negotiate, as homeowners may have emotional ties to their properties.
Costs Involved
Finding pre-foreclosure lists can be low-cost, especially if you utilize free public records. However, if you choose to use paid online databases or hire a real estate agent, costs can vary:
County records: Usually free or a small fee for copies.
Online databases: Subscription fees can range from $20 to $100 per month.
Real estate agents: Commission-based fees, typically around 5-6% of the sale price.
Timelines for Pre-Foreclosure Deals
The timeline for closing a deal on a pre-foreclosure property can vary significantly. Here’s a rough outline:
Research and compile your list: 1-2 weeks.
Contact homeowners and negotiate: 2-4 weeks.
Close the deal: 30-60 days, depending on financing and negotiations.
Alternatives to Pre-Foreclosure Lists
If pre-foreclosure lists don’t yield the results you’re looking for, consider these alternatives:
Direct mail campaigns targeting distressed homeowners.
Networking with real estate wholesalers who may have leads on distressed properties.
Attending foreclosure auctions for potential deals.
Checklist for Finding and Using Pre-Foreclosure Lists
Check local county records for notices of default.
Utilize online databases for comprehensive lists.
Contact homeowners with empathy and clear solutions.
Research property values and conditions thoroughly.
Be prepared to negotiate offers based on your findings.
Common Mistakes to Avoid
When working with pre-foreclosure lists, avoid these common pitfalls:
Not verifying property details before reaching out.
Being overly aggressive in negotiations, which can alienate homeowners.
Ignoring the emotional aspect of homeowners facing foreclosure.
FAQs
What is a pre-foreclosure list?
A pre-foreclosure list includes properties where the homeowner has defaulted on their mortgage but the property has not yet gone to auction. It’s a valuable resource for investors looking for deals before properties are publicly listed.
How often are pre-foreclosure lists updated?
Pre-foreclosure lists are typically updated regularly, depending on the source. County records may be updated weekly, while online databases might refresh their listings daily or weekly.
Can I buy a pre-foreclosure property with financing?
Yes, you can buy pre-foreclosure properties with financing, but it’s essential to have your financing lined up before making an offer. Sellers may prefer cash offers for quicker closings.
What should I say when contacting homeowners?
When reaching out to homeowners, express empathy and understanding of their situation. Offer solutions that can help them avoid foreclosure, such as a quick cash sale or assistance in finding a buyer.
Is it legal to contact homeowners in pre-foreclosure?
Yes, it is legal to contact homeowners in pre-foreclosure, but be sure to follow local laws regarding solicitation and respect the homeowner’s privacy. Always approach the situation with sensitivity.
