Find Prior Foreclosures – That’s the Way to Get Ahead
It’s sad but true: Foreclosures are on the rise and everyone knows it. So everyone wants a piece of the action. Chances are, whatever foreclosed property you find, a bunch of other people have gotten there first.
Then what do you do? One answer is: go ahead and find previous foreclosures.
Go to any foreclosure auction and you’ll find it full of speculators eagerly eyeing the prospects. That is an indication that when a property has reached the auction stage, it is not of much use as a short-term investment. You need to get hold of the properties at an earlier stage; in other words, find previous foreclosures.
What is a prior foreclosure? Pre-foreclosure is the period of time between the date a notice of default is served on homeowners because they are behind on the mortgage and the date the property is to be sold at public auction. During this period, the lender has no claim on the property and the owners can still dispose of it as they wish.
So how do you find prior foreclosures? Here are some ideas.
- Contact your local county court and ask if notices of default (NODS) must be recorded as court documents. If the answer is yes, ask how you can find the archived documents.
- To go http://www.netronline.comClick on “Online Public Records” and select the status you want. If there is any prior foreclosure information available in the public domain, you can find it there.
- Look in your local newspaper under “Legal Notices,” look for properties that are going to be up for sale at auction, and write down addresses, owners’ names, tax ID, etc. if available. Then go to the County Recorder’s office, look up the title’s NOD (Notice of Default) at those addresses and find out who registered it; You want to find a title or abstract company you can work with. They will often provide you with a list of NODs they have registered, on the condition that you use their services when you close any of these deals.
- Find landlords whose tenants have moved out or been evicted. If they can’t get new tenants soon, there’s a good chance they won’t pay their mortgage if they haven’t already. Also look for people who have filed for divorce or bankruptcy.
So once you’ve managed to find prior foreclosures, what do you do next?
- Contact the owners, preferably by mail, or by phone or even a personal visit. Remind them that once the lender has foreclosed, they will be evicted and receive zero for all the work they have done on your home. Ask them if they are interested in a deal to avoid foreclosure.
- Some owners will still be reluctant to face reality. But if the owner agrees, visit the property and do a quick but thorough inspection.
- Find out the amount of gross equity in the property. Subtract from this the estimated amount needed for repairs and any arrears, taxes, etc., due, to arrive at net worth.
- Make a 50 percent equity offer, “subject to” being able to take over existing financing. Your offer may only be a few thousand dollars and homeowners may feel like it’s too little, but come to think of it, it gives them huge advantages. If the property were foreclosed, they would get nothing besides a big blemish on their credit score. This way, they at least get something, plus their mortgage is paid off. You get a great deal, your finances in place, and the potential for profit once the repairs are done.
Foreclosures can have great profit potential for you. But the later you quit, the more your earning potential is reduced. If you know how to find previous foreclosures and how to get the best deal, you’ll really be ahead of the curve.