How to find foreclosures
Depending on where you live, there are different means of finding foreclosures. Before we dive into where to find foreclosures, let’s focus on why for a minute. With foreclosures increasing 97% year over year, there’s a good chance you know of a foreclosure or two in your immediate neighborhood.
These foreclosures can have a staggering effect on the neighborhood in terms of property values, desirability and, in some cases, crime rates. An abandoned property helps no one. A vacant property listed for sale is one thing, but a distressed extended property has a different impact on a community. Whether you’re an investor or just a good neighbor, it’s smart to know what’s going on in your own backyard (especially if you stand to make money in the process!).
The foreclosure process is long and drawn out. Processes vary from bank to bank and from state to state. I will concentrate on what happens plus weather. The most common place to find a publicly listed foreclosure is in the newspapers under “Bank Owned” Real Estate. These properties are also known as REO (Real Estate Owned). These are properties that have already been seized and judicially ordered to return to the control of the bank for non-payment of a promissory note. Typically, after the bank seizes the property, they will try to auction it off. If the property does not sell at auction, the bank will hold the property in its “inventory” and contract with a real estate company to sell your property. Banks lose a ton of money in this process. They can’t stand having a Real Estate Inventory. Banks will most likely be willing to deal with these properties.
The next place to find foreclosures, or pre-foreclosures, is your county clerk of court. Before the bank repossesses the property, the foreclosure process must be completed. Part of this process is that the bank tells the homeowner that the bank is “suing” them for breach of contract. During this process, the bank asks the court to publish a “lis pendens”. This “lis pendens” is a notice that a lawsuit is pending. In many cases, this information is available online. In my county, this can be searched in court databases. The downside is that it is cumbersome and not designed to be easy for investors to navigate.
Another place to get access to foreclosures, prior foreclosures, and short sales is a no-brainer… Real Estate Agents. A very good full-time agent will be deprived of information that may be available to the public, but is still hard to find. Many real estate brokers subscribe to companies that compile lists of foreclosures, short sales, and bank properties. Finding a good broker with this level of access could be very advantageous to an investor.
The last place to find access to foreclosures and short sales is the Internet. There are many websites dedicated to offering foreclosure listings. Some offer one-time memberships, while others are monthly subscriptions. Most will offer a first month free. Some of these sites provide quality and timely information, while others are scams. Do your due diligence before signing up for one of these services. The foreclosure mess is just beginning. The subprime slump hasn’t even started to show its ugly face yet. In the next 24 months million of the loans must be adjusted and reinstated at a much higher rate. This will force hundreds of thousands of people from their homes. Prepare and be informed.
Feel free to contact me if you have any questions.