This article is part of a larger series on Real Estate Lead Generation and Marketing.
When homeowners default on their mortgage payments, their property goes into preforeclosure. At this stage, they have a choice to keep the property, sell it, or conduct a short sale. This makes preforeclosures a valuable opportunity for real estate agents to gain a listing or for buyers and investors to purchase a home below market value. To find preforeclosure listings, you can purchase leads, search through the MLS and local directories, or generate referrals.
One of the most effective and time-saving ways to find preforeclosure leads (as well as FSBO (For Sale by Owner), and expired leads) is with REDX. For $39.99 per month, REDX provides up-to-date preforeclosure property information in your county. It will include difficult to attain homeowner contact information and organize it in a database to give you a head start on the competition.
To start finding preforeclosure homes, try these eight methods:
1. Purchase Online Preforeclosure Leads
One of the most direct paths to buying a house in foreclosure is simply buying preforeclosure leads online. Some lead sources automatically send new leads to your inbox every day, which allows you to start marketing to leads immediately instead of spending hours or even days finding the lead before making contact.
Purchasing leads is an optimal choice for buyers or investors who have a significant amount of competition in their area. By using a lead source like REDX or Landvoice, new leads are delivered directly to your inbox on a daily basis, and you can immediately utilize the power dialer to make contact more quickly. Other platforms, like foreclosure.com and ArchAgent, have filtering capabilities and lead managers to sort through potential leads and follow up effectively.
Take a closer look at a few of the top preforeclosure lead sources:
For more information: REDX review
$39.80 per month
$39 per month
$67 per month
2. The Local MLS
One of the most logical places to start finding and generating real estate leads is the Multiple Listing Service (MLS). The MLS is a local database of properties for sale, accessible only to real estate professionals. Your local MLS is often the most reliable source of data, and it can help you find active foreclosure and preforeclosure listings as well as detailed property information.
Since each MLS is operated and managed by real estate brokers and is specific to your state, it is not open to the public for the sake of security and operating costs. However, if you are not a licensed agent, you may be able to gain access by building relationships with agents, brokers, or the association that owns the MLS.
3. Online Directories
Online directories have an extensive amount of data on properties in your area, which can help you pinpoint foreclosure and preforeclosure listings. Directories also have filtering capabilities, making it easier to sort through potential listings to find the most relevant information.
While directories are useful for real estate professionals, they are ideal for real estate investors starting the search process for preforeclosure listings, because directories can be accessed instantly from any device with the least amount of legwork and without a real estate license. However, even the most accurate directories will inevitably have some inaccurate or out-of-date information, so it’s important to check multiple sources.
Here are some online directories to assist with your search for preforeclosure listings:
$119 per user, per month
$17.99 per month
Free to browse, ZPA costs about $20-$60 per lead
$49 per month
A few online directories, like ProspectNow and Reonomy, use artificial intelligence (AI) and machine learning to provide in-depth information and investment calculations. The AI tools can predict foreclosures and help you reach new foreclosure leads ahead of your competition.
However, a good place to begin your search is with Zillow. With a free account, you can access preforeclosure listings, foreclosure information on each property, and the contact information for the agent representing the property. As a Zillow Premier Agent, you can also get primary placement on local listings, even if they aren’t yours, as well as highly motivated buyer leads.
4. Public Records
Preforeclosure listings can be found for free in the public records section at your county recorder’s office or online. Search for Notice of Default, Lis Pendens, and Notice of Sale. These notices are issued to the homeowner and publicly recorded during the foreclosure process.
Public records include the property address and the homeowner’s name. Generally, they also include the name of the bank that is doing the foreclosing and how much is owed on the property, but there is a good amount of important information that will be unavailable. For example, public records don’t include:
- Liens owed on the house (a title search is required for this information)
- Detailed property description
Finding a preforeclosure property through public records is only the first step of the process. You’ll need to visit the property and look for signs of distress, like overgrown grass, piles of newspapers, or other signs of abandonment. You may even want to talk to neighbors or mail delivery drivers to find information about anyone living in the home. If you can’t find contact information, you can leave a handwritten note letting the owner know that you are interested in assisting with the property.
Searching public records is one of the most reliable ways to find accurate foreclosure listings and one of the few free methods. However, it can be time-consuming and only provides limited information. This method could be effective for any investor or real estate agent with time, energy, and know-how to communicate with owners to get the foreclosure listing.
5. Local Newspapers
Local newspapers publish the addresses of homes that are in any stage of the foreclosure process. Once the preforeclosure process begins, the homeowner will receive notices of foreclosure, including “Lis Pendens,” which are also published in the legal section of the newspaper.
Of course, most local newspapers also have an online edition where the same information is published. You’ll have to pay for access to the newspaper for your county, but you can check out the legal section and make notes of the addresses that have litigation pending. Just like the public records, the paper won’t include photos or descriptions of the preforeclosure listings, so you will have to do your own research to find this out.
Even though checking out local newspapers may seem archaic, it’s an extremely reliable source that provides information as soon as the property receives notices. It’s also extremely easy to access, although there will often be a fee. This method is ideal for agents and investors who already know how to get listings, since there will be competition for these leads as soon as the data is public.
6. Real Estate Wholesalers & Attorneys
There are multiple ways to find preforeclosure listings without manually searching through data and properties. Instead of searching through data yourself, you can make valuable connections with specialized professionals who are consistently in contact with preforeclosure leads, like real estate attorneys and wholesalers.
Real estate wholesalers are entrepreneurs who advertise to distressed homeowners to buy their home and connect it with a buyer or investor. For example, a wholesaler can find a homeowner in preforeclosure and make an offer at a certain price, depending on comparable properties and the home’s condition. Wholesalers create a contract with the homeowner, but don’t actually pay the designated amount. Instead, they find a real estate investor to buy the home for a fair price, and the wholesaler keeps the difference.
On the other hand, real estate attorneys are licensed professionals who can work with homeowners in a variety of legal matters. For instance, attorneys are often hired to represent clients who inherit homes that they can’t afford. The best way to connect with attorneys and wholesalers is by going to in-person events or making connections through personal and professional friendships. You can also find them online or on social media and connect almost instantly.
Although these two professions are extremely different, both types of connections can put you directly in the path of distressed owners and strong investment opportunities. These can be some of the most valuable sources of foreclosure listings because the referrals you receive are already active homeowners looking for your help. However, you will still need to do your own research on each property before making a deal.
7. Real Estate Referrals
In the real estate industry as a whole, networking is the best way to find leads and build a reputation. Whether you’re a buyer, investor, or agent, you’ll be more successful in real estate with more connections. According to the National Association of Realtors (NAR), 68% of homesellers find their listing agent through a personal referral. You most likely have many other friends, family members, and acquaintances who can connect you with potential preforeclosure listings.
The owners of preforeclosures are simply members of your community who likely went through an unexpected difficult hard time. You might be more connected to these potential leads than you think, so don’t miss an opportunity to open the door for referrals.
Start by sharing your search for preforeclosure listings with friends, family, or on social media. Let them know that you are looking to invest in potentially distressed homes and that your business venture could be life-changing for other people in need.
You can even build a system to generate real estate referrals online, like creating a website, landing page, ads, or a social media account. With a real estate website builder like Placester, you can get a full website and custom landing pages up and running in a matter of hours. Tailor your website and landing pages to speak to homeowners of distressed and preforeclosure properties by giving them information about the process to let them know you’re an expert in that niche. You can even try Placester free for 30 days.
8. Prospecting Letters for Preforeclosure Listings
In the digital communication world, there are endless ways to contact investment leads and homeowners in foreclosure. Writing letters can seem like a boring, tedious, or old-fashioned way to make contact, but it can actually be a particularly effective strategy for foreclosures. Since the recipients are not in their situation by choice, they should be approached with sensitivity and compassion, which is very difficult to do through online ads or messages.
Letters, on the other hand, can be personalized and handwritten in order to make the biggest impact. Write your prospecting letter from a template, but include personalized details about their neighborhood, local hot spots, or their interests if you are familiar with them. Keep the focus on communicating how you can benefit the owners as much as possible.
Read more information about how to create and distribute real estate prospecting letters, and download a free preforeclosure template from our article: 9 Real Estate Prospecting Letter Templates for Lead Outreach.
To further simplify the process, consider using a direct mail service like ProspectsPLUS! for the execution of your prospecting letters, like designing, printing, and even mailing. ProspectsPLUS! offers multiple resources and strategies for distributing your letters and direct mail, including EDDM (Every Door Direct Mail) and the Market Dominator direct mail strategy. Start looking through ProspectsPLUS! templates and mailing options for free.
Pros & Cons of Preforeclosure Leads
Homes in foreclosure often cost less than market value, which presents an incredible opportunity for savvy real estate investors or agents. This profit potential is the most obvious reason to search for preforeclosures, but there are also many hurdles that come with foreclosures. Before investing your time and resources, consider all the pros and cons of preforeclosure listings.
- Motivated homeowners: Going through a foreclosure can have a very negative and lasting impact on the homeowners both financially and emotionally, so they are often extremely eager to sell their homes quickly.
- Benefits homeowners: Although foreclosure is never an ideal situation for the homeowners, you have an opportunity to relieve them of a significant financial and legal hardship.
- Less competition for agents: Marketing to the same listing leads as every other real estate agent in your area can be exhausting. However, many agents and investors avoid foreclosures, minimizing your competition and helping you become an expert.
- Profit potential: For investors, homes in foreclosure essentially guarantee that they can purchase a property for less than its market value. With the right research and timing, you may be able to find a foreclosed home that provides almost instant equity.
- Properties in poor or distressed condition: Many homeowners in foreclosure have struggled to maintain their homes for some time before the actual preforeclosure process begins. This means that most homes aren’t in great condition, and some will need significant work before being viable for rent or for sale.
- Longer sale process: Foreclosures can take anywhere from 90 days to a number of years to complete, depending on many different factors. You may be able to find and close a property in a matter of weeks, but you also need to be prepared for unexpected situations to arise.
- Significant research required: The process of finding preforeclosure properties can be extremely time-consuming. After that, you also have to evaluate whether the property is a profitable investment, then put in more work to find the owner’s contact information. If you struggle to do research or comb through data, finding consistent foreclosures will be extremely difficult.
- Difficult homeowners: While many owners in preforeclosure have simply had a string of unfortunate circumstances, there are many other cases that can be hard to navigate. These homeowners can be difficult to contact or have extenuating circumstances with additional legal or financial obstacles.
Preforeclosure listings can be found in many different ways, such as the MLS, online directories, real estate referrals, and public records. Although it may be more work than a traditional property listing, there is potential to make a lot of profit, stand out from the competition, and specialize in a niche area of real estate.