Those that know how to find short sales may find themselves with a distinct advantage over those that can’t.
To find short sales in your area, resort to the following strategies explained below.
The best way to find foreclosures may not be what you originally thought.
While the innate characteristics of a savvy real estate investor may be intangible, they are by no means required to realize success in this industry. Everyone, regardless of experience, is capable of successfully investing in real estate if they demonstrate a willingness to learn and a propensity for hard work. However, there are a couple of factors that those with high aspirations need to address if they want to realize their goals. Investing in real estate requires an acute attention to detail and a particularly opportunistic approach. Subsequently, investors need to know how to find short sales; it’s that simple. When a potentially lucrative deal is made public, investors must take action.
What Are Short Sale And Foreclosure Properties?
Short sale properties are homes sold to a third party for less than the amount owed by the homeowner. Although unfortunate, short sales provide homeowners under some type of financial hardship with an alternative to foreclosure. However, the lender must agree to absorb the loss caused by a short sale, usually incentivized to do so in order to avoid the costly process of a foreclosure. Foreclosures, on the other hand, are homes that are being forced to sale by the lender to recoup any potential losses.
How To Find Short Sales And Foreclosures In 5 Steps
The real estate industry is ripe with properties that are considered to be profitable for investors to rehab and flip. However, none may be more appealing than foreclosures and short sales. These are the properties investors must approach proactively. Doing so, unfortunately, is easier said than done. On average, short sales and foreclosures sell for approximately 30 percent less than a non-distressed property. Therefore, they are a priority for every investor, including your competition. Everyone in your market will be vying for these properties, as they offer some of the highest ROI (return on investment).
You must approach distressed properties with a proactive plan. Unbeknownst to many, there are actually steps you can take to give yourself an advantage when locating and tracking down these homes. Establishing a working rapport with the appropriate people may actually land you the home of your dreams at the best possible price. Whether you are working with other investors, or posting up on the courthouse steps, you can land a good deal before everyone else even knows it is available. The following illustrates 5 simple ways an investor can find foreclosures and short sales before everyone else:
Connect With Likeminded Investors
Work With Investor-Friendly Real Estate Agents
Search Public Records
Conduct Online Research
Visit Your Local Courthouse
1. Contact Likeminded Real Estate Investors
The real estate industry, for all intents and purposes, is a people business. Truly successful investors have already realized the benefits of working with others in their field. After all, it takes two sides to complete a transaction. Why not do so in a manner that is conducive to the success of your business in the future? Having said that, likeminded investors are an excellent resource for just about anything you may need. Their knowledge regarding a particular area can be an invaluable resource when trying to locate a property for sale. Not only are they familiar with their respective area, but they may also have inventory that is waiting to be sold. Of particular importance, however, is the buyers list they may have on hand.
As its name suggests, a buyers list consists of people that are currently in the market to purchase a home. While the goal is to obtain a property, getting on this list is equally beneficial. In doing so, you will be in line to secure a property that meets your criteria. Essentially, they will be using their extensive resources to help you find short sales and foreclosures. In return, you are providing them with a means of wholesaling–everyone wins. However, not everyone will simply add you to his or her list. You need to not only find an agent, but also prove that you are worth their time.
Visit A Local Real Estate Investor (REI) Club Website
Local real estate investor club meetings are as easy to find as browsing the Internet. With a simple search, find a local club near you and do what you can to attend it. While individual clubs may specialize in certain niches, they are certainly invaluable sources for local information. Prior to attending your first meeting, contact the group leader and inform him or her as to what you are looking for. Despite their specializations, you will likely be introduced to several investors with a working knowledge of the area. With the appropriate networking capabilities, some may even be willing to place you on their buyers list.
Visit Additional Websites
The Internet is a valuable tool with limitless possibilities. It would be a shame to neglect its potential. Therefore, branch out beyond that of the typical real estate aggregate sites. Consider browsing the “Real Estate” section of advertising platforms and contact the individual who published any content that catches your eye. Craigslist has become a popular choice for investors of every level. Ads that say “We Buy Houses” are usually a good place to start. They are usually the product of an investor who has ties to the community in question. Once you get in contact with the investor, they can either help you with what you need or point you in the right direction.
Post An Ad
Aside from seeking out ads, it is equally beneficial to place your own. Take the initiative and post an ad that asks investors to contact you. Remember, real estate is a people business. Any smart investor will be willing to take a couple of minutes to contact another likeminded individual if the resulting relationship can help them in the future. Be sure to promote the concept of a symbiotic relationship and the value you can bring to the table. Real estate investors spend a lot of time searching through ads for new deals, and there is a good chance one will come across your ad.
Ask A Fellow Agent
Many investors are not agents themselves, but work closely with agents. View their relationship as one that you can benefit from, particularly in lieu of a referral. If you network well enough, an investor may refer you to an agent with the information you need. Referrals are a great source of leads, as they are more likely to result in progress. Simply being referred to an agent builds instant credibility and establishes another relationship to benefit from. With the right connections, you may be introduced to an agent that has a house for you.
2. Work With Investor-Friendly Real Estate Agents
The concept of contacting another investor, whom many believe to be their adversary, is foreign to many. However, breaking down such a barrier is pivotal for success, no matter their title or position. Take the initiative and work with anyone that is willing and able to boost your career to the next level. Having said that, you will also want to contact real estate agents. In fact, they may be the first person you consider asking for help finding foreclosures and short sales. If so, your hunch is right. Working with knowledgeable agents is one of the best ways in procuring distressed properties.
Most agents are very familiar with their territory, and are probably already aware of properties that are nearing foreclosure. This is usually because of two reasons: they network with other agents and can typically be found working with banks and lenders.
While relatively new investors may be eager to work with any agent, it is worth noting that a good agent is invaluable. Work with an agent that communicates well. There is no point in working with an agent that you can’t get in contact with, as punctuality and timely responses are critical to securing a deal. In addition to communication, networking is essential. While this may be a given, some are much better at it than others. Find one that meets your criteria.
Above all, you want to associate with an agent that has an unquestioned passion for the industry. It will be hard to rely on an individual that you can’t necessarily trust. Knowing that they will have your best intentions in mind is well worth going the extra mile to find a good agent.
In the end, working with a passionate real estate agent that is “in-the-know” can lead to a promising relationship. Their contacts alone can net several distressed properties.
3. Obtain Public Foreclosure Lists
The importance of having trustworthy contacts and a working rapport with other individuals in this industry can’t be underestimated. However, in the search for foreclosures and short sales, other professionals are just the beginning. A multitude of sources have been made available to investors, each of which make finding distressed properties easier for those that know about them.
When a homeowner begins to fall behind on his or her mortgage payments, each delinquency is reported to the credit bureau. In other words, there are both public and non-public records of those facing a foreclosure. As the nature of their name suggests, non-public lists are more difficult to acquire. However, public foreclosure lists are released when a lender files for the necessary paperwork to initiate the foreclosure process. The list that is released is officially referred to as a Lis Pendens or Notice of Default (NOD).
To obtain such a list, you must follow individual state laws. As the process is different in every state, there are a number of ways that you may have to go about getting the list. Some of those options include, but are not limited to:
The County Recorder’s Office
Local or National List Providers (for a fee)
4. Locate Online Foreclosure List Providers
In the event you want to search for distressed properties that may be up for sale, the Internet should be one of your first stops. Almost anything you wish to inquire about can be found on the Internet, that includes both foreclosures and short sales. Some companies have even made a business out of providing this information to the public. For a fee, Foreclosure.com and RealtyTrac will do the hard work for you and locate properties. However, if you are less inclined to pay someone to do your dirty work, you can take advantage of Google. Simply typing in “local foreclosure list provider,” followed by your county or city, will provide you with valuable information. Regardless of which route you take, make sure to consult a real estate expert. Short sales and foreclosures are tricky to navigate and can leave you in a bad situation if handled improperly.
5. Take Part In Real Estate Auctions At Your Local Courthouse
Real estate auctions are certainly an option worthy of your consideration. There are hundreds of homes auctioned everyday, making the opportunities more plentiful than many are aware.
Prior to a home being placed up for auction, several things have to transpire. A house will typically reach the auction when a homeowner doesn’t pay his or her mortgage for several months. This causes the bank to file a notice of default. If the homeowner fails to pay the balance due or negotiate a solution with the lender, the home can be put up for auction. The other main way a home can wind up at an auction is if the owner doesn’t pay property taxes or becomes very delinquent, in which case the relevant authority can start foreclosure proceedings.