Can You Find Preforclosures on the MLS

Question

Im in the Dallas/Fort Worth area, wondering if you can find preforclosures on the MLS. If not, where is the best place to find them, what is the best way to find them?

Sean OToole · Answer

@Neil Aggarwal Pretty much all vendors in the industry use "Preforeclosure" to mean the period of time between the notice of default and notice of trustee sale in non-judicial foreclosure, or between the lis pendens and the notice of sale in judicial states (with some state to state variation thanks to things like combo notices).

For the period you mention, during which the owner is simply late on their payments, those are called "mortgage late" leads or 30/60/90 day late leads. These are actually available from the credit bureaus as marketing data, but they are "credit data" and therefore come with a lot of rules around how they can be legally used. Those rules include having to use a disclaimer that is a bit like the surgeon generals warning on cigarettes - and if you follow the rules and include the warning, most have found that they get almost zero response. Not following the rules, helps response, but creates legal risk. We've never sold them for that reason.

Another thing most people don't realize, is that owners are typically no where near being ready to sell, especially with any level of distress in the price, that early in the process. The most successful preforeclosure investors I've met largely focus on being there at the end, when the owner has exhausted all their options and is truly about to lose their home.

Jay Hinrichs · Answer

when I was active in buying this asset class it ALWAYS happened within 24 to 48 hours of the sale.. its at that time that the owners realize its do or die..  so to be successful at this end of it means.. you need great contacts at your title company that will give you a lot of information and also do a date down literally on the phone with you.. you catch 97% of what needs to be caught but your still taking risk.

you need to be able to prep your own docs.. you need to get the seller to a reputable notary  preferably at a title company your going to end up using to resell so they know the deed was not forged or coerced .. then you need CASH to either pay off the loan that day or reinstate it.. you need great relationships with the trustee's handling these you should be on first name basis with the person in charge of the file.. then you need courier service to run the cashiers checks ( in my instance from Portland to Seattle to NW trustee services).  That's how you make money in pre foreclosure world but the laws changed in our states so you have to be pretty cautious how you do these and it was those changes that led to me abandoned this method of buying property..

but early in the process like mentioned above it was rare to be able to buy those.. remember your not the only one trolling these someone with a notice of default is going to get no less than 200 or so yellow letters and hammered by real estate agents for a listing.

Along with the fact that they have probably lived in the house for a year or more for free.. so that motivation Is down the line.. and forget about fixing their credit at this point its trashed..

Jack Bobeck · Answer

@Jay Hinrichs I dont buy rentals either, to much of a PITA!

I do rent to owns, lease/option, let the tenant earn some sweat equity and take care of the house. After 10 rentals, I'll never do another rental, ever.

Jack Bobeck · Answer

@Jay Hinrichs Tough break.....you should move to FL, where its legal, second thought stay there, I don't want your competition. :)

Thanks for sharing!

Sean OToole · Answer

@Vincent Meoli - while they don't track the auctions, and there are some other limitations, RealtyTrac is likely the best provider in your area at this time. The only real alternative today would be Corelogic's Listsource in my opinion. Hopefully that will change soon. ;-)

Sam Shueh · Answer

foreclosure radar, auction.com etc.

Jay Hinrichs · Answer

I no longer buy rentals.. so no competition..

Jay Hinrichs · Answer

Jack,   believe it or not.. our state and I think WA made it ILLEGAL to do foreclosure rescue sub too leave backs.. I used this strategy exclusively for many years.. but unlike a lot of folks just because it was sub too I would not buy unless there was substantial equity day one.  reason.. leasing it back usually lasted maybe 6 months then you were evicting and had a pretty heavy duty make ready or remodel to resell..  but alas its not legal anymore were I live and work.

Jack Bobeck · Answer

@Jay Hinrichs - Amen, skip credit repair. See if you can get to the people early, explain the bank and what they will do. Any good investor that has lost properties knows the drill. Explain to them what is coming.

If its a good enough deal, you can take over the notes, subject to, and tell the people they can stay in the home. Its all about TRUST, the more you build up front, the easier it is in the future. Yes, you could be greedy, but why do it? Why not be a bridge for them. You catch more bees with honey, than vinegar.

The key is to find the Pre's as they happen and work to build the trust, face to face.

Neil Aggarwal · Answer

Thanks for the clarification!

Can You Find Preforclosures on the MLS

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