Looking for Tips on Buying Preforclosure Properties

[Leilah Davis]

Hi all! I have never purchased a property in preforclosure, but it seems like a good thing to look into and wondering if anyone has advice. Where do you find preflorclosure listings, and who do you contact first to get the deal going - the owner, the entity processing the forclosure, or a title attorney? 

A lot of the advice I've seen online for buying prefoclosure properties says you should get a real estate agent who specializes in that ... well I am a licensed agent and would like to represent myself in any deals, but I don't know anything about preforclosure! Any advice or tips would be greatly appreciated!! Also, what about tax lien forclosures, or other types of forclosures rather than just a bank?

Another thing to note is that we do not buy houses, we are spec developers and therefore we are only buying vacant land. I know there can be a lot of emotions when someone's home that they live in is being forclosed on, but it seems like that isn't as much of an issue with vacant lots. Granted forclosure happens a lot less with vacant lots than with improved property, but it's still an avenue I'd like to look into.

Thanks a bunch!

[J. R. Crowell]

Hey Leilah, while I don’t have a good answer for a good pre-foreclosure listing source (I’m interested in that answer, too!) I have another avenue  that may work for you if you haven’t tried it yet.

I used to be a commercial lender. Each week, we would pull a list of the “slow pay” notes in our book of business. This could be 30 days late and beyond. It was our job as the banker to call and find out what was going on with our client and their cash flow. If there was a problem with our clients financial situation, we better know about it before it got to a foreclosure status. You become a respected banker by keeping your clients and your bank from losing money and assets. 

It takes a little networking and a few lunches, but if you can get in with a few bankers that deal in these type notes and become the person that can keep their loans from going south, you’ll be a hero. I would get calls all the time asking for deals, but rarely did someone try and find out how they could help my clients out of a cash crunch. On the occasion I did have someone try and find solutions for my clients, I always took the time to listen. 
For your investment strategy (spec developments) find the bankers that write the most construction loans in your area. 

Same source, different area is the special assets department (that’s what we called it). This is where loans go that are in the pre-foreclosure process. The special assets manager is not public facing and may be harder to find, but if you can ever get on their call list, you’ll have good deal flow. In a nutshell, their job is to preserve loan loss and get the deal out of the bank as quickly as possible without losing money. 

Not exactly what you asked bout, but it could be a good rabbit hole for you to run down. 

Happy Hunting.