A borrower who has missed several mortgage payments might wind up in foreclosure. If that happens, the lender will sell the property.
A homeowner who can’t cover mortgage payments might ask the lender to approve a short sale. That means the house will be sold for less than the owner owes, and the lender will accept that amount to avoid the long and costly foreclosure process.
Those types of properties are often sold at bargain prices. That makes foreclosure and short sale homes particularly appealing to real estate investors. Here are some tips on how to identify leads.
Work With a Real Estate Agent
A local buyer’s agent can be a valuable resource. An agent will have access to information about distressed properties that are currently for sale or that are likely to become available soon. The agent’s brokerage might provide a list of short sale homes, or your agent might give you access to a multiple listing service where you can search for properties yourself.
You’ll also be able to take advantage of the agent’s network. Your agent might learn about short sales and foreclosures from fellow agents, real estate investors, lenders, or others in the real estate business.
Reach Out to Other Investors
If you let people know what you’re looking for, they can help you find it. Local real estate investors might provide information on specific listings, ask people they know for information, or refer you to other individuals who can assist you.
You can use the internet to find information on local real estate investing clubs or ads that individual investors have posted. Another option is to post your own ad online, explain what you’re looking for, and ask investors to contact you.
Check Public Records
If you visit your local clerk’s office, you might be able to find information on homeowners who have defaulted on their mortgages. That doesn’t necessarily mean that their lenders will foreclose or that those houses will be sold in short sales, but there’s a good chance that they will. You might also be able to obtain a list of properties that are currently going through the foreclosure process.
Short sale and foreclosure properties are frequently sold at auctions. You can contact your local courthouse to get information on houses that will be sold at an upcoming auction.
Invest in Distressed Properties
If your goal is to find investment properties at discount prices, houses that are in foreclosure or being sold in short sales can be excellent opportunities. It will take some legwork to find them, but your diligence and patience can pay off in the long run.
