How can I find motivated sellers before they go into foreclosure?
Uncovering a house before it goes into foreclosure is like making friends. You have to push through scores of "average" people to find someone you like, usually looking in multiple places. For example, you might get to know people with similar interests, such as in your church group or at work. The more courageous people among us might also place in ad in the personals section or visit a social networking site. Or, if you trust your friends, you might ask them to introduce you to other people you might like.
All right, maybe the metaphor is a little strained, but it works reasonably well. Instead of networking with groups that have common interests, you can find pre-foreclosures by visit the one building all foreclosures have in common: the courthouse. If you’re courageous, you can also place advertisements in the newspaper or use bandit signs, which are somewhat similar to the personals and dating sites. Asking your friends to introduce you to others is like asking realtors and other investors to send you foreclosure leads.
Had enough of the metaphor? Then let’s get into the nitty-gritty of each strategy:
Visit the Courthouse to Find Pre-Foreclosures
Go to your county courthouse and ask the clerk for a quick lesson in how to look up foreclosure notices. Usually, you can pull up a list of Lis Pendens or Notices of Default, which are both indicators of a house going into foreclosure. Some forward thinking counties are also making these records accessible online, so ask for the web site address. It might save you a lot of trips.
Once you have a list of houses going into foreclosure, you need to contact the owners. Some investors take a simple approach and send out a mass mailing of postcards to all of their prospects. Unfortunately, most sellers are so overwhelmed with their bills that they don’t read through the mail anymore. So, you might have to get more creative. I’ve heard of investors going door-to-door, talking to neighbors, and even tracking down family members. You’ll have to decide how far you want to go.
Use "Stop Foreclosure" Advertisements
If the idea of doing that much work sours your stomach, consider this strategy. Advertise to motivated sellers and let them come to you. You can use:
Bandit Signs
They’re everywhere — on street corners, telephone poles, the sides of buildings. People drive by and see the sign, usually saying something like, "Stop Foreclosure" or "Paying Cash for Houses." Then they write down your number and call you.
Classified Ads
When desperate, some people turn to the classifieds for ideas on how to sell their house. Or, they might notice your ad while looking for something else. Either way, placing an advertisement in your largest local newspaper can sometimes bring you leads on pre-foreclosures.
Car Decals
If you’re unashamed, you can bring in a lot of leads by plastering your car with decals. I know several investors that claim this strategy is their biggest producer. Large vehicles, such as vans, have plenty of room for advertisements. Use the space productively.
Build a Network of Realtors and Investors
Another passive yet successful strategy is to build a network of realtors that bring you deals. One of the most successful investors I know has an e-mail database of over 1000 realtors, and he constantly sends out reminder messages for them to bring him any pre-foreclosures deals. On a smaller scale, you can contact the realtors that work in your areas of interest and ask them to keep you in mind. Hopefully, they’ll notify you as soon as they hear something.
Interestingly, I also catch the inside track on a lot of pre-foreclosures from other investors. Technically, I suppose they’re competitors, but most people are happy to pass along a deal that’s outside their price range, general area, or current buying power. As a matter of etiquette, you should pay them an appropriate fee or piece of the equity if you buy the house. Then they’re more likely to keep sending you pre-foreclosure deals.