How to Identify Pre-Foreclosure Properties

A property in pre-foreclosure can be a great investment.

The pre-foreclosure market presents plenty of opportunity for the savvy real estate investor or loan provider. It consists of people who have stopped paying their mortgages, but still own the property. Some people in this group will want to keep their homes and you can market to them if you specialize in loan modifications. Other people can no longer afford the property and are motivated to sell. You can buy a house from a motivated seller for your personal residence or as an investment, or you can work a short sale on the homeowner's behalf.

Instructions

1. Buy a list. This is the simplest way to find pre-foreclosures. Call local title companies and attorneys (especially bankruptcy attorneys) and ask them if they keep a list of pre-foreclosure properties that they would be willing to sell. You might also ask other real estate investors if they keep a list they'd be willing to sell.

   You can buy a list from an online vendor, but it might not contain the most up-to-date information. A local list is always better.

2. Search the clerk and recorder's office. Each lis pendens or notice of default is filed at the county clerk and recorder's office. It's free to look through these records--it's all public information--and doing so will give you the most recent information.

3. Check the newspaper. Foreclosure notices are legally required to be published in a public forum. Look in the classified section under legal notices. If you don't see anything, make sure to check that your city doesn't have another newspaper that publishes legal updates.

4. Translate the legal description to an address. The notice will typically have the legal description of a property instead of an address (unless you're buying a list where someone adds the addresses).

   You can look up the legal description at the county's tax assessor office (or online if the information is available) to find the address of a property. Match it to the owner's name on the notice of default to make sure you have the right property.

Tips & Warnings

• If you don't have the time to search through the clerk and recorder's records, hire the job out.

• Check to see if the clerk and recorder have online records. You could save yourself a lot of trips if you can access the information from your computer.