By far, the most essential step in the short sale process is finding motivated sellers
in pre-foreclosure. If you can’t find motivated sellers in pre-foreclosure, then it will
be very difficult to do short sales.
I will share with you a few of my secrets of finding motivated sellers and you just
need to choose 3 or 4 of them to use that fit your style. The idea behind this is to
maintain a constant flow of pre-foreclosure leads – potential homeowners who need
your help and expertise.
There are several ways in which to find motivated homeowners. Newspapers, ads,
signs, courthouse, attorneys, just to name a few. See, when a homeowner is
delinquent on their mortgage, a legal notice or notice of default must be sent to the
homeowner to let them know that their property will be going to auction soon. Once
the legal notice has been recorded, you can go to the courthouse and research these
files to find homeowners in default. These legal notices are published weekly,
sometimes daily at the courthouse. This will be the first place to look. Go down to
your county courthouse and ask to speak to the clerk of courts. Then ask him
where they publicize the legal notices or notices of foreclosure or lis pendens.
Depending on what state you live in, they may call it something different. If you
can’t get any answers, then go to the recorders office. Any legal action must be
recorded. You are looking for notices that show homeowners have defaulted on a
loan and are now trying to collect the debt. Once you find them, make sure you
don’t take any of these notices or files out of the building, just ask them if you can
Before you leave, ask the clerk or recorder if there is a county website or newspaper
that publishes all the legal notices so you can save time by just looking them up on
your computer. Most newspapers have a website with everything on it – yes even
legal notices. Let me clarify one thing. Ideally, you are trying to find homeowners
who are 90 days from the auction because this gives you more time to negotiate a
short sale with the bank. Every state is required to notify the public, usually by
newspaper, that there will be a foreclosure auction on such and such a property
anywhere between 3 to 5 weeks before the auction. So be aware that if you find
legal notices in a newspaper, the auction is only 3 to 5 week away. You must act
very quickly and know what you are doing. On the other hand, when you go to the
courthouse or recorders office, typically the homeowner still has a few months
before the auction.
Real estate agents can become very useful to you. They are constantly looking at
real estate, it’s their job. Start networking with them. Come up with some sort of
win-win. Let them know if they ever see a property that is upside down or
over-leveraged, to give you a call. If you buy the property, let them list it for you.
Agents make their money from commissions. You treat them good, they will treat
Business cards are another great way to find pre-foreclosures. You can hand them
out to everyone and let them know you buy distressed properties. Give them out to
real estate agents, attorneys, friends, neighbors and so on. Anything that gets your
name out there that you are looking to invest in distressed properties. Make them
attractive so people want to call you back. Send them out in all your letters. Money
talks for most people. So set up some sort of referral program where you give them
money if they know of anyone who may need your help and you buy their home. I
don’t know how many people I’ve talked to just because of a small finders fee. Most
of the time it’s friends and neighbors of the people you are doing the short sale
with. They are so pleased with what you’ve done with them, they want you to help
their friends or family, plus they get a finders fee. You could have something like
this – „this card is worth $1000 to whomever finds me a property!“
Attorneys work well because a huge number of people are filing for divorce or
bankruptcy. If you know any attorneys that specialize in these areas, work with
them. They can become one of your greatest assets.
Other methods include flyers, magnets, newspaper ads, and signs you see on the
side of the road. Try all these ways to find pre-foreclosure leads and then focus on
the ones that bring you the best results.