Even though foreclosure activity has fallen 14 percent in the past two years, there are still plenty of good foreclosure deals for real estate investors who know where to look for them. In fact, approximately 940,000 foreclosure cases were filed in 2016. The opportunity is still available to acquire a good investment through a foreclosure receivership or court foreclosure. You just need to know how to find them and how to make them yours.
There are four easy ways to find properties in foreclosure. Once you have identified foreclosure properties, you can evaluate them to see if they meet your requirements for a good investment opportunity.
TIP #1 Look at Court Records in Your Target Market
Foreclosure cases are often published in local newspapers, or you can reach out to your market’s local Clerk of Court. Information about foreclosures is a matter of public record, but some counties may require you to file a Freedom of Information Act (FOIA) form in order to access the list (see sidebar).
Check to see if a receiver is assigned to the case. If one is present, reach out and mention that you are interested in the property. Although receivers cannot sell the property on their own, they can let the court and anyone else with interest in the property know about your interest and your offer. In the end, the court will make the final decision on whether or not to list the property and eventually sell it.
TIP #2 Just Ask the Bank
You can also find out about the availability of properties in REO by going to lenders’ websites. Most lenders have a real estate portfolio section on their website that shows properties for sale. Using this resource, you will be able to review properties that have already gone through foreclosure and work with the bank’s loss mitigation experts to reach an agreement if you wish to make a purchase.
TIP #3 Reach Out to Specialty Brokers
Another way to find possible investment properties is to reach out to real estate brokers who only specialize in foreclosure properties. They may be able to give you a heads up on bank properties first. If a broker has developed a business relationship with a bank, the institution may give them first opportunities on any real estate that the bank is receiving and will be marketing for sale.
TIP #4 Investigate Code Violations
Finally, head back to the courthouse and check with city Building and Zoning Hearing Division Court to see what properties have been problematic for the city. When problems arise because of a property, it is an issue for the municipality, owner, the neighborhood, and the homeowners’ association (if there is one). The property could have unpaid utilities and/ or code violations.
When code violations are safety and health issues, the court will move forward more hastily to resolve the problem. Some properties end up in court because the city has moved forward in appointing a receiver to get these issues taken care of. This could present an opportunity to deal with the court and the receiver on a possible purchase of the asset. If your purchase of the property helps the city resolve these issues, your offer is likely to be quite attractive. Just remember that when you buy a property with problems, its problems may become yours (see sidebar).