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Foreclosures can be a great option for real estate investors. They’re cheap, they typically make for quick transactions, and there’s often tons of potential for ROI. Fortunately, they’re not too hard to find, either -- at least if you know where to look.
Are you considering buying a foreclosure for your next investment property? Here’s how to find foreclosed homes in your area:
Search government agency websites
Government agencies regularly foreclose on properties for unpaid tax debts, mortgages in default, and even as part of criminal investigations, among other reasons. Once they’re up for resale, you’ll find these homes on the agency’s website or, in the case of the Department of Housing and Urban Development, at HUDHomeStore.com.
If you’re on the hunt for a government foreclosure, try these sites:
- HUDHomeStore.com (U.S. Department of Housing and Urban Development).
- Treasury.gov/Auctions (U.S. Treasury).
- USDA.gov/Resales (U.S. Department of Agriculture).
- HomePath.com (Fannie Mae).
- HomeSteps.com (Freddie Mac).
- FDIC.com/Buying (Federal Deposit Insurance Corporation).
- Disposal.GSA.gov (General Services Administration).
- USMarshals.gov/Assets (U.S. Marshals Service).
- HomeSales.gov (All Departments).
If you do go this route, you’ll likely need a licensed real estate agent or broker to help you make the offer (as required by most agencies).
Check out bank and mortgage lender listings
Similarly, individual banks and mortgage lenders foreclose on properties, too. When they do, they’ll list the homes on their website or enlist the help of an asset management company (more on that later) to help them recoup some of the costs.
A bank-owned foreclosure is often called an REO property or real-estate owned listing, though each of these phrases mean the same thing. You’ll find these properties listed on the websites of most major banks, including Wells Fargo, Bank of America, and M&T. Here’s a full list of other sites you might want to check for bank foreclosures, too.
Look to foreclosure-specific real estate platforms
Though you’ll find many foreclosures listed on traditional real estate platforms like Zillow, Trulia, and Realtor.com, there are also a number of foreclosure-specific listing platforms, too. Many of these sites also offer auction listings, short sales, and other distressed property listings as well.
Here are a few of the big platforms of this type you’ll want to look at:
There may be foreclosure property sites specific to your area, too, so be sure to search on Google for additional options. (For example, ForecloseHouston.com is one option in my area.)
Enlist a local real estate agent or broker
A local real estate agent or broker can be a great choice if you’re on the hunt for foreclosures. For one, they’ll have inside knowledge about the foreclosure buying process, and they can help guide you through the transaction.
Additionally, if they’re really well-connected in the area, they may even know about up-and-coming foreclosures that haven’t hit the market yet. That can mean a great deal and less work (no competition!).
If you find an agent you really like, you can even work out a regular working cadence. They’ll alert you of new foreclosures as they crop up and, in exchange, get a small commission for helping you handle the transaction. It’s a win-win for everyone.
Search through county records
A home can’t just be foreclosed on. Legally, there have to be several public notices filed, and these all get entered into county records.
If you’re on the hunt for a steal of a property, your best bet is to head to the local courthouse or see if your county offers some sort of online record search. Whichever way you do it, you’ll want to look out for Notices of Defaults, Notices of Sales, or "lis pendens" filings. If you’re lucky, you might even catch a pre-foreclosure property, which would give you time to contact the homeowner and negotiate a deal.
A quick note: These notices should be published in local newspapers, too, so consider getting a subscription to your community paper. This will help you stay on top of potential foreclosures in the works.
Attend a sheriff's sale or in-person auction
Foreclosed properties are often auctioned off at local sheriff’s sales (typically on the steps of the county courthouse) or at local auction houses. Sheriff’s sales are generally advertised in the local paper or on the sheriff department’s websites. You can also look up private auction houses in your region and view foreclosure auction schedules online via their websites.
Some foreclosures happen via online auction (or even mobile app, in some cases). Check out Auction.com and Hubzu for services like this.
Contact an asset management company
While some banks and lenders try to sell off their foreclosed properties themselves, others opt to outsource the job -- usually to an asset management company. VRM is a good example of an asset management company. The firm currently has hundreds of previously VA-backed properties that have gone into foreclosure, all up for purchase on its website.
Here are some other asset management companies you might want to look to for foreclosure listings:
There are tons of others, too, so be sure to do a quick Google search if you’re considering buying a home this way.
The bottom line
There are numerous ways to find and buy a foreclosed home. However you decide to go about it, make sure you come to the table ready -- with cash in hand or a mortgage preapproval. If the property’s a particularly good deal, you can expect a little competition. Having your ducks in a row can help you act fast and stand out.
And don’t forget: Foreclosures can be a risky undertaking. Do your due diligence in vetting the house (even if it is an "as-is" property), and watch out for any outstanding liens on the property. You’ll also want to carefully calculate your offer price, taking into account repair costs and ARV. Any slipup here could cost you big.
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