To find short sale deals, an investor needs to understand the circumstance that leads to foreclosures and short sales. Previously, I've written about the description of a foreclosure, how the foreclosure process unfolds, and how investors can purchase homes at a reduction in cost during this process through a short sale. This is a great way to purchase homes for little money.
Part of the reason this is such a great opportunity is because so many people are defaulting on their home loans. Today 2 of every 100 mortgages is a foreclosure. As reported by the Mortgage Bankers Association, 550,000 to 650,000 home loans throughout the U.S. The possibilities for short sale experts are going to expand in the immediate next several years.
You can find short sale deals wherever foreclosures are occuring and homeowners are having problems making payments. But this begs a big question: "How do I find homeowners facing foreclosure?" I'm going to give you a few ways to come across distressed homeowners. What you should recall is that in terms of sheer work, this is about as trying as it gets. Short sales are amazingly easy to do as soon as you get the system. Be aggressive in searching for these people and you will make a lot of money.
Unfortunately there is no standard public record of property owners experiencing financial difficulty. Distressed homeowners blend well to their environment, and like all of us are careful not to demonstrate cues of financial difficulties. The extent to which you look for and find short sale deals is contingent on how aggressive you want to be.
Some of your choices include:
• Driving around looking for distressed homes
• Letter writing
• Foreclosure signs
• Newspaper ads
• Foreclosure service
• Mortgage broker referral
• Local REIA groups
• Bankruptcy attorneys
1. Driving around looking for distressed homes
The most assertive activity investors use to find short sale deals is cruising around targeted neighborhoods looking for homes with evidence of distress. You can actually train yourself to start spotting distressed owners by just driving around like this. Homes are left unkept, lawns go uncut, mail, door-to-door mailers and newspapers pile up, shrubs and gardens look unattended, broken windows don't get fixed, and houses begin taking a look of being unwanted. My first house "buy," a crack house, is the most extreme example of what I'm discussing. Yet houses like that one are everywhere.
2. Door knocking
If you're feeling really bold you can talk directly to the owners by knocking on their doors. As a last resort you can use a professional skip-tracing service.
3. Letter writing
Finding the homeowner (either through a neighbor or through using the county records) and sending them a letter would be a much better option.
4. Foreclosure signs
When you want to find short sale deals and decide on a good area you might like to farm for leads, place "Stop Foreclosure" signs at busy intersections in the neighborhood. Keep in mind that nice neighborhoods have the same if not worse foreclosure problems than poorer neighborhoods, so shoot big and get those signs out. They work.
5.
(Online editions of most newspapers do not carry complete classified listings. You need to get a real newspaper.)
6.
Because of the growing number of foreclosures, services have been formed to provide information about who is receiving their NOD (Notice of Default) and even who is missing payments on a regular basis and falling behind. For a fee, you can have a lot of detective work done for you.
7. The internet
You can find short sale deals by doing a great deal of detective work online. For example, most local newspapers now have online editions. You can very easily scan the legal notices for divorces, lawsuits, and legal actions of all kinds. Those are typically great telltales of foreclosures in the making.
8.
The local courts are required to keep good records of foreclosure proceedings in your county. You can hire paralegals and court employees (who are knowledgeable about the system) to work for you on off-hours collecting any information you may want.
9. Mortgage broker referral
Find short sale deals through mortgage brokers, who know a surprising amount about their past customers. Local REIA groups
This is an invaluable source of leads for all sorts of investor related needs. Begin attending these meetings to share ideas and hear the lastest news on what's emerging in your area.
11. Bankruptcy attorneys
Bankruptcy attorneys are an excellent way to find short sale deals because they deal with your target market everyday. Develop a relationship with several of these, define the sorts of clients you're looking for and they can funnel select cases that meet your qualifications.
12. Run your own ads
Be sure to use very direct copy such as "Stop Foreclosure", "Avoid Foreclosure", "Beat Foreclosure", "Escape Foreclosure" and so on. Perhaps you could offer a free report to spur calls. This approach works and should be used along with other tools you are using.
