6 Ways to Locate Distressed Properties Online

by | BiggerPockets.com

If you want to locate distressed properties online, the first thing you have to realize is that no one calls their own house a “distressed property” unless they’re really desperate to sell it. People just don’t think in those terms –unless they’re already highly active in the real estate market, and generally those people know what they’re selling and will make it hard to raise a profit in the first place.

What you’re actually looking for are motivated sellers with real estate they don’t want or can’t handle:

  • Properties with delinquent taxes
  • Properties with delinquent mortgage payments
  • Properties that are legally obligated to be sold due to bankruptcy or divorce settlements
  • Properties being sold out of probate
  • REO/bank-owned properties
  • Government-owned homes

So, let’s talk about how to find each of these kinds of property. But first, we need to add a caveat: All of these methods depend on you having already selected a specific area where you want to purchase a property. Generally, it’s a good idea to do your neighborhood-level research first anyway, so we’re going to assume that you have — but you should nonetheless be aware that these techniques won’t be useful to someone who doesn’t already have a neighborhood (or at least a small city) in mind.

Properties With Delinquent Taxes

Finding properties with delinquent taxes is fairly straightforward if you can find the local tax assessor’s website. Depending on where you’re looking, you might need to Google for “[City Name] Tax Assessor” or “[County Name] Tax Assessor,” and of course every tax assessor’s website is constructed differently. The vast majority of them — especially in densely populated areas — have lists of tax-delinquent properties that you can download and examine.

Related: Rehabbers Beware: 5 Big Issues Distressed Properties Hide (& How to Detect Them)

Properties With Delinquent Mortgage Payments

The best “underwater” properties are the ones that are right on the verge of foreclosure — they’re the most motivated sellers. In many parts of the United States, you can find an official publication of these houses by Googling for “[County Name] Legal Notices,” but you can also find reliable, easy-to-browse listings at RealtyTrac.com, Foreclosure.com, and HUDForeclosed.com.

Properties That Legally Must Be Sold

Fortunately, if you’re familiarizing yourself with your county’s legal notices, you’re already a good way toward the next group of easy-to-find distressed properties. Not every county is legally obligated to post notices of bankruptcy or divorce, but every county is required by necessity to announce when and where properties that are being auctioned are being auctioned. The same legal notices that cover foreclosure auctions also announce auctions for properties being auctioned for bankruptcy or divorce. There’s just no reliable easy-to-browse alternatives here, unfortunately.

Another option is to cultivate relationships with local bankruptcy and divorce attorneys, so they call you when they encounter a motivated seller.

Properties Being Sold Out of Probate

If you’re going to look to probate court as a way of obtaining a distressed property, you should be aware that probate court adds several wrinkles to the process that might affect your decision. First, with some courts, you can’t make an offer on a probate property without putting a 10% deposit down, and that 10% is non-refundable, whether you end up with the property or not. Second, there’s a long process (six months is not uncommon) that involves several stages at which you could end up not buying the property.

  • First, you have to make an offer and have the executor of the estate and the probate court agree to sell you the property. The executor must agree to the price; the court can’t object to the price but can decide to reject your bid on other legal grounds.
  • Then there’s a minimum 30-day delay in which the property is offered publicly at the agreed-upon price, allowing someone to outbid you.
  • Then, at the day the courts set to actually sell the property, they hold an auction, giving other people another chance to outbid you. The price for the auction generally starts at least 5% above your initial agreed-upon price.

The only two circumstances in which you get your 10% deposit back are if the court rejects your bid for legal reasons or if you are outbid. Should you place a bid and then find out from the home inspector that the entire place is falling apart, you’re still out that 10%. Needless to say, this makes probate houses a significant risk.

Finally, on top of all of that, there are still relatively few counties or municipalities in the United State that list probate sale announcements online at no cost. Of the services out there that harvest probate leads and sell them (because the other option is to comb through obituaries, which is essentially the real estate market’s spin on a lawyer chasing ambulances), SuccessorsData.com and USProbateLeads.com are your best bets.


REO/Bank-Owned Properties

Real estate-owned a.k.a. bank-owned properties aren’t just “distressed”; they’ve already been foreclosed upon. Most of them are just sitting empty, slowly costing the companies that own them money. On the downside, 100 percent of them are sold as-is, so if you don’t have a good reason to be confident that a particular home is solid, they can be a gamble. The best way to find REO properties is right here on BiggerPockets: a well-maintained list of REO searches that covers the entire country.

Related: 3 Reasons to Always Buy Distressed Property (& How to Find One)

Government-Owned Residential Properties

When the HUD, FreddyMac, or FannieMae insures a mortgage and that mortgage fails, those entities foreclose on the mortgaged homes just like a bank would. And when they do, they turn around and try to sell those homes, just like a bank does. Furthermore, properties are also frequently offered by several other government entities, such as the Department for Veterans Affairs or the FDIC. While every agency has its own rules and methods, you can start your research into this vast arena at the HUD Single-Family Homes for Sale webpage, which has links to each government department’s relevant webpage. There are also several solid links on the U.S. Marshal Services’ National Sellers List [PDF].

Between all of the resources listed here, finding a distressed property worth making a bid on isn’t a matter of “how” so much as “when.” Give your mouse-hand a workout and investigate, and you’ll find that the process is a lot easier when you’ve got a solid starting block to push off of. Good luck!

Where do you find your distressed properties?

Let me know what you’ve had the most luck with.

About Author

Drew Sygit

While in the mortgage business, Drew rose to a VP position at the first broker he worked for and then started his own company. In the pursuit of excellence, he obtained several mortgage designations and joined mortgage & several affiliate association Boards. He also did WebX presentations and public speaking. It was during this time he started personally investing in single-family rentals, leading him to also start Royal Rose Property Management with two partners. He also joined the Board of a local real estate investors association, eventually becoming its President. The real estate crash led to an offer from the banking industry to manage a Michigan bank’s failed bank assets they acquired from the FDIC. The bank acquired four failed banks from the FDIC, increasing from $100M in assets to over $2B while he was there. After that, he took over as President of Royal Rose Property Management. Today, he speaks at national property management conventions and does WebX presentations.


  1. Lacey S.

    Has anyone used this hudforcelosed.com website? I was checking it out but it seemed a little sketchy because it’s a paid membership but it will not tell me how much a membership costs, at least I couldn’t see anywhere the fee was listed. It only says there is a 21 day free trial…but then what?

    If anyone knows, I’d be curious!

    • Drew Sygit

      @RENA JONAS: most Multiple Listing Services (MLS) allow users to access public records. Public Records will show any mortgage liens, but it will just be the amount at inception of any mortgage. You will have to make some assumptions to extrapolate what the current balance might be and understand that lines of credit may be max’d out. Also, you want to find out what the estimated delay is between when a lien is recorded and when it actually shows up online.

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