Where to start with finding foreclosure deals?

[Richard Rowe]

Looking to by my first investment property in Houston TX. I know of a couple properties that are in foreclosure, are banks willing to sell before an auction?

[Josh Engelhart]

You can try to buy the house before it is foreclosed on via a short sale from the current owner.

Most foreclosures have to hit the auction first. If the owner owed less than the market value they would have sold it instead of foreclosing on the home. The banks then try to sell the property at auction to collect on either the mortgage insurance or the full amount owed by the borrower. If nobody pays up than the banks buy their collateral back and it becomes a bank owned property or REO. This also usually clears the property of other liens.

These are then normally sold via the MLS. Some do sell off market or at auction.

At a smaller bank or credit union you may be able to buy before it hits the MLS. Any larger bank is so regulated they would rather follow the rules, hold the property for 3 months - 2 years (bureaucracy), and list in on the MLS over making a back room deal with a first time investor even if it seems to make more financial sense.