My wife and I have just started our journey in real estate investing. We have been reading and learning as much as we can. We have started looking at properties.
My question is... What are the pros and cons of the properties listed as pre foreclosure on Zillow?
From doing a little research, as I understand it, pre-foreclosure means that an owner is in default. Are the properties listed on Zillow mostly just data dumps since defaults become public records? Or are these properties that are actually up for sale?
Thanks for your help!
Zillow is a good start but watch the Days on Zillow in left hand corner. Anything greater than 60 or 90 days is nearly trash. But it's a start. Some wholesalers will call these homeowners to try to help them fix the mortgage issue by helping them sell their house. Biggerpockets has a tool under marketplace for foreclosure..I have not tried yet.
To add to what @Dawn Quinn stated, Zillow can have some stale, out-of-date information regarding pre-foreclosures so be careful. Some of what is listed can already have been sold or foreclosed on, depending on the 'Days on Zillow'.
It's definitely a start in the right direction for sourcing a deal, but pre-foreclosure homes are not actually for sale and you'd need to contact the owner directly to inquire about purchasing their property before it heads to auction should they not be able to remedy the default.
Thank you both for the insight!
@Aaron Vargas Welcome to the world of real estate investing!
As far as preforeclosures on Zillow, they are indeed just “data dumps” from public records. As stated previously, you need to double check the foreclosure information and make sure the auction date hasn’t passed as Zillow doesn’t seem to update the status.
I’ve wholesaled a few preforeclosures for buyers. You would simply need to get in contact with the homeowner either by mail, phone or in person. Gauge their situation and whether or not they are interested in selling or if they are actively trying to get reinstated and keep their home. You could offer incentives like paying off their mortgage and giving them $10-20,000 over the payoff at closing.
If they are interested, have them sign a Purchase Agreement and request that they contact the trustee handling their foreclosure case. They need to request from the attorney a total payoff statement, reinstatement amount and an authorization form so that your chosen title company can speak to the trustee on the homeowner’s behalf.
Once you have the total payoff amount (including late fees and taxes) than this is the required amount for you to purchase the home plus whatever you offered over (you can adjust the price on the agreement if necessary, I had to do this with an owner who was enraged that she wasn’t getting as much as she thought). From there, it’s a simple closing process!
Many great deals are found this way. Just make sure to check the title for any additional liens or second mortgages.
Great insight! I appreciate the advice. This really helps me fill in the gaps for what the process would look like when making offers on a preforeclosure.
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