Pre-foreclosure vs REO question

[Brian Osso]

Just getting started in REI and ultimately looking to utilize the brrrr method to acquire and rent properties.

However, I have a property down the street that I have had my eye on for a while. It’s vacant and distressed, and could potentially be a great property for a flip.

My question is I am confused about the status of the property, and would like some advice. Zillow has the property listed as a pre-forclosure but when I search the county tax assessor site the owner is not listed, the lender is. Again, this is all new to me, but I’m guessing the property is no longer in pre-foreclosure?

At this point who would I contact in attempt to acquire the property?

[Ron S.]

Originally posted by @Jonathan Greene:

Pre-foreclosure isn't a real thing. It's basically every second of time between when a lis pendens is filed and when the bank buys the property back. So the chances of a pre-foreclosure on Zillow being accurate are quite low. If you are brand new (and are using a mortgage), don't waste your time on foreclosure options as most, if not all, will be bought with cash and most, if not all, will have limited inspection options. For your first deal you want to take the time to find an on-market, safe, arms-length deal where you have an agent helping you.

Preforeclosure is a real thing, and its the best chance and best time to purchase up until the foreclosure sale (Or up to within a few days of sale). There isn't always a lis pendens. More than half of the states are non judicial and do not use the courts, which means there is no lis pendens. Also, the bank that is foreclosing (isn't always a bank. I gather you didn't say it is, just pointing it out though) does not "Buy the property back", they credit bid, and the property goes back to them in the absence of anyone bidding.

I do agree foreclosure auctions are not for the faint at heart but, they do offer deals at times, if you have the financial wherewithal to follow through with it. They are all, always, "Arms length" so, don't get confused thinking that part is different than an on-market sale. They are also, "Safe", (whatever that means). They go through trustees and attorneys and get much closer scrutiny than on-market transactions do. They typically have taxes and utility liens taken care of (Not always). Where they are potentialy more risky (Does not mean they aren't safe) is that YOU need to be aware of liens, and lien priority. Make sure you aren't buying a junior lien, unless you are intentionally buying a junior lien.  

And if its REO, calling the owner (Servicing bank) is a waste of time. Best case is they tell you they won't talk to you. As Minna says, just wait till its listed. Anything anyone else tells you is wrong unless the owner Servicing bank (?) is a mom and pop, one branch institution in Mesquite Texas.