Distressed Property Leads — Drying Up or Just Harder to Spot?

Question

As a broker who works with a handful of distressed-property buyers, I've noticed the obvious leads (pre-foreclosure lists, tax delinquent lists) are getting more competition than they used to. Feels like the easy stuff gets swarmed fast, and the real opportunities are coming from more relationship-driven sources now. Curious how others are sourcing distressed deals lately — are the traditional lead sources still worth the effort, or has everyone shifted to something else?

Michael Eskenasy · Answer

I don’t think distressed leads are drying up. I think the obvious signal is getting priced out faster.

Pre-foreclosure, tax delinquency, probate, code violations, absentee ownership — none of those stopped working. The problem is that everyone can buy roughly the same list now, so the list itself is not much of an edge.

What seems more useful is stacking signals and paying attention to timing.

One distress indicator usually just means “possible problem.” Two or three together start telling you there may actually be pressure. Tax delinquency plus vacancy. Probate plus deferred maintenance. Code violations plus an out-of-state owner. An inherited property that has been sitting for months with utilities off. Those situations are a lot more interesting than somebody simply appearing on a generic pre-foreclosure list.

I’d also separate “distressed property” from “distressed seller.” They aren’t the same thing.

A beat-up house owned free and clear by someone with no urgency may not be much of a lead. A perfectly decent house owned by someone dealing with an estate, relocation, partnership dispute, delinquent taxes, or a property they no longer want to manage can be much more actionable.

The other thing I think gets missed is lead age.

Everyone wants the freshest possible record because they assume first contact wins. Sometimes it does. But fresh distress is also where the competition is worst and the seller is getting buried in calls.

A six-month-old lead that nobody converted may be more interesting if the underlying problem still exists. Circumstances change. A seller who told ten wholesalers “no” in February might be very ready to have a real conversation in August.

That’s where relationship-driven sourcing starts to make sense too. Attorneys, contractors, property managers, agents, code-enforcement relationships, landlords, small banks, insurance people — they often see the problem before it turns into a clean downloadable list.

So I wouldn’t abandon the traditional sources.

I’d just stop expecting the source itself to create the advantage.

The edge is probably in figuring out which records actually represent unresolved pressure, reaching them at the right time, and following up long after everyone else has moved on to the next list.

Jacob Camhi · Answer

it's true the obvious lists like pre-foreclosures get swarmed, but it's not that they're drying up, it's that the common filters are too broad. you have to go deeper.

the real edge is stacking multiple filters on free county records. think absentee owners who have owned for 15+ years, combined with properties in probate or those with multiple code violations. these kinds of specific stacks give you a much smaller, higher-quality list of genuinely motivated sellers that fewer people are calling.

have you tried pulling the actual probate filings and cross-referencing them with properties owned long-term in a specific zip code yet? this usually uncovers some less obvious situations.

Jason Reed · Answer

Michael, I had the data to check the lead age thing so I ran it. 767 resolved FL foreclosures, measuring whether the owner resolved before the sale, refinanced, reinstated or sold.

It doesn't come out clean either way. Cases filed this year resolved 68% of the time but that's only 25 of them. One year old cases were the worst at 42%. Two year old back up to 63%, three plus at 56%. Baseline is 54%. So there's no "older is better" pattern, but there's no "fresher is better" either, which honestly surprised me since that's what I said in my own reply above. Age alone doesn't seem to carry much.

The distressed property vs distressed seller distinction is the part I'd agree with hardest. When I look at what actually predicts resolution it's the money situation, equity above the lien, a small association lien against a whole house. Condition stuff barely moves it.

Jacob, one thing worth flagging since you mentioned absentee as a stack component. In my data absentee owners resolve at 44.7% against a 54.4% baseline, so about 10 points worse, and out of state is worse still. Everyone builds absentee lists and the absentee owners are the ones who walk away from the asset. Owner occupiers with equity fight to keep the house and those are the ones who'll actually deal. Took me a while to accept that because it's the opposite of how these lists get sold.

Jason Reed · Answer

They're not drying up, like you said, they're just getting swarmed faster. The moment a list is easy to buy, everyone's mailing it, so it burns. The edge now is speed and freshness, not access. Foreclosure filings are a good example: FL foreclosures actually rose again this year, so the supply is there, but if you're pulling it from an aggregator that refreshes monthly you're seeing it weeks after the sharper operators already did. Pulling foreclosure/lis-pendens directly from the county each week is more work but you catch them while they're still cold. The "relationship-driven" stuff you mentioned matters, but a fresh data source is what feeds it.

Chris Seveney · Answer

We continue to see a lot more distressed property leads (we are on lending side and buy the note) and inventory typically slow in summer but it's been a very busy summer reviewing assets

Distressed Property Leads — Drying Up or Just Harder to Spot?

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