Pre-Foreclosures
- Adam Garrett
- Jan 5, 2024
- 3 min read
Updated: Jun 9
Image above courtesy Zillow
Pre-foreclosures are where a home is about to get foreclosed on if nothing is done about it. When appearing as "pre-foreclosure" on Zillow, it has typically not been listed yet. Most will not want to check the boxes for "Foreclosed or "Pre-Foreclosures" due to cost benefit analysis, but that's for you to decide. Below, I'll go over the details of pre-foreclosures & share about "foreclosed" as well:
What Happens Next on Zillow? Foreclosed Status
Once it forecloses, it will typically shift to "foreclosed" status. Once it's listed, it typically will shift to "agent listed", "Auction", or "owner posted" status. In some cases, auctions won't appear on Zillow.
Pros of Pre-Foreclosures
Sometimes you can get some solid deals, especially from those in a rough spot and who are uninformed about their home’s actual value & the ability to sell it via a listing agent fast. That said, consider the ethical implications of taking advantage of someone. If you're looking to truly take advantage of someone's ignorance or disability as much as you can get away with, it would be best to not have me used as your real estate agent.
Cons of Pre-Foreclosures
These properties are not “on the market”. Many won’t be sold soon, some won’t be sold at all in the next 5 years, most are a waste of time, and they’re difficult to contact. Time is $, whether it's your time or you hire someone else to reach out to people.
Should You Consider Them?
Unless you have a lot of time on your hands, are planning on buying a number of investment properties, or have a low income where a deal on a house is more valuable than a large amount of additional time, I recommend excluding Foreclosed (properties that the bank hasn't listed yet but will likely list or auction off soon) and pre-foreclosures on Zillow.
Finding Them
For pre-foreclosures, there are not good options on MLS. On the other hand, Zillow has some great options for pre-foreclosures. Go to Zillow.com, then click "Listing type" then select pre-foreclosures.
Websites that I don’t recommend include: https://www.foreclosurelistings.com/ since they charge a monthly fee in order to see the numbers to the address. There are many similar sites that charge fees that are also not ones I would recommend.
Making Contact with the Seller
Keep in mind that pre-foreclosures are quite a hassle to deal with usually, with the owner's contact information seldom readily available besides their address, but if you are willing to go through the hassle of trying to find them online through sites like Been Verified (the easiest way to do it as a buyer that I am aware of, but it is a paid service) or sending them mail &/or knocking on their door, sometimes you can get some bargains. In some cases their contact info (email, phone, etc.) will freely be listed here: https://thatsthem.com/address
Here is another free option based on the sellers’ name(s): https://www.fastpeoplesearch.com/
The Best Pre-Foreclosures to Look for:
A pre-foreclosure short sale is significantly more of a hassle than a pre-foreclosure where they are able to break even.
One important matter to keep in mind is the last time that the property was sold. With foreclosures and pre-foreclosures, often the home was not well kept and will need work. Because of that, instead of the usual 3 years since the last sale (depending significantly on market conditions, with as little as 1 year possible in some cases) for the seller to be able to break even, it is often 5 or more years (depending heavily on market conditions). The highest chances of pre-foreclosures working is when they are 15+ years since when they were purchased & when they have not been refinanced.
Related:
Generally Related:
Comments