The Tools and Techniques of Searching for the Right Pre-Foreclosure by Jeff Adams

What is a Pre-Foreclosure Property?

A pre-foreclosure property features an unpaid loan, and the lender is most likely to sell it at a foreclosure auction. Such a property can be bought for at about 40% less than its real market value, and the entire process usually winds up quicker than a foreclosure.

How to Recognize the Type of a Pre-foreclosure?

  • The availability of such property depends mainly on the kind of debt instrument documented against its title, usually a mortgage or a deed of trust (known as TD or trust deed in certain states).
  • Mortgages do not, but TDs feature a “power of sale” section that entitles the money lender to repossess the loan’s collateral (usually, the property in question) without filing a lawsuit. Usually, mortgages have comparatively more publicly accessible records associated, making these more transparent.
  • On the other hand, certain states do require lawsuits to be filed for any foreclosure, irrespective of the type of associated debt instrument. Hence, to find out whether a particular pre-foreclosure is the right option, a Recorder of Deeds must be contacted and thorough inquiry must be done regarding the debt instrument type recorded against the pre-foreclosed property’s title.
  • The process becomes easier if it’s a mortgage; if it’s a TD or the answer is unclear, additional research pertaining to state laws to gain clarity on the foreclosure process becomes inevitable.

How to Search for Pre-foreclosure Properties?

These are the three ways to locate such properties:

1)    Getting in Touch with Local County Court

Whether Notices of Default (NODs) need to be documented as court records, needs to be found out. If yes, searching for new filings is the next step. Else, the next course of action is among other options mentioned below.

2)    Online Availability of Data

  • Certain county recorders have pre-foreclosure property data available online.
  • These offer access to information released by various real estate consultants in a particular county, and enables searching for NODs filed on or beyond a particular date.
  • This kind of research is convenient, simple and free and offers visibility of any other liens or verdicts associated with the property and could have adverse effects on the deal.

3)    “Legal Notice” section of Leading Newspapers

  • Newspapers list properties coming up for auction publicly (normally listed as trustee sale or sheriff’s sale).
  • All the relevant details such as the property address, names of property owner/s, property tax ID, et al must be jotted down carefully.
  • Interested individuals must then visit the County Recorder bureau to gather more info on the pre-foreclosed property.
  • The NOD associated with the title must be searched for to find out the person or agency that recorded it.
  • This info provides access to a particular entity that an interested buyer needs to work with.
  • Such offices usually necessitate using their services during the closing of a deal, if the buyer accesses it from the list of their recorded NODs.

Jeff Adams is a real estate advisor, with an expertise in dealing with all kinds of real estate issues. He recommends pre-foreclosures as a great property investment option, provided careful research and adequate planning is carried out on the subject.