Pre-Foreclosure Properties: How To Find A Bargain
I. Start at the beginning: get a recent list of applications from Lis Pendens
A. The foreclosure process begins when a lender files a notice of “Lis Pendens” in the land records of the county where the foreclosure is filed. Read Pendens is a Latin term for “pending lawsuit.” It is the first public notice of a foreclosure proceeding in court. Note that the owner still owns the property and this is an opportunity for investors to purchase the home directly from the owner at a discount.
B. Obtain a list of recent Lis Pendens from your local county land records. You can do it yourself; or to save valuable time, you can have a professional title summary service do it for you. The Lis Pendens list should provide you with the owner’s name, the property’s address, the document number of the mortgage being foreclosed, and the contact information for the plaintiff’s attorney. By contacting the plaintiff’s attorney, you can verify that the property is still in foreclosure.
II. Check out the bargain
A. Verify property, property links, and loans with a title search. The property investigation process should not take more than a day or two for the investor; however, because learning the idiosyncrasies of county records can take months, investors run the risk of wasting invaluable time using their own research time. Professional title abstractors know the ins and outs of county records and can provide you with fast response times for title searches. You will most likely want to look up the current owner and the previous owner to be reasonably certain about the property links and the property chain.
B. Obtain comparable sales information before bidding. You can find this online or you can hire a title puller to do it for you. Zillow is one of the main sites online that has this information readily available.
III. Make an offer to the owner
If the offer is less than what is owed on the mortgage balance, you will also have to negotiate with the lender. Negotiations between investors and homeowners and lenders are typical in “short sale” transactions. There are many short sale playbooks available online. Type “short sale” on amazon.com and you will get over 1,000 titles with reviews.
IV. Offer accepted
Title extractors providing Lis Pendens information and title searches have working relationships with title insurers and can provide you with the title insurance and closing services you need through an affiliate agent.
Leave a Reply