It wasn’t that long ago when foreclosures were all the rage. It seemed like every other day there was a story about the foreclosure crisis. There were even laws put in place that changed the way foreclosures were taxed. While that may seem like forever to some it was only seven years ago. During that time things have changed in the foreclosure market. Foreclosures were down roughly 20% in the first half of this year alone. Many investors who relied solely on this niche have moved on to other areas of the business. For those that have stuck around foreclosures are still over 25% higher than in preforeclosure days. There are plenty of good foreclosure deals out there if you know where to look and how to find them. Here are three tips to help find foreclosure deals in any market.
- Know your market. Most real estate numbers that you see are on a national level. Those figures often have little to no bearing as to what is going on where you invest. Regardless if you are just getting into foreclosures or have been with them for almost a decade you need to know what is happening in your market. Take the time to research local trends including unemployment, housing supply, income levels and number of days on the market. These will give you some idea as to which way foreclosures are headed. Pick five local markets and study up on as much as you can. Only look for foreclosures in one or two markets that may offer some value. It is not enough to find foreclosure deals. You need to be able to sell them at a profit. The markets usually dictate just how likely this is.
- Increase your reach. At the outset of the foreclosure craze a good real estate agent was all you needed to find good deals. While they are still a viable source they are not enough. As foreclosure supply declines and competition increases you need as many different sources for deals as possible. You need to reach out to local wholesalers you meet at investment clubs. You can try talking to your local mail carrier and asking them to inform you of any vacant looking properties they see. You can reach out to real estate attorneys, mortgage brokers and even accountants asking for any potential foreclosure client they may have. You need a good half dozen or more outlets for deals in tight foreclosure markets.
- Keep eyes open. In almost every market there are a handful of foreclosure deals there for the taking. You need to keep your eyes open and find them. Every time you are in the car you need to be looking for possible foreclosure signals. Overgrown grass, garbage cans out for days on end and excessive work needed are the typical signs of foreclosure. You can spend money on expensive mortgage delinquent lists but these don’t guarantee accuracy. You are better off making as many local contacts as possible and keeping your eyes open for deals every time you are in the car.
With any prospective foreclosure deal you need to be willing to act quickly. Good deals will only be on the market for a very short window. There are still foreclosures in most markets if you are willing to put the time in to pursue them.