7 Ways To Find Distressed Properties In Your Market

Perhaps you’re new to real estate investing or are a professional interested in trying their hand at a new strategy, but regardless, chances are you’ve been wondering how to find distressed properties for sale. Distressed properties are attractive to investors because they often offer deals that are undervalued, helping to increase the prospective profit margin. Below you will find a discussion on creative ways to find distressed properties, but first..

What Is A Distressed Property?

A distressed property is a property that can no longer be maintained by the current owner, either physically or financially, or both. Some properties are found to be in poor condition due to neglect, or because it is at risk of being foreclosed upon.

How To Find Distressed Properties: 7 Creative Tips

1. Look for properties that are in a state of neglect.
2. Search for properties with delinquent taxes.
3. Search for properties with delinquent mortgage payments.
4. Identify properties that legally must be sold.
5. Search for probate real estate opportunities.
6. Review REO and bank-owned property listings.
7. Don’t forget about government-owned properties.

If you’re wondering where to find distressed properties, there is a traditional method that transcends time is simply drive around, assuming you already have a target neighborhood in mind. As you are driving, look for properties that stand out from others due to a state of neglect. Tell-tale signs to look out for include an overgrown yard, broken windows and shutters, exterior paint that is faded or peeling, blue-tarp on the roofs, notices that are posted notices on the windows and doors, and junk mail and newspapers that are left uncollected. If you find a property that meets any or all of these descriptions, be sure to write down the address so you can start investigating.

For those wondering how to find distressed properties other than driving around, there are multiple methods to searching online. However, it should be noted that distressed properties come in many forms, and are not always called “distressed” outright. Look for ‘distressed properties for sale by owner’ that are delinquent in taxes and mortgage payments, properties that must be sold legally due to bankruptcy or divorce, probate deals, and properties that are owned by the banks or the government. Starting with the first example, finding properties with tax delinquencies is luckily a straightforward process. The hardest part will be finding your local tax assessor’s web page that lists these properties. After you have found the site, simply search the listings until you have found a property you’re interested in. Another type of property that might be in
distressed is one for which the owners have been delinquent on their mortgage payments, also known as “underwater.” These properties are usually in “pre-foreclosure,” and can be found on multiple listing sites such as your local county website or paid sites such as Foreclosure.com.

Properties that must be sold legally, such as through bankruptcy or divorce, may also be in distress. When looking through your county foreclosure listings, you may have already noticed listings that are listed as being auctioned for bankruptcy or divorce. Although not every county is required to list such properties, you can at least find properties that are up for auction. The probate court is yet another creative space to find distressed properties. A probate property is one that was owned by someone who has passed, but without leaving the property to anyone in their will. It should be noted that making an offer on a probate sale requires a special process, as the property is being sold through an attorney or an executor. Finally, investors should search through REO (real estate-owned) and government-owned properties that have already been foreclosed upon. When a property owner fails to make mortgage payments, the provider of the mortgage loan (in this case the bank or the government) retains the rights to reclaim the property. Many local and national banks have their own property listing sites, as do government entities such as Freddie Mac and Fannie Mae.

3 Important Tips For Buying A Distressed Property

1. Choose a target neighborhood: If you don’t already have a target market in mind, selecting a neighborhood will help focus your search. If a specific neighborhood does not yield satisfactory results, there is no harm in widening your search gradually.
2. Don’t just look for the “distressed property” label: It is important to keep in mind that many sellers would never want to call their own house a “distressed property.” If you’re wondering how to find distressed properties for sale without actually using the word “distressed,” look for owners who are quite motivated to sell. This may be because they are delinquent on taxes or mortgage payments, or are going through bankruptcy or divorce. Remember to search through government and lender listings, as well as probate auctions.
3. Get pre-approved for a mortgage: Once you find the perfect property for sale, time may be of the essence. By making sure you are ready to make a credible offer by getting pre-approved for a loan, buying distressed properties will be a much smoother process.

Finding distressed properties for sale is no easy task, but once you implement and combine several creative strategies for identifying these properties, it will offer a great rate on investment (ROI). What are the distressed properties that you target?

If you own a distressed property and you are willing to sell, please give us a call at 252-631-6233.