Efficient foreclosure screening

Foreclosures, Short Sales, Tax Foreclosures
1

I’m interested in buying foreclosures and other inexpensive properties that are fix and flip candidates. I’m a novice to this.

I subscribed to one of the free 7 day trials for a foreclosure web site that lists > 3000 properties as foreclosed, bankrupts, or the like in my area (a midwestern city).

For most properties, the site shows the house price, and a price it gets from Zillow. Theoretically, the bargains would exist (roughly) where a major discrepency between the two exists, but when I look at those more closely, they appear to usually be a case of Zillow mispricing.

Of course, I know when I get genuinely interested in a property, I will have to do far more legwork to get a reasonable estimate of it’s post-fixup resale price. But I don’t want to spend 1-2 hours per property evaluating each of the 3000 properties in the database.

Is there a fast way to cull these kinds of list down to a handful of the most promising properties? Or are these kinds of lists not valuable in the first place (likely to be no good deals)? When a bank owns and lists a property it has foreclosed on, is there typically much room to negotiate the price down?

Any tips appreciated.

2

This post is in no way intended to slur or slander your post or your motives. It’s just that, more and more, I am coming to understand why you may not be getting the best responses if you are a beginner asking for, essentially, the world.

I believe that a good short sale chap has a good grounding in real estate (specially finance), a grasp of appraisal, some computer expertise, a good set of contacts with professionals in the field (title, realtor, contractors, etc.), excellent people skills, and a lot of patience. To that you then add a lot of practical experience. If you don’t starve, you MIGHT be a success!

Or, you could just get lucky.

Everybody and their grandmother is willing to sell you how to make money in Real Estate, but so far I haven’t come across ANYONE willing to sell you the truth! And the problem with this forum is that there are SO MANY BEGINNERS that, after a while, you just get tired of typing and stop. Consequently, a lot of these posts are, I believe, from people who don’t know much more, if as much, as I do. We just sound authoritative!

Of course, I could be wrong. But for the record I’m a newbie.

Consequently, when you are starting out at this try to keep your posts focused like you would a rifle. The more you pick up a shotgun, the less I think your chances are going to be for a thorough response. I also think that it is a great idea if you tell people where you are located. A LOT of the correct response depends on where you are located. What is true for Cali may not be true for North Dakota, Mississippi, or Florida.

3

Now, in the interest of keeping me busy, let me toss this in in response to your question.

I pay for my leads. Yes, it is expensive (IMO). No, I haven’t made a dime. I download the leads in DBF format which is then imported into an Excel database. I sum up all of the debt (I know the amount of the 1st, 2nd, 3rd, etc.) and see who is foreclosing. I used to shoot at everybody (metaphorically speaking) but now I pass on those with equity to my partner while I focus on the short sale candidates where the 1st is foreclosing and they have big subordinate notes.

These lenders are the most motivated.

I do look at Zillow for a rough and dirty but when I am really motivated I go to iProfile (may be available through your title company). Using comps I do a quick appraisal (I take the middle of the road in cost per Sq. Ft… I NEVER lowball). This usually lets me drilll down to the top ten or twenty properties that offer what I feel to be the most potentially lucrative. I then direct mail these people. Repeatedly.

I get a far number of mailings back, which is rather depressive. It’s AMAZING how many people are willing to walk away. If I land one… and I’ve only landed seven… then it’s dig into the numbers and try to justify my offer to the lenders.

It’s tougher than I thought, and I am trying to improve my IT backend to better stay on top of what is a absolute DELUGE of foreclosures.

I suspected for a long time that the foreclosure market was going to be bad (or good depending on your point of view), but I didn’t appreicate how bad.

4

What i think you ought to do, is get familiar with a target area that you would like to invest in. With 3000 properties, most are in neighborhoods, homeowners do not want to live in.

So get with a realtor or look through your local paper and find out the hot spots in your area.

Then that is the area that you want to focus on finding deals.

Next you want to determine the price range and the type of home that is selling in that area.

There you have will a lot less to peruse through. If the website has pictures then in your area, you can pick the best looking houses that might have the most potential.

Hope this helps.