How To Find Distressed Properties: Detailed Guide

A recent report from ATTOM Data Solutions says that the number of foreclosures in the United States is on the rise, with a 16% rise from the previous month. Utah, North Carolina, Michigan, and Georgia have the highest monthly increases in foreclosure starts. Distressed properties can be very appealing to real estate investors, but you must know what to look for and where to look for them. In this article, we’ll explain how to find distressed properties to flip for free online, how to start wholesaling before the competition, and how to find and qualify distressed property deals.

What Causes a Property to Be Distressed?

A distressed property is one whose owner has been unable to maintain it or pay the mortgage. Distressed homes may be in pre-foreclosure, in the process of foreclosure, owned by a bank or government agency, or simply in poor condition.

Property can also become distressed if renovations are halted in the middle due to a lack of financing, or if a deal falls through unexpectedly and an owner needs to sell quickly. Distressed properties are typically classified as one or more of the following:

Short sale with the possibility of foreclosure
Already in the process of foreclosure
REO (real estate owned) or bank-owned property
Have outstanding property tax liens
In desperate need of repair, updating, or renovation

How to Find Distressed Properties for Free

Distressed properties are particularly appealing as investment opportunities. Not only can they offer wider profit margins than traditional deals, but they can also mean less competition. This is due to the fact that many investors are unsure of how to find and invest in distressed properties for free online, as well as for flip or wholesaling. There are many ways to find distressed properties online to flip for free or wholesaling, but the following are some of the best:

#1. Driving for dollars

Although a traditional drive-by is not the most efficient method, it can be the most effective. This is because you may come across potentially distressed properties for free online while driving around that other investors overlook simply because they are unwilling to put in the time and effort.

If you’re a remote real estate investor, ask a member of your local real estate team to go out and look for details, making sure to compensate them for their time and effort.

#2. Real estate wholesalers

Wholesalers are experts at finding distressed real estate at below-market prices, putting it under contract, and then looking for an investor like you to assign the contract to. They’ve already scoured the market for the best deals and persuaded the seller to sell.

All you have to do is perform your due diligence and ensure that the numbers add up before taking over the contract. You’ll pay a small assignment fee to a real estate wholesaler, which can be a small price to pay for a great real estate wholesale deal.

#3. MLS

Another good place to look for distressed properties is your local multiple listing service. Ask your real estate agent to look for properties that have been on the market for a longer period of time. Short-sale and pre-foreclosure homes are all listed on the MLS. If you’d rather do an initial search on your own before contacting a local real estate agent, sites like Zillow, Homes.com, and Realtor.com that list homes also get their information from the MLS.

#4. Distressed real estate websites

According to Kiplinger’s recent research, the best foreclosure sites to find distressed properties in bad shape are:

Equator.com provides free foreclosure and short-sale home listings.
HomePath.com lists thousands of Fannie Mae foreclosure homes for sale.
HomeSteps.com is a website that lists foreclosure homes that Freddie Mac is selling to investors or homebuyers.
You must contact the listing agent directly through Wells Fargo REO Properties.
CitiMortgage and Bank of America also list foreclosed properties owned by the bank.
RealtyTrac charges $49.95 per month for proprietary information such as pre-foreclosure addresses and owner information.

#5. County tax records

Many county assessor websites across the country make property tax records available to the public. In general, if a homeowner can’t pay their taxes, it may not be long before the property is in trouble. If the owner hasn’t paid their property taxes, they may be behind on their mortgage payments as well.

#6. Court Records

You can find homeowners who are behind on their mortgage payments in the local county court records. Notices such as Notice of Default, Lis Pendens, and Notice of Sale that was sent to a homeowner and made public before and during the foreclosure process can be found in the county recorder’s office’s public records section.

#7. Auctions of real estate

When a lender takes back home and can’t sell it right away, the property is often sold at auction. Your local newspaper and real estate auction sites like Auction.com, RealtyBid.com, and Tranzon.com all have ads for property auctions.

#8. Probate

Probate courts handle the assets and debts of a deceased person. A probate judge’s job is to make sure that the dead person’s debts are paid and that any assets, like real estate, are given to the right people or sold in the right way.

If the property is in bad shape and needs a lot of work, the heirs may be willing to sell it to an investor for a very fair price. Local probate records at the county courthouse or city hall, US Probate Leads, and Successor’s Data are all good resources for probate leads.

#9. Networking with attorneys

Lawyers who specialize in real estate foreclosures, probate, or family law can also be a great place to find free online distressed property properties. Building a relationship with an attorney takes time, but it may be well worth the effort.

How to Find Distressed Properties for Wholesaling

Distressed properties are typically homes owned by people who are unable to make their mortgage payments. As a result, the houses are now owned by the bank, either through foreclosure, a short sale, or REO (Real Estate Owned). You can use the following methods to find distressed properties for wholesaling:

#1. Online research

The good old MLS, which is similar to a traditional property search, has listings for homes in poor condition. Other large real estate websites may also have distressed properties for wholesale. There are also websites dedicated to distressed properties, such as Hubzu and foreclosure.com.

#2. Auctions

Most homes that are in bad shape or have been foreclosed on are sold at property auctions, which makes them very popular with real estate investors. Online auctions can be found at sites such as auction.com and realtytrac.com. You can also find them advertised in your local newspaper.

#3. County Government

Your local sheriff’s or county office, which will have foreclosure listings, can help you find distressed properties for wholesaling. You can look up distressed properties on their websites by searching for combined properties with delinquent taxes or delinquent mortgages.

#4. Financial institutions and banks

Banks and other lenders often list properties they own that are available for sale on their websites, so check these out.

#5. Drive-by

One of the oldest and most reliable ways to find foreclosed homes is to drive around the neighborhood. Look for signs of water or fire damage, overgrown yards, and any other signs that a house is not being properly maintained. Once you’ve identified distressed properties, contact the owners and make an offer.

Finding the right distressed properties is critical to success in real estate wholesaling, and while the environment may be low-risk, money can only be made once the right properties are found.

How to Find Distressed Properties Online

The reality, on the other hand, is diametrically opposed to these widely held beliefs. In this section, we’ll show you how to find free distressed property online. Here’s how to find free distressed properties online. You can quickly find listings for homes that are in trouble by using any of the methods below.

#1. Look for an online marketplace.

As you are probably aware, the internet has made investment property available to anyone. There are actually a lot of websites, tools, and real estate investment software that are made to meet the needs of each real estate investor.

#2. Search online for foreclosed properties and find out who owns them.

You can also look for foreclosed properties in your area online to find distressed properties. In many cases, the owners of these properties have chosen to sell the home off the market or are open to reasonable offers. So, how do you find out who owns a house? The answer, like the previous step, is real estate investor websites.

#3. Check property auction sites

In general, distressed properties are frequently auctioned off. Even though it may not be the most obvious way to buy something for less than what it’s worth on the market, auctions can be a surefire way to make a good investment in real estate. There are several ways to find such deals.

#4. Sift through tax records

Online tax records can help you find distressed properties for sale that are rarely used. In fact, this information is public record, and anyone can access it at their local county office or through a dedicated website.

#5. Check bank and lender sites

Marketplaces are not the only places to find distressed properties for flipping or selling online. Many financial institutions have a section on their websites that lists the foreclosed homes they own. It’s worth noting that these companies don’t like to keep properties on their books and are frequently pressed for time when it comes to selling them to investors.

How to Find Distressed Properties to Flip

You can use popular online listing sites, as well as manual and creative methods like looking through public records and advertising on signs, to find distressed properties to flip. In this section, we will find the best methods for finding distressed properties to flip:

#1. Real estate listing websites online

Because real estate listing websites are the most popular sources of investment properties, it’s a logical place to start looking for houses to flip. They are usually easy to use and give you a lot of information about properties and the local market that will help you learn how to find houses to flip.

Zillow lets you search by price, square footage, location, property type, and home features, among other things. It lets you search for phrases like “as is” or “opportunity.” Furthermore, it provides a wealth of information about the property, such as its sales history, estimated value, payments, and market data. Other real estate websites that show you where distressed properties are for sale include:

Realtor.com
Trulia
Loopnet
Foreclosure.com
FSBO.com
PropertyShark
Roofstock
Auction.com
Craigslist
RealtyTrac

#2. Professionals in real estate

Local real estate agents can teach new or aspiring flippers how to find cheap properties that are in bad shape to flip. Real estate agents or brokers, wholesalers, and mortgage brokers are examples of professionals. They can give you first-hand knowledge of the local real estate market, recommend neighborhoods for finding houses to flip, and provide real-time updates on potential properties.

#3. Search for potential properties manually

Despite the fact that the majority of real estate transactions begin with online listings, this isn’t the only way to find cheap distressed properties to flip. In fact, there are numerous offline strategies available to help you find a house to flip. They will require more time and effort than searching online or speaking with real estate professionals, but they can be a profitable way to find properties to flip.

#4. Networking

Creating a network is an essential component of any successful real estate investing business. To be successful in finding, fixing, and flipping properties, you must have a network of contacts that includes other real estate investors, real estate professionals, financial professionals, home improvement professionals, and community members.

#5. Advertising and marketing

You might not need to spend a lot of money on a marketing plan to make a profit from a single property while you are learning how to find distressed properties to flip and do your first fix and flip. Buying and flipping one property without a brand or authority in the community is possible, but if you want to make money flipping houses long-term or full-time, you’ll need to increase your marketing and advertising efforts.

Conclusion

Finding distressed properties to flip for free online and wholesale is a difficult task. Luckily, putting together a number of creative ways to find and target these properties can lead to big results. By implementing the creative hacks listed above, as well as the important tips to keep in mind, you will be well on your way to locating these sought-after investment opportunities.

Frequently Asked Questions

How do you buy distressed properties?

To buy a distressed property, you’ll need a real estate agent on your side who is familiar with the local laws governing the purchase and sale of foreclosed or distressed properties. The most common way to buy distressed properties is with cash after you’ve negotiated a sale with the property owner. But you might be able to get a loan for a distressed property or a loan for home repairs.

What apps are good to find distressed properties?

DealMachine, PropStream, Auction.com, Homesnap, Xome, and Mashvisor are the best apps for finding distressed properties.

What is a distressed property?

Property is in bad shape if the owner hasn’t taken care of it properly or hasn’t paid the mortgage. Many distressed property owners are eager to sell for less than market value because they are facing foreclosure, missed tax payments, or a short sale. Investors who want to buy low and sell high should consider distressed properties.