Wondering how to find foreclosures for sale in 2020 for your real estate investments? Find the best ways to buy an investment property below market value.
Finding foreclosures offers many benefits to both real estate investors and homebuyers. Most importantly, this is a way to buy a real estate property below market value. From investors’ point of view, foreclosed homes for sale offer an instant opportunity to increase the return on investment with zero efforts. Then the question becomes: “How to find foreclosures for sale in 2020?”
What Is Foreclosure in Real Estate Investing?
Let’s first define the concept of foreclosure homes before moving on to finding foreclosures in the US housing market 2020.
A foreclosure occurs when a property owner – a real estate investor or a homeowner – cannot sell his/her property after the bank or another lender has issued a notice of default for failing to make mortgage payments for three consecutive months. Then the home becomes property of the financial institution which issued the loan, so it tries to sell the house as fast as possible – at a discounted price – to cover the rest of the mortgage loan amount.
Check out our What’s Foreclosure & How to Invest in One? – Infographic for a quick reference to everything you need to know about investing in foreclosed homes for sale.
Finding Foreclosures in 2020
1. Real Estate Websites
With the advancement of technology in the real estate industry, real estate websites have emerged as one of the best ways of how to find foreclosures for sale. There a few different types of real estate sites which you could check out when buying an investment property in 2020:
- Bank Websites
The first thing you should do if you are looking for foreclosure listings is to search the websites of different banks. Remember to check out both major national banks and smaller local banks. You should definitely have a look at Bank of America foreclosures, Wells Fargo REO properties, and Chase Bank owned properties as these will constitute some of the major providers of bank owned homes in the US real estate market in 2020 with representation in most or all states. Overall, on banks’ websites you will be able to find dozens if not hundreds and even thousands of REO foreclosure properties.
But what is REO foreclosure? REO stands for real estate owned homes. These are foreclosed houses which failed to sell at an auction, so they are now in possession of the bank which issued the mortgage loan.
Related: Buying REO Property: 8 Tips Investors Need to Follow
The best thing about bank owned homes for sale, or REO homes, is that sometimes they get listed at very discounted rates. As you can imagine, lending institutions are in a hurry to recover the outstanding amount of the mortgage and have no interest in owning and managing real estate properties. Thus, they are willing to sell their REO real estate inventory for just enough money to cover the loan.
How to buy foreclosed homes from banks’ websites? In most cases, banks do not sell REO properties directly but though real estate agents listed on their website.
- Government-Seized Homes Online Listings
In addition to banks, government agencies are another major provider of mortgages to homebuyers as well as real estate investors as long as they meet certain qualification requirements. Despite the easier terms and conditions of government housing loans, some property owners still default on their mortgages, and their homes get seized by the government. Thus, various government agencies’ websites are another place for finding home foreclosures to buy in 2020.
The U.S. Department of Housing and Urban Development website is where you can find listings of HUD homes for sale. If you are interested in buying one of those government-owned listings, you have to contact the real estate agent representing the foreclosure. The name and contact information of the agent for each of the HUD houses for sale are available on the website.
Meanwhile, Fannie Mae house foreclosure listings appear on a specialized website, HomePath.com, while Freddie Mac homes for sale get listed on another website, HomeSteps.com. Both of these real estate sites have free foreclosure listings with photos of the government-owned properties.
Another way of finding government-seized foreclosures in 2020 is through the website of the U.S. Department of the Treasury. There you can find online REO listings of properties acquired by the IRS from owners who did not pay internal revenue taxes or committed other violations of federal laws. Buying foreclosed homes (including both single family homes and multi family homes) from this source happens during live auctions or online auctions publicized on the website.
- Websites of County Offices
Where can you find official public records of foreclosed properties? At county offices nationwide.
All foreclosure activities information gets filed with the local county office, and the vast majority of US county offices publish the foreclosure listings on their websites. Actually, not only foreclosed homes but pre-foreclosure homes also get listed on these websites.
What is pre-foreclosure? This is a property which is at the initial stage of the foreclosing process. After the homeowner has failed to make three consecutive mortgage payments, the bank or another lending institution issues a notice of default, giving the property owner the chance to pay and keep the house, sell it, or perform a short sale. Owners of pre-foreclosure listings are very motivated sellers, which means that real estate investors can score a great deal.
Related: How to Find Real Estate Deals: The Ultimate Guide
So, if you’re wondering about the best ways to find foreclosure and pre-foreclosure homes for sale, check out the website of your local county office. Alternatively, you can look at county offices across the US housing market if you are interested in investing in real estate out of state.
- Asset Management Companies Websites
While most banks and other lenders choose to handle the sale of REO homes on their own or through specialized real estate agents, some prefer to hire an asset management company to do that. The websites of these third-party companies become one more of the best strategies for how to find foreclosures for sale in 2020.
An important advantage of such real estate websites it that they have free foreclosure listings from multiple sources. To the contrary, banks’ websites will have only REO real estate foreclosures in their possession. So, if you’re not sure which US bank foreclosures to start with, check out some asset management companies.
If you are a real estate investor rather than a homebuyer, you must be wondering where you can find foreclosed homes which will make profitable investment properties.
The answer is Mashvisor’s website.
Mashvisor is a real estate data analytics platform which gets foreclosure listings from Auction.com and conducts investment property analysis on them. These properties include both foreclosures and bank owned homes.
What’s the benefit of finding foreclosures for sale through Mashvisor rather than other real estate websites?
There are a few advantages. First of all, unlike local banks and county offices, our platform has REO listings in all 50 states. But even more importantly for beginner real estate investors, these properties come with readily available analytics of their investment potential. Our rental property calculator uses rental comps from the local housing market as well as machine-learning algorithms to conduct investment property analysis on every home foreclosure listed on the website to estimate the rental income, cash flow, cap rate, cash on cash return, and occupancy rate of each foreclosed home for sale, whether to be rented out traditional or as an Airbnb rental.
To start finding foreclosed properties to invest in, sign up for a 14-day free trial of Mashvisor with a 20% discount afterwards.
2. Real Estate Agents
Wondering how to find foreclosures for sale in 2020 in person rather than online? One great way to buy a foreclosure home is to work with a real estate agent.
Realtors are real estate professionals who have knowledge and access to resources which homebuyers and real estate investors don’t. This holds true for REO properties as well. First, agents have access to the MLS, where both foreclosed properties and pre-foreclosure homes get listed. MLS listings is something that regular investors don’t have access to unless they hold a real estate license.
Moreover, as mentioned above, many banks, government agencies, and other lending institutions do not handle the sale of REO sale processes on their own but hire realtors. If you search through a few different real estate investor websites and they all mention the name of a certain real estate agent, it might be worth getting in touch with him/her even if you don’t like any of the specifically listed bank owned homes for sale. Chances are that this realtor might work with other lenders as well and have access to more foreclosure house listings.
A third important way in which agents can help you find REO homes for sale is through their networks. Real estate is a people’s business, and successful agents have to be extremely well connected within the local housing market and beyond. Even if they don’t specialize in foreclosures, they might know other realtors who do.
In addition, a buyer agent will not only show you how to find foreclosures for sale in 2020 but will also advise you on how to deal with it which is of high benefit to first-time real estate investors.
If you’d like to connect with one of the top real estate agents in a real estate market where you are considering buying a foreclosed home, have a look here.
3. Real Estate Auctions
Another one of the best ways to buy a foreclosure is at a house auction. Auction companies hold regular live auctions where they sell anything between a single bank owned home and more than a hundred REO listings. While house auctions usually take place in large conference halls to accommodate numerous bidders, sometimes they are also held at the site of the actual foreclosed property or at the courthouse steps.
Auctions constitute an excellent way to find bank foreclosure homes for sale at really discounted rates. In theory, it’s possible to buy an investment property for as low as $100. While this might sound implausible, some investors have been able to build their career on such real estate deals. On average, though, auctioned properties sell for 30% to 60% below market value, and this is what makes them such an incredible strategy for buying cheap real estate.
However, if you decide to buy a foreclosure home at an auction, keep in mind that you will be expected to pay the price in cash. This means that you need to have enough cash to buy such an investment property as other types of financing are not really an option. Furthermore, you will not be able to see any of the houses for sale before making a decision. Last but not least, similar to other foreclosure homes, these also sell as is – you should not expect any repairs or fixes prior to your purchase.
Having said that, you should not get discouraged as a first-time real estate investor looking for an affordable rental property in 2020. You should consider two types of house real estate auctions:
- Live Auctions
These are the most traditional way of how to find foreclosures for sale which will continue being a valid option in 2020 as well. Live auction events are advertised in newspapers as well as on the websites of auction companies. Moreover, as mentioned above, some government agencies sell their REO listings on auctions announced on their websites.
A major disadvantage of live auctions is that you have to be physically present to bid for the available properties.
- Online Auctions
The above-mentioned predicament has been solved by the emergence of online auction websites which allow out of state real estate investors to also bid for bank foreclosures. Similar to live auctions, auctions online may or may not have a minimum price. In case of a reserve price, the houses for sale will not be sold unless this price is reached. However, there are some real estate auction sites without such a hidden reserve price where the highest bid will win regardless of how low it is.
4. Real Estate Signs
Last but not least, driving for dollars can be applied to finding foreclosures for sale in 2020 as well. As a new real estate investor, you can do some online research to find the neighborhoods in your local housing market with the highest share of mortgage defaults and thus foreclosures. Then you simply need to drive or walk through the area and look for real estate signs such as “Foreclosure”, “Bank Owned”, or “Bank Repo”. This is one of the best strategies if you are buying a foreclosure in a market where you have easy access as you get to see the outside of the bank owned home right away. This will give you a good indication of what you can expect to find inside as well.
Usually the real estate signs will also display the name and contact information of the agent responsible for selling the property, so you can get in touch immediately.
The Pros and Cons of Investing in Foreclosed Homes
Advantages of Buying Foreclosure Homes for Sale
Before you can make your final decision whether you’d like to invest in a foreclosure in 2020, here’s a list of the benefits of this type of properties for sale over others:
- Discounted prices, usually well below market value
- More affordable cash investments
- Higher return on investment in terms of cash on cash return
Disadvantages of Buying Foreclosures
However, you should also keep in mind some of the cons:
- Frequently these are distressed properties.
- Foreclosures sell as is, with no repairs and fixes.
- Buyers don’t usually get a chance to look at the bank owned home.
These are the best ways of how to find foreclosures for sale to start or expand your real estate investment business in 2020. As you can see, there are options to suit the preferences of any real estate investor, whether tech-savvy or in favor of old-fashioned strategies such as working with an agent or attending a live auction. Remember, however, that buying a property below market value does not guarantee high rate of return. To analyze the profitability potential of a foreclosed home, sign up for Mashvisor.