There are a lot of tried and true methods of how to find distressed properties.
Then, there are the more unconventional or newer ways. There are also frowned-upon practices, but if they didn’t work, then no one would be doing them in the first place.
After studying all of these methods, the truth is everything works. It’s all about consistency in applying whatever process you want to pursue.
In this blog post, we will review all the strategies for finding and buying distressed properties.
Some of these methods are hard, but some are easier.
Table of Contents
Multiple Listing Service (MLS)
Ahhh. the good old MLS, also known as the multiple listing service.
The MLS is a special database that licensed professionals will have access to.
(mainly real estate agents)
So, How Does An Unlicensed Real Estate Investor Get Access To This Database?
The answer is easy: you need to find an investor-friendly real estate agent to send you properties directly from the MLS.
You can get your real estate license.
Most agents will gladly assist you in sending you some distressed properties.
In later sections of this blog post, we will discuss finding the right real estate agent for you.
A real estate agent can set you up on automated email sequences to send you properties that fit your criteria immediately as soon as they are listed on the MLS on daily email updates.
Another benefit is that you will be the first to know about new listings in the retail market.
This is faster than the syndication between the local MLS and all of the big-name websites.
Syndication transfers data from the MLS, typically a database controlled by licensed real estate brokers and agents, into all other online websites.
There are thousands of smaller websites, but the point is all of these websites get their data from the MLS.
The good news is nowadays, the data syndication between the MLS and big-name websites is relatively fast. A new listing can hit these big-name websites in as little as 15-30 minutes.
Some local markets may even have their own private IDX websites.
For example, here in my local market in Hampton Roads, my MLS is called:
REIN (Real Estate Information Network)
Foreclosure auctions are one of the most exciting things to attend.
Tensions are high; there’s other competition bidding on the same property YOU want.
When a lender begins the foreclosure process on a home, they will hire an attorney to start the foreclosure process. Once the lender gets the state’s approval to begin the foreclosure process, they will post a public notice of the date of the sale.
How Do You Find These Auctions?
Luckily, thanks to the internet, you can pull these public notices online.
A simple Google search will do the trick.
It should be the first or second search result. You may have to click around the website to get to a place where you can search for foreclosures.
As a quick example. In Virginia, the public notices are listed on this website:
Once you find where public notices are, typically, there are filter features such as selecting the city and notice date.
Usually, once the notice is posted, the auction sale date can happen anywhere from two to four weeks out.
This period allows you to perform due diligence on the property before the sale date.
Okay, now you’ve found the foreclosure public notice: What should you look for inside this notice?
The public notice is written in confusing legal language, but you need to find the pertinent information inside the notice, such as the address:
See an example:
Usually, you can find the address in the first paragraph of the notice.
The next bit of information you need to find is the location, date and time of the auction
See an example:
Foreclosure auctions are almost always held at your local municipal center in front of the courthouse. Pay attention to the location of where the sale will be held.
Note: Do not mix the deed of trust date with the sale date. You could mix up these dates if you are glancing at the notice quickly.
The last good information is the law firm’s name representing the bank. Typically, you will find this information towards the end, but it could be anywhere on the notice.
See an example:
Often, the law firm will have all their sales listed on their website. This is great because it gives you more information about rescheduled or canceled sales dates.
Pro Tip: You always want to call the law firm on the day of the auction to confirm that the sale is on for that day. Often, these auctions get canceled or postponed due to various reasons.
A more convenient and paid option to find foreclosures is using Foreclosure.com
Bank-Owned Properties (REOs)
You may have heard the term bank-owned properties or REOs thrown around in the real estate investing community. REO stands for:
Real estate owned
How Does A Property Become Real Estate Owned?
This will depend on what happens at the foreclosure auction.
In many cases, the starting bid is too high at the public auction, resulting in the home getting sold back to the noteholder (aka the lender)
What a WASTE of time to the people who showed up to the auction!
Insider Tip: The banks do this because they secretly know they can get more on the retail market.
Typical… greedy banks 💰
They get more on the retail market because there are more eyes on the property than at the auctions. This will help drive up the offers the bank will receive on the property once they hire a real estate agent.
I won’t lie… I’ve always been jealous of those agents who get those REO listings—consistent listings and consistent real estate commissions.
Where Can You Find REO Properties?
If you visit foreclosure auctions regularly or track them, you will know a home is about to become a REO property.
We discussed earlier that if no one buys the property during an action, the home gets sold back to a noteholder.
(aka the bank holding the property’s lien)
A real estate agent who works with the bank should list the property afterward, usually within at least a week or two.
Remember, every day the bank is holding onto the property, they are losing money, so the bank is eager to sell off this distressed property to a new buyer.
Similar to foreclosures, REO properties are sold in an as-is condition, and the bank will not perform any repairs on the property. This gives you, the investor, an opportunity to to buy distressed properties at a discounted price.
Unless another investor has a better offer than you! 😒
In the next section, we will discuss more about real estate agents. Not all agents have the same leverage, but it does help to know a few agents who work with banks that sell REO homes.
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Real Estate Agents
If you are a real estate investor, you may already know of a local real estate agent here.
Maybe it’s your brother… or your sister or maybe your parents. Perhaps it’s your friend’s sister’s cousin.
Almost always somewhere in your family or friends circle is a real estate agent that you know of.
It’s their job to let others know they’re real estate agents. Kinda annoying, I know.
If you’re like me, you know many; we’re a dime a dozen.
What Makes You Want To Work With A Specific Agent?
Truthfully, it boils down to trust and credibility.
I’ve seen some of the most bumbling idiot agents sell many houses. That left me guessing that it must be more than just skills or how many homes that particular agent sold made people want to do business with them.
So what is it?
The answer is trust.
The real estate game is a trust-based business. This business is mainly like this because of how much money is involved and how daunting buying or selling real estate can be. There are legal elements.
It’s honestly just a whole lotta stuff!
So, when selecting an agent, you must trust your gut.
Agent receives about 70% of their business through referrals. This is why starting with people you already know, like, and trust inside your inner circle is crucial.
Ask yourself this question when you choose an agent:
Do I trust this person to help me make one of the most expensive purchases I will make in my life?
Do you have a few possible agents in mind yet?
If you don’t know of any agents, the best recommendation is to find one off of Zillow’s find an agent.
You can interview multiple agents, ask them to show you properties, and work with one you feel is the most trustworthy and reliable.
Remember to trust your gut when selecting the right agent.
Not all agents use the same strategies to find homes…. meaning most agents know how to find properties on the MLS. Honestly, anyone can find properties on the computer.
The problem with agents finding your properties on only the MLS is you may need to find a more motivated seller. You also want a more competitive edge over other investors when you are on your house hunt.
Your best strategy is to work with an agent that comes across listings consistently.
Either they have a vast network of people they know, or they have a relationship with local probate attorneys or even banks.
An excellent real estate agent should be able to find properties before they even hit the market. Part of a real estate agent’s expertise is having a bit of an inside scoop on the market.
A good agent can be your most reliable tool in the real estate investing game, so choose yours wisely.
Also, make sure they aren’t a bumbling idiot…
Short sales are homes owners try to sell under the amount they owe to avoid foreclosure.
Hence the name: short sale
The drawbacks of short sales are they can take up to anywhere from one to two years to sell.
Typically, an attorney will try to negotiate the short sale with the other bank or government agency. The short sale has to be approved by the bank before the deal will go through.
Short sales can be a gold mine if you are patient and have much time to spare.
You can find short sales listed on the MLS. Your agent can find them for you quickly. You know a home is a short sale because it will be under the disclosures of the listing documents and also marked as a short sale on the MLS.
Another benefit of short sales is that many competitors may shy away from these listings because they want to buy immediately.
Driving For Dollars
Ahhh, there is nothing like a Sunday drive-out looking for distressed properties.
So, what does driving for dollars entail?
Driving for dollars is driving around neighborhoods searching for distressed homes or vacant property. When you find a property that matches the criteria, you take note of the address and save it for later.
Here’s what to look for when driving for dollars:
- Maintenance Issues: Overgrown landscaping, broken windows, peeling paint. Damaged roofing or siding.
- Structural Problems: Sagging rooflines, cracked foundations, visible water damage.
- Signs of Abandonment: Piled-up mail, no active utilities, overflowing trash bins.
- Sale Indicators: “For Sale by Owner” signs or long-standing sale signs.
- Vandalism: Graffiti, broken windows, signs of forced entry.
- Economic Cues: Nearby homes in foreclosure or boarded up.
- Local Insights: Ongoing police visits or neighbor reports.
- Outdated Presence: Old vehicles, outdated decorations.
- Violation Notices: Posted city or county warnings or citations.
So now you’ve found a distressed home, what do you do?
Now, a little outreach to the property owner comes into play. We will discuss this later in this blog post about those marketing methods.
Delinquent Tax Auctions
My grandpa always used to say two things are certain in life:
Death & taxes
Real estate taxes are not different.
Many states have a company or several companies that will auction homes delinquent on real estate taxes. These companies are easy to find.
You can do a quick Google search with your local area or state name.
In my local area, there is a company called Virginia Auction Company Inc. They have a website. Take a look at it below:
Typically, you can register to vote and bid online on these websites. The bid winner will generally have to make a 20% deposit of certified funds.
Although an old-school method, you may get lucky and find real estate for sale by owner listings in a small newspaper ad.
Most newspapers are now shifting to online-based. You can try doing a Google search for some of these websites.
See if they have any class fields for real estate for sale.
Real Estate Wholesalers
If I had $10 for every time I wanted to ring a wholesaler’s kneck, I would have at least $1,000 by now.
Wholesalers can be an excellent source for off-market real estate listings.
The caveat is that many of them are not licensed professionals, so the same set of ethics does not uphold them as a real estate agent or broker may be.
Some wholesalers are worth their salt, and you may get lucky enough to find a good one.
If you need to familiarize yourself with what a real estate wholesaler is, let me explain….
A wholesaler will perform marketing in the local market to find a property to buy. They could do direct mail, cold calling, or even text marketing.
Some of these wholesalers are experts at marketing and finding motivated sellers.
Once a wholesaler finds a motivated seller, they will offer the property at a deep discount.
Typically, the homes they make offers on are distressed properties or with a motivated seller. Sometimes, a combination of both.
They will typically be under contract for around 30 days.
Wholesalers typically know a lot of other real estate investors. Especially the kind that has cold, hard cash.
A real estate wholesaler who has placed a property under contract can use creative contracts with jargon inside of them that allow the wholesaler to disposition a property already under contract to another real estate investor.
If the wholesaler finds another investor to assume the existing contract, the new investor can be the new assignee of the contract.
See below an example of a real estate contract.
The wholesalers charges a small assignment fee to the other investor for the contract assignment and will get paid at closing.
The assigned fee is compensation for the wholesaler’s leg work to find an off-market for distressed property owners, which is of enormous value to many other investors.
This can significantly benefit an investor who wants to find properties off-market and wants to avoid competing with even more investors on the open retail market.
Where can you find wholesalers?
- Facebook marketplace listings
- Craigslist listings
- Bandit signs
- Facebook real estate investing groups
- Real Estate Investment Groups
Estate sales can be another way to connect with a motivated seller.
The homes will often need to be sold shortly after because the family will inherit the house, and many do not want the home for themselves.
Here are some places you can find estate sales at:
- Local newspapers
- Estate sale company websites
- Facebook Marketplace
- Yard sale listing sites (e.g., GarageSaleFinder.com)
- Local community bulletin boards
It’s essential to come to these estate sales with carefulness and respect. You don’t want to rub anyone the wrong way.
If you approach the situation right, you may get a good lead for finding a deeply discounted property.
Real Estate Networking Groups or Clubs
Networking with other real estate investors in real estate networking groups is crucial.
Some of these people will be wholesalers or even real estate agents, but you may also find long-term buy-and-hold investors wanting to sell properties they are ready to cash out on.
This can be a good opportunity for you to come in and make a deal with the other investors.
You can find many of these groups on Facebook groups or local websites.
Okay, we all know about all the other real estate websites, such as Zillow.com or homes.com, but what about the other websites?
Here are some popular online auction websites:
To find motivated seller leads for attorneys, you should begin by finding an attorney in your area who specializes in each of these fields.
Many attorneys will niche down to specific categories of law.
You can find them through a Google search, association directories, or legal directories.
The types of attorneys you should look for are probate, estate, and divorce attorneys.
Approaching can be a tough sell, but you must work on being persistent and establishing credibility as an investor.
When we talked about how real estate is a relationship and trust-based business, this is a prime example.
A good business relationship with a local attorney can be an excellent way to find motivated sellers.
Note: Always consult with your legal counsel to ensure full compliance with local, state, and federal regulations and guidelines when establishing business relationships.
Sometimes, you can pull public records online to find motivated sellers for your next real estate deal.
See the list of possible leads:
- Code Violations
- Fire Damaged Properties
- Tax Delinquencies
- Vacant Properties
- Liens (Mechanics, Tax, etc.)
- Demolition Lists
Government-owned homes, also called HUD homes, are government-owned properties that you can find online at:
Direct Mail Campaigns
Now, we are at the more difficult and expensive part of this blog post.
Direct mail marketing is how a lot of businesses still generate leads.
The downside to this way of finding motivated sellers is it is costly. On the upside, you can also have a slight edge against your competition.
Some say direct mail marketing is dead, but I beg to differ; you can still find motivated sellers with this method.
The first step in direct mail marketing is having an excellent marketing list to pull.
You can find these lists on paid websites such as:
With your list comes a solid call to action. You will need a direct mail piece that gets you leads:
Word Of Mouth
Letting other people know you are a real estate investor can be a great way to find people wanting to sell to you.
Ask your friends, family, or anyone you may know at work if they know anyone looking to sell property!
Oh boy, those annoying bandit signs.
What is a bandit sign?
A bandit sign is a small, often temporary sign used primarily in real estate and local businesses to advertise properties for sale, rent, or to promote services.
Have you ever seen those “We Buy Houses” signs?
Nine times out of ten, a real estate wholesaler deploys those signs in hopes of finding a motivated seller.
These signs are effective if placed in the right areas and can generate a lot of motivated sellers wanting to sell their properties fast.
You can make your bandit sign signs for the best price at this website:
This method is not for the faint-hearted. This method is only for some, and you will experience a lot of rejection with this one.
This can also be an effective way to find motivated sellers, and the cost-effectiveness of this one is pretty good.
Some popular software for cold calling are:
Legal Disclaimer: The content provided in this blog post is for informational purposes only. Before implementing any cold-calling techniques for real estate investing, comply with all local and state-level regulations and laws.
Ahhh, door knocking… the most old-school marketing method out there.
Also, the one that burns the most calories!
Another good fact about this method is it is FREE!
When you are door-knocking for real estate leads, you can canvas an entire neighborhood or hyper-target a list of potential leads you have, such as the one you find in public lists or driving for dollars.
Legal Disclaimer: The content provided in this blog post is for informational purposes only. Before engaging in door-knocking for real estate investing, ensure you comply with all local and state-level regulations and laws pertaining to solicitation.
Text marketing is another way to reach potential homeowners interested in selling their properties.
Here is a service that can do it for you:
Legal Disclaimer: The content provided in this blog post is for informational purposes only. Before initiating any text marketing campaigns for real estate investing, ensure you comply with all local, state-level, and federal regulations, including the Telephone Consumer Protection Act (TCPA) and other relevant laws.
For Sale By Owners
For sale by owners can be a notable lead to go after. Most for-sale by owners prefer to avoid real estate agents or paying for their commissions, so they opt for this route.
Unfortunately, FSBO’s ego often gets the best of them, and they sell their properties for under-market value.
Many FSBOs do not want to perform any repairs on their property when selling, so this may be a good opportunity for you to get a discount on a property that needs a little TLC.
It’s a win-win for both parties because the FSBO does not want to pay agent commission or offer repairs, and you can get a property at a discount to sweeten the deal on your side.
The best places to find FSBO listings are on Zillow. There is a way to filter for them directly on Zillow, so you can only look at FSBO listings.
Another good place to find FSBO listings is on Craigslist and Facebook Marketplace.
Real Estate Investor Website
The last method of finding real estate deals I want to cover is using a real estate investor website.
This is one of the most challenging ways to generate motivated seller leads because you need knowledge in website builders, advertising platforms, and coding for your website.
If you are well versed or have experience with this, you can make your real estate website.
One real estate builder website I recommend is carrot.com.
Once you establish your website, you can begin to optimize the website for search engine optimization to bring in organic traffic to your website.
Many people who feel overwhelmed by a problem will turn to Google for a solution to their problem.
They may search for a topic such as “sell my house fast in your city name” or “real estate investors near me.”
If you position yourself as a real estate investor in your local area, then you can rank for some of these keywords.
Another alternative to organic search traffic is pay-per-click ads on Google search.
The downside to paying for traffic for your website is it can be costly.
For example, my area’s keyword in Hampton Roads value for “we buy houses” is around $50 per click.
You could spend thousands of dollars monthly on PPC traffic for these overly competitive keywords.
We covered a TON of ways to find and buy distressed properties. As a real estate investor, more than likely, you will not indulge in every single one of these methods.
Some are crazy challenging, and others are relatively simple.
Some cost more money, while others are entirely free.
My professional recommendation would be to focus on one or two of these strategies and figure out which works best for you after testing different methods.
Remember: Consistency is vital to finding an excellent real estate deal.
What are you waiting for?
Go out there and find your next real estate deal.