Drive Gross Income with Pre-Foreclosure Leads

In today’s post, we’ll review the revenue potential of prospecting pre-foreclosure leads.

FORECLOSURE TRENDS

To provide context for pre-foreclosure opportunities, we thought it would help to look at recent trends with regard to foreclosures in the U.S. housing market.

According to ATTOM Data Solutions:

  • There were a total of 164,581 U.S. properties with foreclosure filings (default notices, scheduled auctions, bank repossessions) during the first six months of 2022. This foreclosure activity represents a 153% increase versus the same period a year ago. See the graph below for foreclosure trends dating back to the earliest days of the Great Recession in 2008.

  • While still well below historic trends, the recent foreclosure activity is back at pre-pandemic levels as we see in the chart above.
  • One in every 854 housing units (0.12%) had a foreclosure filing during the first half of 2022. The states with the highest level of foreclosure activity were:
    • Illinois (0.26%)
    • New Jersey (0.24%)
    • Ohio (0.21%)
    • Delaware (0.20%)
    • South Carolina (0.19%)
  • The five most populous metro areas (pop. 200,000+) with the highest rate of foreclosure filings were:
    • Cleveland (0.40%)
    • Atlantic City (0.33%)
    • Jacksonville, NC (0.31%)
    • Chicago (0.30%)
    • Columbia, SC (0.30%)
  • Foreclosure “starts” rose 219% in the first half of 2022. It’s worth noting that much of this foreclosure activity was really a backlog dating back to the years preceding the pandemic. The homeowners holding delinquent loans benefitted from the government’s foreclosure moratorium and were able to stave off foreclosure activity.
  • Bank repossession during the first half of 2022 rose 30% versus YAG, and 113% versus the first six months of 2020.
  • On average, as we see below, it takes 948 days to move from the initial foreclosure proceedings to final foreclosure, for homes that foreclosed in Q2 2022.

As you can see from the data above, foreclosure activity is picking up, and significantly in certain areas of the country. These trends obviously represent an opportunity for real estate agents who are open to working with homeowners who are delinquent in their payments, and may be open to an opportunity to sell.

THE FORECLOSURE PROCESS

For those of you unfamiliar with the foreclosure process, there are five general phases (NOTE: Agents need to learn the specific statutes on foreclosure in their state):

  • PHASE 1: Payment Default-arises when a borrower fails to make monthly payments on their principle balance or interest on a home loan. Defaults can also arise for failure to pay property taxes or homeowners insurance, or transferring a title to another person without the lender’s approval.
  • PHASE 2: Notice of Default (NOD)-NOD refers to a public notice filed with a court that states that the borrower of a mortgage is in default of the loan. Typically activated after three months of non-payment, the NOD is of the final action lenders take before placing a lien and seizing the collateral for foreclosure. NOTE: The NOD serves as the basis for Vulcan 7’s Pre-Foreclosure database.
  • PHASE 3: Notice of Trustee Sale-Informs the homeowner and mortgage borrowers-of-record that their home will be sold at a trustee’s sale on a specific date at a specific location. The actual sale typically completes a non-judicial foreclosure in states allowing this type of foreclosure process.
  • PHASE 4: Trustee Sale-Refers to the sale of the property via a public auction.
  • PHASE 5: Real Estate Owned (REO)-The term for a property owned by a lender because it failed to sell in a foreclosure auction after the borrower defaulted on their mortgage. Typically, banks attempt to sell their REOs using a real estate agent or by listing the property online.

VULCAN 7 PRE-FORECLOSURE

Vulcan 7 offers Pre-Foreclosure leads as a monthly add-on. For an additional, one-time payment, you can also get 200 enhanced Pre-Foreclosures (significantly more information about the properties, plus you select on the leads you want to enhance, with the remainder carried forward to future months).

The Pre-Foreclosure leads in your file are based on your FSBO zip and mile radius, and will go into a separate Pre-Foreclosure folder within Vulcan 7.

So, what is the value of having Pre-Foreclosure leads?

When considering the foreclosure process outlined above, once things progress to Phase 3 (Notice of Trustee Sale), the homeowner is essentially out of options. But here’s the thing: according to Realtor.com, most homeowners who have defaulted on their loans, and have received a NOD, don’t realize that they can still sell their property. Therein lies the benefit of prospecting Pre-Foreclosure leads.

By engaging those homeowners who have received a NOD, you give them an opportunity to avoid foreclosure and possibly net enough to pay off everything they owe the lender, including back mortgage payments, penalties and fees. Yes, they won’t own the house anymore, but by avoiding foreclosure they also avoid doing serious, long-term damage to their credit score.

In terms of prospecting Pre-Foreclosure leads, you would use the same Neighborhood Search scripts already included with Vulcan 7. You would, of course, not reveal that you are calling in reference to the homeowner’s foreclosure:

“Hi, we just sold John Smith’s home on Main Street for $X. We still have buyers interested in your neighborhood, and wonder if you have any interest in selling your home.”

Vulcan 7’s Pre-Foreclosure leads would make a valuable addition to your prospecting strategy.

Learn more about Vulcan7’s Pre-Foreclosure leads