It's sad but true - foreclosures are on the increase and everyone knows it. So everyone wants a piece of the action. The chances are, any foreclosure property you find, a gazillion other people have got there first.

So what do you do? One answer is - get ahead and find pre-foreclosures.

Go to any foreclosure auction and you will find it full of speculators eagerly eyeing up the prospects. That is an indication that by the time a property has reached the auction stage, it is not much use as a short-term investment. You need to get hold of properties at an earlier stage - in other words, find pre-foreclosures.

What is a pre-foreclosure? Pre-foreclosure is the period of time between the date a notice of default is served on the owners because they have fallen behind on the mortgage, and the date the property is to be sold at public auction. During this period, the lender has no right over the property and the owners can still dispose of it as they wish.

So how do you find pre-foreclosures? Here are some ideas.

• Contact your local County Court, and enquire whether notices of default (NODS) have to be recorded as court documents. If the answer is yes, ask how you can search the filed documents.


• Go to http://www.netronline.com, click on "Public Records Online", and select the state you want. If there's any information on pre-foreclosures available in the public domain, you can find it there.


• Look in your local newspaper under "Legal Notices", find properties due to come up for sale at auction, and note down the addresses - and the owners'names, tax ID etc. if available. Then go to the County Recorder's office, look up the NOD (Notice of Default) of the title on those addresses, and find who recorded it - you want to find a title or abstract company you can work with. They will often provide you with a list of the NODs they have recorded, on condition you use their services when you close on any of these deals.


• Find landlords whose tenants have left or been evicted. If they can't get new tenants soon, they are very likely to default on their mortgage if they haven't already. Also look for people who have filed for divorce or bankruptcy

So once you've managed to find pre-foreclosures, what do you do next?

• Contact the homeowners - preferably by mail, or else by telephone or even personal visit. Remind them that once the lender has foreclosed, they will be evicted and receive zero for all the work they have put into their home. Ask them if they are interested in a deal to avoid foreclosure.


• Some owners will still be reluctant to face up to reality. But if the owner does agree, visit the property and carry out a quick but thorough inspection.


• Find out the amount of gross equity in the property. Subtract from this the estimated amount required for repairs, and any arrears, taxes etc., that are owing, to arrive at the net equity.


• Make an offer of 50 percent of the net equity, "subject to" being able to take over the existing finance. Your offer may only amount to a few thousand dollars and the owners may feel it's too little - but if they think about it, it brings them huge advantages. If the property went to foreclosure, they would get nothing, plus a massive blot on their credit score. This way they at least get something, plus their mortgage is paid off. You get a great bargain, your finance in place, and the potential for profit once the repairs are done.

Foreclosures can have great profit potential for you. But the later you leave it, the more your profit potential is reduced. If you know how to find pre-foreclosures and how to get the best deal on them, you will really be out in front.

If you would like to know how to get hold of the best selection of pre-foreclosures and every other type of foreclosure property, come and visit http://www.bizwrite.co.uk/realestate/foreclosures.html

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