When I started out as a “rookie” real estate investor in 2002, I was confused by all the websites claiming to provide a list of Houston foreclosures. I wasn’t sure which ones provided the most leads, which ones provided the highest quality leads, which one provided the most for my money, and so on. It was a maze out there, and I was lost.
After spending several years in the business, everything is much clearer. This is what I now know. In summary, there are three categories of foreclosure websites in Houston: 1) those that offer actual foreclosures, 2) those that offer pre-foreclosures, and 3) those that offer “prepre” foreclosures. Each category of foreclosures has advantages and disadvantages, and the category that works for one person may not work for another. It all depends on what your goals are. Let me explain the three categories in more detail.
Category 1 – Actual Foreclosures: Foreclosures are properties that have already been foreclosed on. They are usually owned by a bank or the government. They are best for people looking for a house to live in, NOT investors. You will get a minor discount, maybe 10-15% retail discount, but the whole process is easy. Look through the listing, find what you like, and ask your real estate agent to show you. And then have the real estate agent make the offer and handle the negotiations. Very simple. There are probably fifty websites that contain real foreclosures, but three of the most popular are currentforeclosures.com, foreclosure.com, and realtytrac.com. These are national websites, but they are full of Houston foreclosures.
Category 2 – Pre-Foreclosures: Pre-foreclosures are properties that will be heading to auction in one to three months. A notice has been filed with the court. They are best for real estate investors who are willing to work or spend some money in an effort to get a bigger discount. After meeting with a few sellers and making a few offers, you are likely to find a property that you can buy for 30% off. At least that’s what you should be looking for. If you choose to mail to these lists, you will probably spend hundreds of dollars in postage. If you choose to knock on vendor doors, you’ll probably spend dozens of your own man-hours. If you want the discount enough, these problems are tolerable. When I was starting out and desperately needed the money, I went after previous foreclosures, but that’s too much trouble for me today. I’ll let the new batch of “rookies” chase them! Quality pre-foreclosure websites in Houston are foreclosehouston.com and realdata.net. Both are local.
Category 3 – “Pre Pre” Foreclosures: “Prepre” foreclosure websites contain listings for properties that have not yet appeared on official pre-foreclosure lists or actual foreclosure listings. They’re best for investors who want a discount of 30% or so, but don’t want to spend all the money on postage or man hours knocking on doors. The advantage is less money and less time spent. The downside is that there are usually fewer properties to choose from, so you’ll probably have to drive outside of your immediate ZIP code to find the one that gives you the earnings you want. Popular “pre pre” foreclosure websites are myhousedeals.com and propertyleadsnow.com.
Which category of Houston foreclosures you choose to pursue is up to you. It just depends on whether you are an investor or an owner-occupier, and it depends on how much time or money you are willing to spend. I bought 41 houses, and 60-70% of them were “prepre” foreclosures.