Learn how to use public foreclosure records and other resources.
There are a number of reasons you may be curious about how to find out if a house is in foreclosure. For instance, you might hunt for an investment property that’s going for below market value. Or perhaps it’s in your best interest to figure out if the house next door is now a foreclosure, which could bring down your home value.
Maybe you suspect that a close friend or family member is struggling with money, and they could be on the brink of losing their house. After all, a home in foreclosure is a telling sign that the owners are suffering from financial distress.
What is a foreclosure?
A foreclosure happens when a borrower can’t keep up with their mortgage payments and defaults on the loan. In turn, the mortgage lender seizes the property. In some cases, a Chapter 13 bankruptcy filing may stop a foreclosure.
To cut its losses, the lender may make a go of selling the property at an auction. If there are no bidders and the property isn’t sold at auction, in many cases the lender will sell the property, either by way of a real estate agent or the multiple listing service (MLS), which is a large marketing database that provides detailed info about properties up for sale.
There are two main types of foreclosures: a bank-owned foreclosure, which is usually sold at an auction or on the courthouse steps; and an REO foreclosure, in which the bank itself prepares the property to be sold on the market. The major difference between the two is the stage of foreclosure.
Foreclosures skyrocketed during the Great Recession. According to a paper released by the FDIC on the Great Recession and its effects, in 2009, a staggering 2.8 million mortgage loans were in foreclosure, which was nearly four times the number in 2005.
What’s more, according to the Federal Reserve Bank of St. Louis, it’s estimated that almost 10 million people with mortgages lost their homes.
So how much damage did these foreclosures do to the U.S. economy? According to the Federal Reserve Bank of St. Louis, the cumulative net cost to household worth was nearly $12 trillion dollars.
As for how much value these foreclosed properties lost during the Great Recession, research focusing on certain parts of the U.S. show that in many cases it was a devastating blow.
Case in point: According to research by the Poverty Center on foreclosures in Cuyahoga County, Ohio in the years leading up the crisis, properties auctioned at a sheriff’s sale stayed in REO three times longer than before the foreclosure crisis started. What’s more, these homes lost 56% of their market value.
How to tell if a home is in foreclosure
If you’re curious about a particular home, here’s how to find out if a property is in foreclosure.
Visit the house
There are a few telltale signs that a home is in foreclosure. Often, the house shows signs of wear and tear and physical distress. You could drive around certain neighborhoods and look for homes that are in poor physical condition, said Lukasz Kukwa, a real estate advisor based in Westfield, New Jersey.
Depending on where you live, typically 90 days after the borrower has missed a mortgage payment, the lien holder—which is usually a bank—might issue what’s known as a lis pendens, a written notice that a lawsuit has been filed.
What’s more, there might be a flyer—usually posted on the front door—that a property management company is in charge of maintaining the property. You can also look for a private lockbox, which employees of the property management company can use to access the property.
Search Public Records
To check a foreclosure by address, reach out to your local county clerk’s office. Depending on the county and state the property is in, you might do a search either in person or online.
The County Clerk’s office will also provide you with lists of sellers. Another way to find the homes that are in foreclosure is to ask for a Notice of Default in the property’s county. These public foreclosure records are accessible to everyone, explained Kukwa. An online property search may also return some of these records, making them potentially convenient one-stop shops.
Where else can I find foreclosures?
Besides homing in on a particular property by its physical address, there are ways you can find listings of foreclosures. If you’re house-hunting and curious how to find out if a home is in foreclosure, check out the following:
There are a handful of property auction sites that feature listings of foreclosed homes. Popular ones include Hubzu.com and Auction.com.
Note: Some of these sites exist more to generate leads than to function as true auction sites, explained J Scott, a realtor, investor and author of The Book on Flipping Houses.
For instance, being the high bidder doesn’t necessarily guarantee you’ll pick up the home for that price—the bank may be trying to get a feel for interest in the property. That being said, these are a common route for banks to sell REOs these days.
Most banks have listings of foreclosed homes. There might be a dedicated real estate center on their website. You can also try looking by searching for “foreclosures,” “REO” or “bank-owned homes” and the name of the bank.
If you’re trying to tell whether a house is in foreclosure because you’re shopping for a home, some small banks will offer REOs directly to their customers who are real estate investors, explained Scott. “Investors with relationships with small banks can often get REOs at reasonable prices,” said Scott. “And many times, the bank will finance the deal as well.”
Real estate agents
The most common way to buy REOs is through a realtor who finds these listings directly on the MLS. “There are a lot of extra paperwork and hoops to jump through, but anyone can offer on these properties and ultimately buy them,” said Scott.
What’s more, you’ll want to work with real estate agents who either deal directly with sellers in distress, or they deal with bank-owned homes, said Kukwa. “They’ll have a close ear to the ground regarding sellers who might be in the process which will allow to possibly place an offer on the property,” he said.
Government-backed housing organizations
Some large organizations with government backing in the housing market—think: the U.S. Department of Veterans Affairs (VA), Fannie Mae, Freddie Mac and the U.S. Department of Housing and Urban Development (HUD)—have their own portals and systems for buying their foreclosures, explained Scott. Some have consumer-friendly sites where you can search for REOs (i.e., HomePath.com for FannieMae, HUDHomesUSA.com for HUD).
However, it often requires a real estate agent knowledgeable about those specific processes to enter a bid on your behalf and negotiate a deal, Scott said.
While it might seem old-fashioned, you can find listings of foreclosures in the local newspaper. You might come across a “Notice of Sale” in the legal notices section of the publication. And if the foreclosure will be sold at auction or at the courthouse steps, such a listing could alert you to one that’s coming up.
The information is out there if you know where to look
If you’re trying to tell if a house is in foreclosure, there are several places to look, and a handful of routes to go about it. Whether you’re in the market to buy a home, are wondering if a foreclosure in your neighborhood will drive down the value of your property or have concerns about a loved one’s financial situation, locating this information will help you make an informed choice and know how to best proceed.