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Thinking About Investing in Pre-Foreclosures? Don't Forget Tax Sale Pre-Foreclosures

Richard Dawson

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Have you ever looked into working with mortgage preforeclosures?

By this I mean contacting the owner of a property who is about to lose it due to non-payment of their mortgage, and attempting to buy the property. This technique has been around forever, and a lot of people have made good money practicing it. I would highly recommed you give DeedGrabbing a try - it's a similar concept, only you'll be going after owners of tax-delinquent property, not mortgage-delinquent property. You may have made money in your area going after mortgage foreclosures, especially when the market was better. Me, I had very limited success. My area didn't have the dramatic price

increases some of you may have experienced for one thing. Let's look at why you'll want to concentrate on DeedGrabbing or at least add it to your successful mortgage foreclosure investing. The big reason I like working tax preforeclosures better than mortgage preforeclosures is that mortgage foreclosure properties all have a mortgage against them! Duh! Most tax sale properties don't.

So you're automatically dealing with a large debt against the property, and possibly unpaid taxes in addition. It is difficult to tell from your mortgage preforeclosure list what the actual payoff balance is on the mortgage, because there are additional attorney fees, interest, and other charges that will not be published on the list. These charges increase literally every day. I learned this the hard way when I bought a property that had a mortgage of $10,000 being foreclosed - the payoff turned out to be over $21,000 after attorney's fees and all of the missed payments were added!

Also, there is no good way to tell from the list if an owner is going to get an extension or workout agreement from the mortgage company prior to the sale. You may be working on dozens of leads that appear active but have had a settlement agreement reached. If you do contact an owner who wants to work with you, they will most likely not want to sell the property but to have you make them a loan or otherwise let them stay in the property. You will encounter a much greater percentage of abandoned properties with working on tax sale leads, and these are the easiest to quickly buy and resell.

Finally, if you get a mortgage preforeclosure with lots of equity, somebody is going to have to catch up all the payments on the property to stop the foreclosure. This amount is usually much greater than the amount needed to redeem a tax sale property. Then you're going to have to make the mortgage payments on the property while you're dealing with it.

What did I hate most about preforeclosure investing? Every Tom, Dick, and Joe in town is also sending letters and calling the owners! How am I supposed to get my message in front of them when they've been trained to throw all of these letters away and stop answering their phone?

I like the firm drop-dead dates with most tax sale property. I don't have to worry about protecting the owner's credit by making sure their mortgage is taken care of (delinquent property taxes do not affect an owner's credit).

As the firm deadline approaches, a hesitant owner will often finally decide to cut and run, and I'm running with the profits! And I'm usually the only one who has contacted them so they're limited to dealing with me.

If you'd like to learn more about DeedGrabbing, subscribe to my free 5-day Mini Course “Go Ahead, Be a DeedGrabber" at

Have any questions? Email me at

Happy Deedgrabbing!

Rick Dawson


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