Pre-Foreclosure Seller Leads: 2024 Ultimate Guide to Closing More Deals

This is a complete guide designed for real estate agents working with distressed seller leads in 2024. Understand the factors that will help you close more deals from pre-foreclosure leads in today’s competitive market.

In this guide you’ll learn:

1. What are Pre-Foreclosure Seller Leads?
2. Cold Call Real Estate Scripts and Handling Common Seller Prospect Objections
3. Winning the Listing with an Effective Listing Presentation and CMA
4. Database Marketing Plan for Real Estate Agents

Let’s begin!

Welcome to the foundation of your ultimate guide to working with pre-foreclosure seller leads. In Chapter 1 we’ll uncover what distressed seller leads are, how they are sourced, and how they can be effectively leveraged to generate listings.

What are pre-foreclosure seller leads?

These leads are property owners who are delinquent on mortgage payments and at risk of losing their property to foreclosure. Homeowners in pre-foreclosure still have the opportunity to resolve their missed payments or list and sell the property through traditional real estate channels before it becomes bank-owned.

How are pre-foreclosure seller leads sourced?

Pre-foreclosure seller leads can be obtained from legal notices recorded in the public record. While anyone can obtain this data, scrubbing, sorting, and aggregating it takes time, so real estate agents looking for a more efficient way to source pre-foreclosure leads can use a specialized lead generation service, like KeyLeads.

What are the stages of pre-foreclosure & foreclosure?

Pre-foreclosure unfolds in three critical stages before a property faces foreclosure. The complete timeline from the first missed payment to actual foreclosure varies by state, according to the U.S. Department of Housing & Urban Development, but in general takes between 3-6 months.

Pre-foreclosure process stages

Stage 1: Missed mortgage payments trigger reminders from the lender.

Stage 2: The lender sends a Notice of Default (NOD) around 90 days of delinquency, formally notifying the homeowner of impending foreclosure unless the default is resolved within a specified timeframe.

Stage 3: The lender sends a Notice of Trustee’s Sale and Final Judgement, indicating a set auction date for the property.

Foreclosure process stages

Stage 1: The sale and day of foreclosure may happen through a judicial or non-judicial process.

In a judicial process, auctioning occurs through court-appointed trustees, while in a non-judicial process, the mortgage company carries out the auction.

Stage 2: The property is either sold or unsold after the auction. Unsold properties become Bank-Owned or Real Estate Owned (REO). The bank can then list the property through traditional real estate channels.

Stage 3: After the auction, homeowners have a redemption period during which they can reclaim their property by settling their overdue mortgage balance and any additional fees incurred during the foreclosure process.

Why understand the foreclosure process?

As a real estate agent, one of the ways you can add the most value to your prospects and clients is by being a source of knowledge. If you can help your pre-foreclosure prospects understand the full foreclosure process, you’ll get far in building rapport and developing these relationships.

In this chapter, you’ll learn how to make outbound calls to pre-foreclosure seller leads and handle common objections you might hear. If you have any reservations about your outbound call strategy, this is the chapter for you!

Before you start calling seller leads: get into the right mindset

Homeowners in financial distress and pre-foreclosure likely feel a variety of emotions – from hopelessness to anger to confusion. Just as you would with any cold call, expect to hear some annoyance or get hung up on. Don’t take it personally and come from a place of compassion. The most successful agents don’t view a “no” as a failure but as a step on the path to getting a “yes” and having a great conversation.

Cold call real estate scripts

There are two main approaches you can take in reaching out to pre-foreclosure seller leads – you can either avoid mentioning the homeowner’s situation or acknowledge it.

Leading with a general seller prospecting script can be an effective way to connect with potential sellers in pre-foreclosure without causing any embarrassment or shame.

General seller prospecting script

Here’s a general seller prospecting script based on real estate legend Mike Ferry’s “Just Listed” script (Source). It shares a lot of similarities to scripts you may have used for expired listings or FSBO prospecting. The goal of the script is to build rapport, understand the prospects’ motivations, and set an appointment to see the property.

Hi, this is __________. I am a realtor with __________, and the reason for the call today is that I’m working with a lot of buyers in __________ who are interested in homes like yours. Have you ever considered selling?

(Yes)

Great! How long have you lived here?

Terrific. How did you choose this area?

Wow. If you sold this home, where would you go next?

If you sold, what what your ideal timeline be to move?

Okay great. To get you one step closer to what you want in the timeline you want, all we need to do is set an appointment for me to come by and understand more about the house.

When’s a good time for me to come by and discuss what it might sell for and what your options are?

(Time)

Terrific. I’ll see you at __________ on __________. Before we meet, I’ll call you to confirm our appointment. Looking forward to meeting you in person!

Handling objections to selling script

(Not interested in selling)

I understand. Something to think about – in the current real estate market there’s a huge demand from buyers but limited housing inventory available. Would you be interested in staying updated on market trends and recent home sales in your neighborhood? 

(Yes)

Great, what’s the best email address for you?

Acknowledging the foreclosure script

The alternative approach to connecting with prospects in pre-forclosure is to acknowledge their situation. Nicole Espinosa, owner of “The Short Sale Queen” brokered by EXP Realty, has closed thousands of pre-foreclosure deals. If your prospect may be a good candidate for a short sale, Espinosa’s script, below, is one you can try (Source).

“I specialize in assisting distressed homeowners in the area. I noticed that your house is in pre-foreclosure. Were you aware of this?

I wanted to check in to see what you were planning to do with the house?

Are you aware of the options you have to prevent foreclosure of your house?

I specialize in helping distressed homeowners sell their houses through a short sale in order to prevent a foreclosure. Has your lender talked to you about this option?

Let’s meet so we can determine if a short sale is the right option for you.”

Handling objections: “I have equity”

Not everyone in pre-foreclosure is a candidate for a short sale, and this is more frequently the case in today’s market in which many have built up equity. If a prospect says they have equity, Espinosa uses the following rebuttal:

“Great! I am a licensed realtor, if you do have equity I can help you stop the foreclosure and get your house listed so we can get you money to move and avoid foreclosure.”

Handling objections: loan modification

(I’m doing a loan modification)

I understand, but selling may be your best option. Loan modification requires catching up on missed payments or adding them to your loan, while a short sale settles the debt. You’ll also have a few months to plan your next move while staying in your home. It’s a fresh start without the financial burden. I’m here to guide you through every step.

Which approach to prospecting pre-foreclosure leads is right for you?

Before cold calling pre-foreclosure prospects, it’s a good idea to do some role play to prepare for objections and feel confident in your pitch. If you’re new to working pre-foreclosure leads, a general seller prospecting script may be your best bet, whereas if you feel more comfortable with the nuances of the foreclosure process, you may be effective with a specific pre-foreclosure script. 

Whichever approach works best for you – your outbound prospecting strategy has to follow with a strong listing presentation. Read on to Chapter 3 to learn about how to master the listing appointment.

After you’ve set an appointment, it’s time to win the listing. In this chapter, you’ll learn how to close the deal by pre-qualifying the listing and having all the materials you need in a pre-listing package.

Different selling options for homes in pre-foreclosure

Traditional listing

The traditional approach involves professional photography of the home, listing on the MLS, and advertising to other agents, but this may not be the best approach for distressed homes – those in poor condition that need extensive renovations.

Cash sale

A cash sale can be effective for distressed sellers and distressed homes because it’s quick and easy. Cash sales can take as little as three days to close. Make sure you have a network of investors who are capable of fulfilling a cash offer if that’s the best option for your client.

Short sale

If the homeowner owes more on the property than what’s it worth, a short sale may be the best option. A short sale is when the homeowner sells their property for less than the amount owed on the mortgage with the lender’s approval. The lender agrees to accept the sale proceeds as satisfaction of the mortgage debt.

Pre-qualifying the listing

To understand which selling option may be best for your client, ask them a few pre-qualifying questions. Do this on a follow-up call before you have your first appointment. If you’re working with a client in pre-foreclosure and haven’t yet discussed their situation, these questions may help you better understand their state of mind and their knowledge about where they are in the foreclosure process. You’ll want to make sure you know the following:

• Are you interviewing other real estate agents?
• How soon do you need to move?
• Where are you moving?
• Why are you moving?
• Do you have an idea of how much you want to list the home for?
• What price will you not go below?
• How much do you owe on the property?
• Can you describe your home for me?
• Will everyone who needs to be involved in the decision to sell the home be at the appointment?

Pre-listing package

Once you know more about the homeowner, their expectations, property condition, and who else is a decision-maker, it’s time to finalize the pre-listing package. You will need the following:

• “About you” page, including your experience and credentials
• Testimonials from past clients 
• Your plan of action to advertise the home
• Overview of the selling process and timeline
• Comparative market analysis (CMA)
• Net sheet
• Contract
• Disclosures

Listing presentation

On the day of the listing appointment, be prepared to walk around the home to better understand its condition, go over a short one- or two-minute presentation, and answer any questions the homeowner and other decision-makers have.

Set expectations for the listing presentation

Set the stage for your listing presentation by telling the homeowner what to expect by the end of the appointment: they will either decide to work with you, not work with you, or you’ll decide not to work with them. Assure them that any of those outcomes is fine.

Confirm answers to your pre-qualifying questions

Confirm answers to any of your pre-qualifying questions. After being at the property and walking around, you’ll have more information about the state of the home and may get more information from the homeowner.

Present the Comparative Market Analysis (CMA)

Show your client similar houses that are in the market or have sold recently and their prices. Point out any differences between those properties and theirs as well as how long homes at varying prices were on the market to validate your proposed list price and selling route (traditional, cash, short sale).

Sign the listing contract

If the seller agrees to list with you, you’re ready to sign a contract – voila!

Talking to the mortgage company

In many pre-foreclosure cases, it’s a good idea for you to get on the phone with the lender to discuss the seller’s options and your proposed course of action. Your goal should be to build enough rapport during your conversations with the homeowner that they feel comfortable with you talking to their lender. Having you, the homeowner, and the lender on the same page about the next steps is critical for success.

Beyond the listing presentation

Demonstrating your value to clients doesn’t stop at the listing presentation – it’s an ongoing job. Read on to learn about nurturing and marketing to your client database to keep showing your value day after day.

As a real estate agent, you likely know that your database marketing plan can make or break your success. The good news is that a lot of the principles that apply to effectively marketing to your sphere of influence also apply to pre-foreclosure clients. This chapter outlines the nurture, follow-up, and branding tactics utilized by some of the best agents in the business, so grab your pen and paper to take notes!

When should I add pre-foreclosure seller leads to my realtor CRM?

If you’re looking into using a lead generation service to make connections with pre-foreclosure leads, make sure the service has a CRM integration so that you can put your prospects on an outreach plan. 

After you’ve connected with your pre-foreclosure leads through an initial call or outreach plan and start to turn those leads into relationships, it’s time to make sure you stay top of mind and continue to position yourself as an expert they can trust. If these relationships aren’t ready to sell now, all the more reason to make sure they see your name, face, and value proposition everywhere they look so they know who to go to when they are ready.

How to position yourself as an expert real estate agent to your database

“I am all for calling your database, texting your database, CTA-ing your database, however, I’m going to encourage you not to bruise the list,” says National Real Estate Coach and Speaker Jason Pantana. “Are you giving more than you’re asking? Because when you give, give, give, then when you ask, the harvest comes in.” (Source)

Providing educational content to your past and current clients about the market, neighborhood, commonly asked questions, and useful tips and advice is a surefire way to give before you ask.

Different types of marketing for your real estate database

You need a multi-channel approach to targeting and nurturing your database. Creator of LabCoat Agents Tristan Ahumada has a simple acronym he uses as a framework for real estate marketing called HOP: your brand needs to meet your database at home, online, and in-person (Source).

Make sure you’re incorporating all three into your database marketing strategy:

Marketing to your database at home

Meeting your database at home includes traditional direct mail like postcards as well as more personalized marketing like handwritten notes or even gifts.

Clients in pre-foreclosure are likely getting a lot of mail from their lender as well as investors seeking to buy the property. You can differentiate yourself in the mailbox by providing educational content about selling options and how you can help.

Marketing to your database online

The largest and arguably most important category of database marketing is meeting your clients online. This includes both paid and non-paid channels.

Marketing to your database online: Social media marketing

Having a presence on primary social media channels like Instagram, Facebook, X (formerly Twitter), and TikTok helps establish your credibility. For pre-foreclosure clients specifically, you can use these channels to reinforce your expertise through content such as client success stories, local market trends, financial guidance, and general education or FAQs about the foreclosure process.

You can also use social media as a way to stay connected to your database by engaging with their content and sending personal messages or DMs.

Marketing to your database online: Email marketing

A recurring newsletter further helps you establish yourself as a trusted advisor, and the effort to create one is lower than you might think. All the content you create and post to social media can be repurposed for your newsletter.

Marketing to your database online: Online paid ads retargeting

Use the content from your organic social posts and email newsletters to retarget your database through paid channels like social ads, YouTube ads, and Google search and display ads. Not all of the content you share organically will be seen by your database, so it’s important to leverage paid advertising, too.

Marketing to your database in person

Veteran real estate agents know the key to success is developing relationships. There’s no better way to do that than being face-to-face. To market to your database in person you can host everything from one-on-one coffees to small group lunches or even sponsor larger community gatherings.

The importance of a database marketing plan

With every connection you make, you have to have the mindset that not all of those are “now” business. This is especially true with many pre-foreclosure clients who aren’t ready to list their homes yet. With an effective marketing strategy, however, those relationships will convert in 6 months, 12 months, years from now, or even never convert, but refer you other business.

Conclusion: Working with pre-foreclosure seller leads

Throughout this ultimate guide you’ve learned:

• How the pre-foreclosure and foreclosure process works
• How to do effective outreach to distressed sellers through tried and true scripts and rebuttals
• How to win the listing by understanding your seller’s options, pre-qualifying the seller, and having a strong presentation
• How to nail your database marketing strategy by providing educational content

If you’re working with distressed sellers, use the techniques from this guide to turn those leads into relationships into deals. Good luck!