How to Find Distressed Properties in Texas

Texas foreclosure properties are structures that have liens, are in pre-foreclosure, or are already in foreclosure and ready to sell at auction. These properties are valued far less than fair market value, but many are a good investment if they are structurally sound and not in disrepair. Distressed properties become that way due to the owner's financial troubles. They may lose the home in foreclosure if they cannot pay the mortgage, taxes, or other debts.

Texas ranks 15th in the U.S. for foreclosures, and one in every 4,605 housing units goes into foreclosure. The Texas counties where foreclosure is most prevalent are Liberty, Franklin, Kaufman, and Kinney.

The trick to finding a distressed property that is a sound investment starts with finding the right opportunity. You have many options available to you when searching for foreclosure and pre-foreclosure homes. The ways to find one in Texas include:

How to Search for Distressed and Bank-Owned Properties in Texas

• Visit the online realty search portal of your choice.
• Narrow your search by entering "Texas" or the zip code of the region you desire.
• You can also narrow down your search by type of home, location, and price.
• Set up an alert to be notified when new foreclosure properties come onto the market.
• Contact the seller/owner about making an offer.

Distressed properties usually have liens on them. An effective way to locate potentially distressed properties in foreclosure or pre-foreclosure is to look for those with liens. You can do that in a variety of ways.

Search County Clerk's Office

Liens are filed with the county clerk's office in the county where the property resides. You can find tax liens, mechanics', judgment, or mortgage liens there.

Visit the local county clerk's office in person during regular business hours and ask to see a copy of recently filed liens. The Texas Secretary of State has created a list of all county clerk's offices.

You may also visit the county clerk's website and search for liens online. Most of them have online search tools. You can generally search by the property address, owner's name, or parcel number.

Some Texas County Clerk's Offices to Search Include:

• Bexar County Clerk's Office
• Collin County Clerk's Office
• El Paso County Clerk's Office
• Harris County Clerk's Office
• Tarrant County Clerk's Office

Texas County Tax Offices

Another great resource for finding properties with liens is the county tax office. Every county has a tax assessor-collector where tax liens are also filed and maintained. They originate from these offices when a homeowner fails to pay their annual property taxes. For example, if you want to find liens in Harris County, you could visit their tax office in person at 1001 Preston St. Houston, Texas 77002, between 8:00 a.m. and 4:30 p.m. every Monday through Friday. You can also visit their website and search for liens there.

Texas State Library and Archives Commission

The Texas State Library and Archives Commission has abundant land records, deeds, surveys, property tax records, maps, etc. You can search using this website and potentially find properties with liens that may be inching toward foreclosure and be an investment opportunity. The resource has partnered with Family Search to make finding records easier for the public.

Court Records

Some liens, like judgment and tax liens, are also filed with the court. Courts can be a wealth of information when searching for properties with recently filed liens. Unfortunately, Texas has no consolidated court database where you can search all courts from the same place. You can either visit the courthouse and ask for records or use the options below to find lien records:

• re:SearchTX is a free subscription website that allows you to search multiple county courts (district, county, probate) using a single search. However, you may have to pay a fee to download copies.
• Texas Appeals Management and eFiling System (TAMES) Case Search is another option where you can tap into Supreme Court and Court of Appeals case files.
• District Court Clerk's Websites Check out the district court clerk's online presence to find lien records. Some examples include Bexar, Collin, Dallas, Denton, Harris, Tarrant, and Travis counties.
• Legal Databases are another option for finding distressed lien records and properties. Some options include Lexis, Westlaw, and Fastcase.

Use a Title Company or Real Estate Attorney

Title companies perform deep dives into properties to find liens, encumbrances, foreclosures, title issues, etc. They can be a helpful resource in locating recently distressed properties due to a lien. They may have exclusive information that is vital to finding a good investment. Some legal attorneys or title companies to check out in Texas include:

• Texas Title Company
• Texas Secure Title Company
• Republic Title of Texas, Inc.
• Independence Title
• Silberman Law Firm, PLLC
• Lone Star Land Law

Third-Party Online Databases

Another option for searching for distressed properties is to use third-party online databases like PropertyChecker. These databases sometimes allow you to download detailed property records, including lien information.

PropertyChecker is an excellent option for quickly and easily obtaining a complete property report, including value, taxes, liens, foreclosures, and other essential data. You can quickly search using the property address to see if it is in pre-foreclosure or has liens that may lead to foreclosure. You can also search by zip code to view all the pre-foreclosure homes in a specific area.

Homeowners in Texas who are in financial trouble often file for bankruptcy to solve the problem. If the house has liens on it, they may consider selling to get rid of the debt and get out from under the situation. Some ways to find distressed properties through bankruptcy records include:

Search Federal Bankruptcy Court Records

Since bankruptcy is a federal court process, your first stop should be court records. Texas stores and maintains records through the PACER (Public Access to Court Electronic Records) system, which is publicly accessible.

To use the PACER system:

• Visit pacer.uscourts.gov.
• Create an account.
• Perform a search by narrowing down your parameters by searching for Texas bankruptcies.
• Review the results and determine which properties involved in bankruptcy might be good options.
• Contact the homeowner and make an offer.

* You may have to pay fees when using the PACER system.

Check Delinquent Tax Attorneys in Texas

Tax attorneys helping clients with delinquent taxes are another strong resource for finding properties that may be coming up for sale soon. If you find a trusted lawyer who can put you in touch with the right seller, you may not have to deal with any competition. Your attorney can also help you with the sale and make things smoother.

How to Proceed with a Tax Attorney:

• Contact a local tax attorney who deals with bankruptcy cases.
• Ask if they have any clients who may be interested in selling their property to get out of debt.
• Have the attorney introduce you to their client.
• Research the property thoroughly.
• Make an offer.
• Have the attorney handle the sale privately.

Attend Public Auctions and Sheriff's Sales

Attending auctions will expose you to multiple opportunities and potential properties involved in bankruptcy. Financial hardships are the source of many real estate auctions. It's best to attend as many auctions as you can to see what is out there.

To Find Information on Upcoming Property Auctions:

• Visit local sheriff's offices' websites (see the list below).
• Search for upcoming auctions.
• Sign up to attend.
• Make a bid.
• If you win, pay for the house and take possession.

Some county sheriff's offices' websites include:

• Dallas County - auctions held monthly.
• Denton County - auctions are held on the first Tuesday of each month.
• Collin County Courthouse - auctions are held on Tuesday of each month from 10 a.m. to 4 p.m. in person.
• El Paso Sheriff's Office

Also, check out public auction houses (listed above) to see if any auctions are coming up soon. Try nationwide auction houses like Auction.com as well. Mark your calendar and attend. Many of them require pre-registration.

The Steps to Attend an Auction:

• Register online or in person.
• Review the rules.
• Have your funds ready (deposit or full payment).
• Attend the auction.
• Bid.
• Win and pay.

Use LoopNet

LoopNet is a commercial real estate platform that specializes in auctions. The main menu includes a link to the auction properties in your specified area. You can refine your search by property type, size, and investment type.

Search for Distressed and Bank-Owned Properties Using LoopNet:

• Visit Loopnet.com.
• Click "Auctions" at the top menu.
• Type in Texas (where it says US).
• Refine your search using the filters.
• Check the details of the properties you are interested in.
• Attend the auction.
• Bid.
• Win and pay for your property.

Follow Chapter 7 Realtors

Follow Chapter 7 realtors on social media. Many of them post regularly and may announce potential distressed property sales due to bankruptcy. If you have questions, the platform will allow you to contact them directly using a DM (direct message). Chapter 7 realtors and attorneys will have exclusive information about available opportunities. If you act fast, you could grab a great investment easily.

Steps to Use Chapter 7 Realtors:

• Follow multiple realtors specializing in Chapter 7 on social media.
• Watch their feeds carefully.
• If any properties or notices come up, contact them directly.
• Ask if they can check the MLS for additional bankruptcy properties.
• Ask to be connected with the owner.
• Make an offer.

Contact the Texas Department of Revenue

The Texas Comptroller's Property Tax Assistance Division (PTAD) oversees all local tax officials (tax assessors/tax collectors). Although it does not handle tax liens or bankruptcies, it may have information about recently filed bankruptcies and related tax liens. It might also list upcoming auctions.

How to Inquire About Tax Lien Sales:

• Visit the PTAD website.
• Contact the main office and inquire about lien sales.
• Ask for a listing.
• Attend any upcoming auctions.
• Make a bid.
• Win and pay for the property.

Investigate Bank and Lender REO Listings

When a bank proceeds with foreclosure, it often repossesses the house to sell at auction. If no one bids higher than the outstanding balance, the bank can bid that amount and win. Once that happens, the property becomes Real Estate Owned (REO). The lender can then sell the property on the open market for more than the loan amount.

You can search for REO listings online or contact the banks directly to request a listing of any property they want to liquidate.

Some banks in Texas to check out include:

• Bank of Texas
• St. Mary's Bank
• Frost Bank
• Prosperity Bank
• Texas Capital Bank
• Credit Union of Texas
• Capital One
• Texas Regional Bank
• Cadence Bank

How to Find Real Estate Owned (REO) Properties in Texas

• Visit the bank website and look for REO departments or links pertaining to real estate.
• Contact the bank representative for that department and ask for a listing of REO properties that the bank wants to sell.
• Ask for details about the property and schedule a showing.
• Make an offer.

Homeowners in financial distress often turn to a short sale to get out from under the debt. If their lender has already informed them they are late on mortgage payments, they may be facing foreclosure, and a short sale can solve the problem. Often, as a mitigation gesture, the bank will help the homeowner sell the house by listing it with realtors and online realty websites, placing ads, and connecting the seller with potential buyers. They may even absorb closing costs to help sell the property to recoup their losses.

Short-sale homes often sell for far less than fair market value. The lender wants to get their money back, so they may list it for the remainder of the loan, which may be considerably lower than the appraised value.

Some ways to find short sales in Texas include:

• Contacting banks and ask if they are helping any owners with short sales.
• Use real estate platforms and look for deals or bank-owned properties.
• Check the local newspaper for any ads or listings of properties in trouble.

Texas courts handle probate issues and selling property from estates with no heirs. They may also sell property to pay off the debts of an estate. Probate sales can be limited to cash only, but they may also be a good investment if the property is sold below fair market value and in good condition. Some ways to find probate sales are:

• Contact the Probate Court - Contact the probate court in the local district and ask if they have any properties for sale. Each county has its own probate court.
• Read Obituaries - Read the obituaries regularly to find potential properties that may soon be up for sale. You can combine this information with other details gathered from public records.
• Contact Probate Lawyers - Many probate lawyers may also have inside information about upcoming probate property sales.
• Check Local Funeral Homes for recently deceased individuals and cross-check with public records.

Some obituary sources to review include:

• Austin American-Statesman
• El Paso Times
• Corpus Christi Times
• Denton Record-Chronicle
• Galveston County Daily News

How to Buy Probate Properties:

• Get your financing in order.
• Use one of the methods above to find the right property.
• Educate yourself on how a probate sale differs from a regular sale.
• Consult with a legal professional if necessary.
• Have it inspected and appraised.
• Make an offer.
• Put down a deposit.
• Attend the closing and take possession.

Finding suitable investments means the right auction at the right time. Before attending, be sure to do plenty of research on the properties and have your financing in order. To find real estate auctions in Texas, you can follow the tips below:

• Contact local auction companies (see list above) and ask for their latest schedule.
• Check online/national auction houses like Auctions.com.
• Read your weekly newspaper and check out the real estate section looking for auction notices.
• Also, check the classified section for ads or auction notices.
• Review your favorite online real estate platforms looking for auction sales.
• Peruse the county websites for notices of upcoming real estate auctions.
• Check out the sheriff's office websites for auction details.
• Visit local Texas realty websites looking for auction notices.

Owners of distressed properties (individuals, banks, government agencies, companies, etc.) sell them to recoup their financial losses. Often, the debt owed on the property is far less than the value of the home, making it an appealing investment for someone with the resources to buy it and turn it around quickly. However, buying distressed properties is not without risk. Consider these issues before purchasing a distressed property.

• Hidden Costs: Distressed properties are often bought sight-unseen, and some come with hidden costs, such as liens that need to be paid off, title disputes, and expensive closing costs.
• Poor Condition/Required Maintenance: Many distressed properties have been neglected and may suffer from foundation or roof issues, mold, plumbing or electrical problems, or structural damage that is costly to repair before you can sell.
• Legal Issues: If the house is named in any legal battles or has liens, back taxes, or title issues, these can be tricky to resolve before you can take ownership and sell the property.
• Financing Challenges: Banks are often reluctant to finance the purchase of distressed property, so you may have to raise the cash yourself to buy it.
• Market Risks: The house could be in an area with declining values, and you could overpay for something that is quickly losing its value. It may be years before you can sell it and make a return on your investment.
• Fast or Long Transaction Times: Sometimes, you must act quickly to buy the distressed property, overlooking potential issues. Other times, the sale could be delayed due to foreclosure or short sale issues.

Although distressed properties sound like a headache, they can be an opportunity for some savvy buyers. Those who are interested in buying distressed properties include:

• Cash Buyers: Cash buyers have an advantage in that if they see a distressed property in good condition, they can quickly purchase it by paying cash. They don't have to wait for financing, which is ideal when attending a foreclosure auction.
• Real Estate Investors: Real estate investors look for good-condition distressed properties to buy cheaply, turn around, and sell for profit. Foreclosure homes generally sell for far less than market value, making it easy to profit.
• Nonprofits: Nonprofit organizations may have limited funds and look for a deal when they need space for operations. A distressed property in good condition could be perfect.
• Developers: Developers also buy distressed properties to fix up or use the land. They may use their resources to upgrade the structure, demolish it, and build fresh. Their goal may be to revitalize the neighborhood by buying up properties in the area and improving them or offering them as affordable housing to low-income families or disabled people.
• First-Time Homebuyers: First-time homebuyers may have limited means, and buying a distressed property could help them become homeowners more cheaply than paying for a non-foreclosure home.