Hi Joan, good questions.
First, as you observed, the overwhelming majority of short-sales do fall out, mostly via foreclosure.
For a good post describing this, click here:
For a good post about the difference between the types of homes for sale, i.e. short vs foreclosure vs. resale, etc., click here:
As Katrina mentioned below, the list of NOTâ€™s is a matter of public record. The easiest way to obtain the lists are to poke around online with keywords like â€œNotice of Trustee Saleâ€ and â€œNotice of Defaultâ€, etc. and for a nominal service charge or membership, you can get your hands on some lists. Or you could go to the County Recorderâ€™s Office and get mine the data yourself.
Of course, if you plan to buy these foreclosures before they hit the MLS there is only one wayâ€¦ and that is at Public Auction. Here you will compete against sophisticated investors who eat beginners for breakfastâ€¦ and you will have to buy all-cash (i.e. without any mortgage financing). If this sounds intimidating, then your next best bet is to take advantage of the thousands of REOâ€™s that are readily available on the MLS.
To find them, and more importantlyâ€¦ to find the ones selling below intrinsic value, youâ€™ll need a realtor. There is no way to screen for only REOâ€™s. One must review a search that includes all types of properties and a good agent, which is pretty much any agent who is still left in this business today can help you determine which are REOâ€™s by reading the confidential agent-to-agent remarks. A great agent, will do this for you manually, instead of reactively waiting for you to identify homes you like. In exchange, the agents will likely expect your loyalty to go through them when they find you a home you love with great value.
In the end, donâ€™t put too much stock in all they hype about good dealsâ€¦ most of the value in buying now, simply comes from not buying two years ago. Thereâ€™s a 40% discount for you right there, at least in some markets. Of course if you do have all cash, but still donâ€™t want to go the route of public auction, then a good agent can help you swing a big hammer when negotiating MLS listings too, whether theyâ€™re REOâ€™s or not.
Go get â€˜em!