The Complete Guide to Distressed Properties

Distressed properties represent one of the most consistent paths to below-market deals in real estate. But finding them before your competition requires more than luck—it requires a system.

At PropertyRadar, we’ve helped thousands of investors, agents, and wholesalers build distressed property pipelines using what we call the 7 Plays—seven distinct types of distress, each with its own signals, timing, and approach.

In this guide, you’ll learn:

• What defines a distressed property (and why owners sell below market)
• The 7 Plays framework for categorizing and finding distressed deals
• How to identify properties before they hit the market
• Marketing approaches that convert distressed owners into deals
• How to use PropertyRadar to automate your distressed property pipeline

What Is a Distressed Property?

A distressed property is real estate where the owner, the property, or both are experiencing circumstances that create motivation to sell—often below market value.

Distress doesn’t always mean a run-down house with overgrown weeds. It can be:

Financial distress:

• Missed mortgage payments (preforeclosure)
• Tax delinquency
• Liens and judgments
• Bankruptcy

Life event distress:

• Death of owner (probate/inherited property)
• Divorce
• Job loss or income reduction
• Medical emergency
• Relocation

Property distress:

• Vacancy
• Code violations
• Deferred maintenance
• Tenant problems / eviction activity

Situational distress:

• Out-of-state ownership
• Tired landlords
• Inherited property with multiple heirs
• Long-term ownership with high equity

The key insight: Distress creates motivation. And motivated sellers are more likely to accept terms that work for you—faster closings, below-market prices, creative financing, or as-is sales.

The 7 Plays: A Framework for Finding Distressed Properties

After 15+ years of helping real estate professionals find off-market opportunities, we’ve identified seven distinct categories of distressed properties. We call them The 7 Plays.

Each Play has unique characteristics, timing windows, and outreach strategies. Master all seven, and you’ll never run out of deal flow.

Let’s break down each Play.

Play #1: Preforeclosures

What it is: The owner has fallen behind on mortgage payments and received a Notice of Default (NOD) from their lender. The foreclosure process has begun, but the owner still has time to sell.

Why it’s valuable: Pre-foreclosure owners are highly motivated. They’re facing the loss of their home and equity. A quick, fair offer can solve their problem and protect their credit.

The window: Depending on the state, owners typically have 90–180 days between the NOD filing and the auction date. This is your window to reach them.

How to find them:

• County recorder filings (Notice of Default, Lis Pendens)
• Public records databases like PropertyRadar
• Driving for dollars (look for deferred maintenance, overgrown yards)

Outreach approach: Lead with empathy. These owners are stressed and often embarrassed. Position yourself as someone who can help them avoid foreclosure, protect their credit, and walk away with cash—not as someone looking to capitalize on their misfortune.

PropertyRadar advantage: Our Preforeclosure Quick List automatically pulls NOD filings daily. Stack it with equity filters to find owners who have something to walk away with.

Play #2: Foreclosure – Pre-Auction

What it is: The property has been scheduled for auction (Notice of Trustee Sale or NTS has been filed), but the sale hasn’t happened yet.

Why it’s valuable: This is the final window before the owner loses control. Some owners don’t respond until this stage—when the reality of losing their home hits.

The window: Typically 21–60 days between NTS filing and auction date, depending on state laws.

How to find them:

• Notice of Trustee Sale filings at the county recorder
• PropertyRadar’s auction tracking (shows scheduled sale dates)

Outreach approach: Urgency is high. Your message should acknowledge the timeline and offer a concrete solution. Be direct but respectful.

Key insight: Many pre-auction properties are redeemed (owner catches up on payments) or postponed. Don’t assume every NTS leads to an auction. Follow up consistently.

Play #3: Foreclosure – Buying at Auction

What it is: Purchasing a property at the trustee sale (courthouse steps or online auction).

Why it’s valuable: Auction properties often sell below market because buyers must pay cash, sight-unseen, with no financing contingencies. Less competition from traditional buyers.

The reality check: Auction buying is not for beginners. You’re buying:

• With cash (or same-day funding)
• As-is, with no inspection
• Subject to any senior liens
• Without title insurance at purchase

How to succeed:

• Research properties extensively before auction day
• Run title searches to identify liens
• Drive by properties to assess condition
• Know your maximum bid and don’t exceed it
• Have funds ready (cashier’s check or proof of funds)

PropertyRadar advantage: Our auction calendar shows upcoming sales with property details, estimated equity, and owner information—so you can do your homework before bidding.

Play #4: Bank Owned (REO)

What it is: After a failed auction (no bidders or bid below minimum), the lender takes ownership. These are called Real Estate Owned (REO) properties.

Why it’s valuable: Banks are motivated sellers. They don’t want to own real estate—they want to recover their loan balance. REO properties are often sold below market, especially if they’ve been sitting.

How to find them:

• MLS listings (search for “bank owned,” “REO,” or “corporate seller”)
• Bank REO departments directly
• REO listing agents who specialize in this niche
• PropertyRadar’s ownership filters (identify corporate/lender-owned properties)

Outreach approach: REOs are a different game. You’re negotiating with asset managers, not emotional homeowners. Focus on: - Clean, all-cash or pre-approved offers

• Fast closing timelines - Minimal contingencies

Pro tip: The best REO deals often happen after a property has sat for 60–90+ days. Banks get more flexible as carrying costs pile up.

Play #5: Tax Delinquent

What it is: The property owner has fallen behind on property taxes. After a certain period (varies by state), the property can be sold at a tax sale or the government can place a tax lien.

Why it’s valuable: Tax delinquency is an early warning sign of financial distress. These owners often have other problems (mortgage issues, deferred maintenance) and may be motivated to sell before things get worse.

The timeline: Property tax delinquency typically takes 1–5 years before a tax sale occurs, giving you a long window to work with owners.

How to find them:

• County tax assessor records
• PropertyRadar’s tax delinquency filter (shows amount owed and years delinquent)

Outreach approach: Many tax-delinquent owners don’t realize how serious the situation can become. Your outreach can educate them on the risks while offering a solution.

PropertyRadar advantage: Stack tax delinquency with other distress indicators (high equity, absentee owner, vacancy) to find the most motivated sellers.

Play #6: Divorce

What it is: When couples divorce, real estate often needs to be sold to divide assets. Court orders may require a sale within a specific timeframe.

Why it’s valuable: Divorce creates forced motivation. Neither party wants to stay in a property that reminds them of a failed marriage, and courts often mandate liquidation of assets.

How to find them:

• Divorce filings are public record in most states
• PropertyRadar sources divorce data directly from court filings—not the county recorder
• Title changes (one spouse removed from title) can signal recent divorce

Why the data source matters: Most platforms pull divorce records from the county recorder, but fewer than 5% of divorces ever get recorded there—and those that do show up months or even years after the initial filing. PropertyRadar sources directly from court filings at the point of initial petition, so you see divorce leads as they happen, not after the deal window has closed.

Outreach approach: Tread carefully. Divorce is emotionally charged. Your messaging should be neutral, professional, and focused on helping them move forward—not capitalizing on their pain.

Timing insight: Because PropertyRadar captures the initial filing, you can reach property owners within days of the divorce being filed—months ahead of anyone relying on recorder data.

Play #7: Death of Owner

What it is: When a property owner dies, the property typically enters probate (court-supervised transfer) or passes to heirs. Either way, the new owners often want to sell.

Why it’s valuable: Heirs frequently:

• Live out of state and don’t want to manage a property remotely
• Need cash to pay estate taxes, medical bills, or other debts
• Have no emotional attachment to the property
• Want a fast, hassle-free sale

How to find them:

• Probate court filings
• Death records matched to property records
• “Death of Joint Tenant” recordings at the county recorder
• PropertyRadar’s probate and death of owner filters

Real probate vs. “pre-probate”: Many platforms market “probate leads” that are actually just deceased-owner flags—they don’t have real court filings, case numbers, or details about the estate. PropertyRadar provides actual probate filings sourced directly from the courts, including case numbers, decedent information, attorney details, and relatives. This means you’re working verified probate opportunities, not guessing based on a death record.

Outreach approach: Empathy is essential. You’re reaching out to people who recently lost a loved one. Lead with condolences, position yourself as a resource, and never apply pressure.

The opportunity: Probate properties are often sold below market because heirs prioritize speed and simplicity over maximizing price. They may accept lower offers for a quick, certain close.

The Power of Stacking: Combining Plays for Better Deals

The real power comes from stacking multiple distress indicators.

A property that’s:

• In preforeclosure AND
• Tax delinquent AND
• Vacant

…is exponentially more likely to result in a deal than a property with just one indicator.

PropertyRadar’s list stacking lets you combine any of the 7 Plays with 200+ other property and owner criteria:

• Equity percentage — Find owners who have something to walk away with
• Ownership duration — Long-term owners may have more equity and less attachment
• Absentee status — Out-of-area owners are more likely to sell
• Property condition indicators — Code violations, vacancy, eviction activity
• Divorce + high equity + long ownership — Forced sale with room to negotiate
• Probate + absentee heirs + vacant — Inherited property no one is managing

Example stack: Preforeclosure + 40%+ equity + 10+ years ownership + absentee owner = Highly motivated seller with equity who’s likely overwhelmed.

How to Market to Distressed Property Owners

Finding distressed properties is only half the battle. Converting them to deals requires thoughtful, ethical marketing.

The Good Neighbor Marketing Pledge

Before you reach out to anyone in distress, commit to these principles:

• 100% legal and transparent — Recipients should easily identify you and your business
• Targeting stays private — Never mention how you found them (“I see you’re in foreclosure…”)
• Protect personal information — Don’t reference details they’d consider private
• Lead with empathy — Remember you’re reaching real people in difficult situations
• Honor opt-outs — Immediately remove anyone who asks

Marketing Channels That Work

Direct Mail — Still the most effective channel for distressed outreach. Handwritten-style letters outperform postcards. Focus on empathy, not “I buy houses” messaging.

Door Knocking — Highly effective but requires strong interpersonal skills. Best for local investors who can respond quickly.

Phone/Text — Use only if you have permission or the contact is from public records. Follow TCPA guidelines strictly.

Skip Tracing — When owners aren’t at the property, skip tracing finds their current phone and address.

PropertyRadar’s Direct Mail Integration — Automatically send custom postcards to every new lead that matches your criteria. Set it and let your pipeline build itself.

Common Challenges (And How to Overcome Them)

Challenge #1: Finding owners before competitors Solution: Automate your lists. PropertyRadar monitors public records daily and alerts you when new distressed properties match your criteria—before they show up on anyone else’s list.

Challenge #2: Unknown property condition Solution: Drive by properties before making offers. Use satellite imagery. Build relationships with local contractors who can assess properties quickly.

Challenge #3: Title issues Solution: Always run a preliminary title search before making an offer. Build a relationship with a title company that can turn reports quickly.

Challenge #4: Legal complexity Solution: Work with a real estate attorney who understands distressed transactions. The cost is minimal compared to the risk of a deal gone wrong.

Challenge #5: Competition from other investors Solution: Be first (automation), be different (empathy-based marketing), or be better (faster closes, higher prices than lowball competitors).

How PropertyRadar Helps You Get Preforeclosure Leads

PropertyRadar is the only platform that combines all 7 Plays in one system:

• Preforeclosure & Foreclosure Tracking — Daily updates from county recorders nationwide
• Tax Delinquency Data — See who’s behind on property taxes and by how much
• Court-Sourced Probate Filings — Real probate data with case numbers, decedent info, attorney details, and relatives—not just a “deceased owner” flag
• Court-Sourced Divorce Data — See divorce filings at initial petition, months before they appear on any other platform
• Eviction Data — The only platform offering court-sourced eviction records, identifying tired landlords in active distress (no competitor offers this)
• 200+ Stacking Criteria — Combine distress types with equity, ownership, vacancy, and more
• Automated Alerts — Get notified the moment new properties match your criteria
• Built-in Skip Tracing — Find owner phone numbers and emails instantly
• Targeted Marketing Tools — Direct Mail, Mailing Labels, Mail Merge, Online Ads, and Email campaigns
• Mobile App — Research properties on the go while driving for dollars

Your Next Steps

1. Pick your Play — Which of the 7 distress types fits your market and experience level? Preforeclosures and tax delinquent are great starting points.
2. Define your criteria — What geographic area? Minimum equity? Property types? Get specific.
3. Build your list — Use PropertyRadar to create a dynamic list that updates automatically.
4. Launch your outreach — Start with direct mail or door knocking. Consistency beats volume.
5. Track and refine — Monitor response rates. Adjust your messaging and criteria based on what works.

The investors who win in distressed real estate aren’t the ones with the biggest budgets—they’re the ones with the best systems. Automate your lead generation, lead with empathy in your outreach, and deals will follow.

Related Resources

• 7 Ways to Get Preforeclosure Leads and Turn Them Into Deals
• The Complete Guide to Foreclosure Investing
• 7 Do’s and Don’ts When Marketing to a Pre-Foreclosure List
• How to Get Preforeclosure Leads — Learn How the Pros Do It
• 5Ds: The Life Events That Commonly Lead to Foreclosure
• How to Generate Real Estate Leads — Hunting vs. Farming