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:
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:
Life event distress:
Property distress:
Situational distress:
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.
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.
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:
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.
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:
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.
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:
How to succeed:
PropertyRadar advantage: Our auction calendar shows upcoming sales with property details, estimated equity, and owner information—so you can do your homework before bidding.
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:
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
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.
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:
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.
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:
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.
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:
How to find them:
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 real power comes from stacking multiple distress indicators.
A property that’s:
…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:
Example stack: Preforeclosure + 40%+ equity + 10+ years ownership + absentee owner = Highly motivated seller with equity who’s likely overwhelmed.
Finding distressed properties is only half the battle. Converting them to deals requires thoughtful, ethical marketing.
Before you reach out to anyone in distress, commit to these principles:
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.
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).
PropertyRadar is the only platform that combines all 7 Plays in one system:
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.