Found a Foreclosure… Now What?

A Beginner’s Guide to Turning Distressed Properties into Real Deals (Step-by-Step)

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Meet the Expert Behind the Process

This breakdown comes directly from Patrick Butler, Co-founder of Asset Resolution Advisors.

• 40+ years in residential real estate
• 20+ years in distressed assets (pre-foreclosures, short sales, bankruptcies)
• Helped shape many of the processes banks use today

Patrick and his team don't just teach this — they underwrite deals, structure transactions, and close complex distressed properties every day.

And if there's one message he made clear in our conversation, it's this:

"Don't buy yet… You need to check this first."

Their entire system follows a clear 3-step workflow you can use too.

The Biggest Misconception About Foreclosures

Most people think: "Foreclosure = deal"

But according to Patrick:

"A foreclosure is a bank-owned property that's been fixed up and listed at market value."

What a True Foreclosure (REO) Looks Like

These properties are:

• Already foreclosed
• Owned by the bank
• Priced close to retail market value

Great for homebuyers, but not where investors usually find real deals.

Where the REAL Opportunities Are: Pre-Foreclosures

Patrick explains:

"Pre-foreclosures are properties where the mortgage hasn't been paid for 60–90+ days… that's where the opportunity is."

Why?

• The owner is under pressure
• The bank hasn't taken the property yet
• There's room to negotiate

This is where investors find:

• Motivated sellers
• Flexible deal structures
• Below-market opportunities

Step 1: Define Your "Buy Box" Before You Do Anything

Before you even open Foreclosure.com, you need to answer: What kind of buyer are you?

Patrick puts it simply:

"Are you a homeowner, or are you an investor? And if you're an investor—what kind?"

Common Strategies:

• Fix & Flip
• Buy & Hold (Rental)
• Wholesale
• Subject-To
• BRRRR

Each strategy changes:

• What deals you look for
• How you evaluate them
• Your risk tolerance

Without a buy box, everything looks like a deal. With a buy box, most deals become easy "no's."

Step 2: Use Data to Find Deals (Instead of Spending Thousands)

Professional investors often spend $20,000–$40,000/month on marketing.

But Patrick points out a smarter approach:

"Start with data. You don't need money first—you need a deal first."

Platforms like Foreclosure.com allow you to:

• Filter by distressed property type
• Track pre-foreclosures
• Set up free alerts to get the newest foreclosures by email

This becomes your deal pipeline.

Step 3: Understand the Types of Distressed Properties

Not all distressed deals are created equal. Patrick emphasizes this heavily because each type requires a different strategy.

Patrick breaks them down clearly:

Pre-Foreclosures (BEST Opportunities)

• Owner behind on payments (60–90+ days)
• Not foreclosed yet

Where investors make money

Foreclosures (REOs)

• Bank-owned
• Listed at market value

Better for retail buyers over investors.

Short Sales

• Debt > property value
• Bank agrees to take less

Slower, more complex deals. Patrick explains:

"Banks learned after 2008—it's often better to take a short sale than foreclose."

Bankruptcy

• Owner filed for protection
• Bank can STILL foreclose
• Legal protection for homeowners

Often overlooked opportunity. But here's the surprising part:

"In 97% of Chapter 7 cases, the trustee doesn't sell assets… but banks can still foreclose."

Hidden opportunity most investors miss.

Probate

• Owner passed away
• Legal process required
• Property tied up in estate

Can be complex, but profitable.

Tax Liens

• Unpaid property taxes
• Priority lien (above all others)

High risk / high reward.

Step 4: Title Research — The Step That Can Save You Thousands

This is where most beginners fail.

Patrick warns:

"If someone isn't paying their mortgage, they're probably not paying other things either."

A title report reveals:

• Mortgages
• HOA liens
• Tax liens
• Municipal violations
• Judgments

Real Deal Example (Fort Lauderdale Fourplex):

• Value: $900,000
• Liens & violations: Over $1,000,000

Issues included:

• Fire extinguisher placement
• Smoke detectors
• Dumpster violations

Daily fines added up fast. But here's the twist:

"We got those violations reduced from a million dollars down to $26,000."

This is exactly what Asset Resolution Advisors specializes in.

Key Lesson:

"Spend a few hundred dollars on title… or risk losing hundreds of thousands."

Step 5: Physical Due Diligence (After Financials Check Out)

Only after the numbers work, then inspect the property.

Patrick recommends hiring:

• Licensed home inspector
• Engineer (if needed)

Common Issues:

• Foundation cracks
• Mold
• Electrical code violations
• Roof damage
• Unpermitted additions

He warns:

"In distressed properties, deferred maintenance is guaranteed."

Even worse: Some homes have illegal additions that must be torn down.

Step 6: Follow the 3-Step System Used by the Pros (The Game Changer)

This is where everything comes together.

Step 1: Underwriting (Deal Analysis)

This is where Patrick's company stands out.

"We create a health card for the property."

Includes:

• Title research
• Public records
• "Property health report"

What's wrong with the deal?

Step 2: Exit Strategy

"Are you keeping it, flipping it, or wholesaling it?"

The team helps determine:

• Best use of the property
• Profit potential
• Risk level — Flip? Hold? Wholesale?

How do you make money?

Step 3: Transaction Management

• Fix title issues
• Work with agents
• Negotiate with lenders
• Close the deal

Time is critical (especially pre-foreclosure).

Step 7: Build the Right Team

Patrick calls this a team sport:

"TEAM = Together Everyone Achieves More."

Your Core Team:

• Real estate agent (distressed experience)
• Lender (hard money / non-QM options)
• Title company or attorney
• Home inspector or contractor
• Advisors like Asset Resolution Advisors

Don't rely on:

• Friends
• Family
• "Uncle Louie, who knows construction"

Step 8: Time Is Your Biggest Enemy

In pre-foreclosure, the clock is ticking and the bank is moving.

Patrick emphasizes:

"Time is the enemy in these transactions."

Move too slow: you lose the deal and the bank forecloses.

Move efficiently: You control the outcome

Step 9: Expect to Say NO (Most Deals Won't Work)

This is where professionals win.

Patrick explains:

"You're going to find reasons to say no—and when you don't, that's a home run."

Why most deals fail:

• Too many liens
• Bad numbers
• Structural issues
• Legal complications

The goal is not to buy everything.

The goal is to buy right

Step 10: Bonus Strategy — "Driving for Dollars"

Patrick recommends:

"Keep your eyes open while driving."

Look for:

• Overgrown grass
• Mail piling up
• Vacant homes
• Junk in yard

Then cross-check with Foreclosure.com. This is how pros find off-market deals.

Final Advice from Patrick Butler

• Start with data (Foreclosure.com)
• Define your buy box
• Always check the title first
• Inspect the property
• Build a strong team
• Follow a clear process

And most importantly:

"You don't need money first—you need a deal first."

Why This Matters

Real estate investing isn't about luck. It's about:

• Process
• Discipline
• Execution

By combining deal flow from Foreclosure.com and execution support from Asset Resolution Advisors, you now have a blueprint most beginners never see.

Final Thought

Finding a foreclosure is easy. Turning it into a profitable deal? That's where process + experience + execution matter.

So next time you find a deal...

Don't buy yet.

Check this first: Click here to watch video

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