Pre-Foreclosures List 📍 High vs Zero Equity

In this lesson, I want to take a few minutes to dissect high equity, zero equity and even the underwater segment of the pre-foreclosures list and data.

Pre-foreclosures list is a list of properties and property owners whose mortgage banks have filed a lis pendens which is an intention to foreclose on their property with the government.

This lesson is important because in my camp, it has been an argument, which of the lists are best among so many options to go after with a marketing campaign.

We are going to touch on…

  • High Equity
  • Zero to Negative Equity (The Underwater)
  • Which of the 2 Pre-Foreclosure Lists is Better?
  • High Equity + Vacant List
  • How to Get Free Access to PreForeclosure List

My wholesaling career was launched back in 2005 with a pre-foreclosures list; precisely underwater.

Just in case you are new to this, what is real estate wholesaling?

Real Estate Wholesaling is the art and science of finding deeply discounted properties leveraging mass marketing campaigns.

Now, the underwater pre-foreclosure list comes with additional layers of processes (extra work) to go through with the attached mortgage bank to close deals for profit.

But back then, I didn’t know it was more work because I was new in the business.  My perspective was from the place of an excited newbie.

With what I know today, you will be shocked with what I am about to reveal in terms of which of these 2 lists segment is the best:

1, High Equity or…

2, Zero to Negative Equity (The Underwater)

My name is OLA and I am the author of 2 books:

Smart Real Estate Wholesaling and…

Real Estate Money Secrets

Which you can download absolutely for free at:


I am also the creator of myEmpirePRO and the 11 days challenge quick start guide which you can access at:


Let’s break it down.

What is Equity?

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Equity is essentially the difference between how much a property is worth in the market and the amount of mortgage loan owed against the property.

For example, after an appraisal of your property, the report has revealed that it is worth $430,000 today.

You purchased the property 25 years ago and have managed to have only $103,000 left on the mortgage to own it free and clear.

Effectively, your equity (your ownership value in the property is:

$430,000 minus $103,000 which is equals to.. 

$327,000 in Equity.

So How Much Would Be High Equity?

When the principal balance of a mortgage loan carries a smaller portion against the value of the property, it is then considered a high equity property.

Here is why you would want to go after the high equity segment of the pre-foreclosures list.

Though the property falls under the category of a distressed property, the high equity puts them in a position to be able to sell the property at a discount.

Zero to Negative Equity (The Underwater)

If the property was in a zero to negative equity position, an additional layer of shortsale with the bank would be necessary even if the owner wants to give away the property to you for free.

Let’s use this example from the same neighborhood with a few unique scenarios.

It was just last year that the real estate market collapsed real badly and things are not recovering fast enough.

A property that was worth $430,000 is now worth only $275,000.

In addition to that, the owner purchased it only 2 years ago with a payment of only $20,000 so far.

The original mortgage loan amount was $380,000 therefore the principal balance is now $380,000 minus $20,000 which is equals to $360,000.

The owner is owing $360,000 against a property that’s only worth $275,000 so that brings us to a negative equity of -$85,000. (Underwater Equity).

So the owner agreeing to sell us the property even at $275,000 is not enough; the balance to the mortgage lender also has to be settled through a shortsale.

Which of the 2 Pre-Foreclosure Lists is Better?

TRENDING: 5 Stages of Wholesaling Pre-Foreclosures [The Definite Guide for 2021]

There are 5 stages of wholesaling a piece of real estate right? You have…

  1. Data
  2. Contact
  3. Leads
  4. Contract and
  5. Deals

In the next video lesson,I will dive a little more into the details of the 5 stages to wholesaling a house in preforeclosures.

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If everything else were equal, you will get to the final stage which is deal-disposition with high equity because all you need is for the property to have enough to agree to your offer.

When a property is underwater, the 4th stage of contract-acquisition has to involve a shortsale approval from the mortgage lender which can take anything from 2 weeks to 2 years based on my experience.

With that being said, 90% of all the deals I closed between 2005 and 2008 when the market crashed were shortsale deals because I created a seamless process around the often lengthy process.

With negative equity, the property owner is facing the reality that their property is worth nothing.

So they are typically open to giving it away if you know what to do with it. I did and they were the easiest contract  to acquire.

The Main Lesson

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Ultimately, it comes down to a system of lead pipeline and focusing on problem solving.

So even though we like high equity to remove the hassle of negotiating a shortsale, we’ve made it a point to prioritize properties that fit these 3 criteria.

  • Pre-Foreclosure 
  • High Equity and
  • Vacant Properties

You can easily pull this list by setting up a free trial at:


Check out the video on this screen to learn step by step how we set that up in our business.

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