How to Spot a Short Sale Opportunity Before It Hits the MLS

Investors and agents don’t want to wait for a property to appear on the MLS before they act. The key to finding off-market short sale opportunities is knowing where to look—and who to talk to—before a foreclosure is filed.

Start with the Default Timeline: 30, 60, 90-Day NOD Lists

Many investors rely on Notice of Default (NOD) lists to spot distressed properties early. These lists show how far behind a borrower is on their mortgage:

• 30-day late: The earliest red flag.

• 60-day late: When lenders typically start making collection calls.

• 90-day late: The point where foreclosure proceedings may begin.

These lists are excellent for prospecting because homeowners in default are often open to a short sale when they realize foreclosure is imminent.

Look for Lis Pendens Filings

In judicial foreclosure states, watch for lis pendens filings. A lis pendens means a formal foreclosure lawsuit has been filed, and the clock is ticking. A homeowner may be open to a short sale if they are under water on their mortgage.

Track Tax Delinquencies and Code Violations

Another great lead source is property records. Unpaid property taxes and repeated code violations signal a homeowner in distress. A backlog of tax bills or code fines often points to someone who is overwhelmed or unable to maintain the property. Combined with negative equity, this creates a strong short sale prospect.

Build Referral Relationships With Bankruptcy & Divorce Attorneys

Real estate agents can find excellent leads by partnering with attorneys. Bankruptcy and divorce attorneys often represent clients who are experiencing financial hardship or an unexpected life event. If the client is upside-down on their mortgage, they may appreciate an agent who can handle a short sale and help avoid foreclosure.

Denied Loan Modifications or Forbearance Requests

Many homeowners try to stay in their homes by requesting a loan modification, forbearance or repayment plan. When a bank denies those requests, a short sale becomes the logical next step. Reaching sellers at this point lets you offer a dignified solution before foreclosure damages their credit further.

Credit Repair Services Can Be Great Referral Partners

Credit repair agencies work with people who are struggling with late payments or other financial issues. Building relationships with these professionals can lead to early introductions to homeowners who need to sell.

Final Thought

Finding short sale opportunities before they hit the MLS isn’t just about data—it’s about understanding the timeline of financial distress and connecting with the right people at the right time. Whether you’re an investor or a real estate agent, spotting these signals early helps you provide value and close deals.

If you’re ready to take action, see how our team can shelp you start a hort sale. To learn more about the types of clients we assist, visit our Who We Serve section, and explore How We Help to understand our proven process. We’re here to process, coordinate, and negotiate your short sale from start to finish.