Courthouse Foreclosure Pre-emption
Walk someone through finding and buying distressed properties before they reach auction or public listing — using Codie Sanchez’s courthouse research method from My First Million Ep. #176.
When to Use
The user wants to invest in real estate but can’t find good deals at market prices. They might say:
- “How do I find off-market real estate deals?”
- “How do foreclosure auctions work?”
- “I want to buy below-market properties — where do I start?”
- “What is Roddy’s List?”
- “How do I approach homeowners in foreclosure?”
- “I want to buy before things hit Zillow”
The Core Principle
From Codie Sanchez (CarCWCl1JFk.md):
“So ‘foreclosed’ is really when it’s listed on Zillow and Redfin — that’s the post-auction step. That’s when most of us see them. But prior to that you have auctions — the bank auctions of bankrupt or foreclosed properties — and you get it before the street does.”
Most retail investors compete for the same properties at the bottom of the funnel — Zillow listings, Redfin, the MLS. Codie’s approach is to find distressed properties two steps earlier, when they’re still in the legal process and the owner still has options. At that stage, you can offer a solution — not just a price.
The sequence runs: financial distress → legal filing → pre-foreclosure list → courthouse auction → Zillow/Redfin listing. Most people enter at step five. This framework gets you in at step three.
Step 1: Understand the Three Entry Points
There are three windows to buy before a property goes to market. Each has different access requirements and deal dynamics.
Window 1: Pre-Foreclosure (Best for relationship deals) The owner has defaulted but the auction hasn’t happened yet. The property is on a courthouse list — accessible to anyone who buys it. The owner still holds title and can still sell directly.
Window 2: Courthouse Auction (Best for cash buyers) The bank auctions the property publicly, often on courthouse steps. You bid in cash against other investors. You’re buying the property, not a relationship with the owner.
Window 3: Post-Auction / REO (Worst deals) If no one buys at auction, the bank takes the property as “Real Estate Owned” (REO) and lists it on Zillow, Redfin, or with an agent. This is where retail investors compete. Worst prices, most competition.
Ask the user: Do you have cash available to bid at auction, or do you need to structure deals more creatively? This determines which window to target.
Step 2: Get the Pre-Foreclosure List
The pre-foreclosure list is the key intelligence asset. It tells you which properties are about to go to auction before anyone else knows.
From Codie (CarCWCl1JFk.md):
“There’s a list of properties that are about to go into foreclosure, and in Texas it’s called Roddy’s List — R-O-D-D-Y-S. You buy the list, it’s cheap, a couple hundred bucks, and you get every property that’s about to go into foreclosure.”
Texas: Roddy’s List (reddylist.com or similar) — county-by-county, updates regularly. Auctions in Texas happen every Tuesday.
Other states: Every county has an equivalent process. Go to the county registrar or county clerk’s website and look for:
- “Notice of Default” filings
- “Lis Pendens” records (lawsuit pending on a property)
- Scheduled trustee sale or sheriff sale dates
- Each county publishes how often they hold auctions — frequency varies by state and county
Ask the user: What state and county are you targeting? Look up the county registrar website together and find where foreclosure notices are published.
Cost: Courthouse records are often free or low-cost public records. Compiled lists like Roddy’s List charge a subscription fee (typically $100-400/year) but save significant research time.
Step 3: Research Each Property Before Contact
Before you knock on a door or make a call, you need to know two things: what the property is worth and who owns the debt.
From Codie (CarCWCl1JFk.md):
“One thing I’ve realized about wealth over time is debt is almost everything. You should always look — even before you do a startup investment — for whether there’s any debt on the company, whether you’re in first lien position.”
Property value:
- Pull comparable sales (comps) from Redfin, Zillow, or a local MLS
- Drive by the property — Google Maps is not updated same day
- Physically walk the exterior if possible: “You could buy a house at foreclosure auction using Google Maps, but that house might have burned down last week.” — Codie Sanchez
Debt research:
- Pull the title report or check the county recorder for all liens on the property
- Identify who holds the first lien (primary mortgage holder)
- Check for secondary liens: tax liens, HOA liens, contractor liens, water/utility liens
- Watch out for small liens that compound: “One of the biggest predators on low-income homeowners is those little water purification faucets — they put them in houses by applying a lien. You could literally have a lien for fifteen hundred dollars that hasn’t been paid, now worth twenty-five thousand because it’s accumulated at ten or twelve percent interest.” — Codie Sanchez
Ask the user: Have you pulled the title on this property? Do you know what liens exist beyond the primary mortgage?
Step 4: Contact the Owner Directly
This is where Codie’s approach diverges from traditional auction investing. Instead of waiting for the auction, approach the owner first.
“Then you can door knock. You go knock on the door and say, ‘Hey, I’ll give you two hundred thousand for the house you’re in foreclosure on because you owe fifty.’ That actually gets them out of bank foreclosure and gives them extra money that the bank was going to write off anyway. So it sounds predatory but it’s actually not.” — Codie Sanchez
Why this works for the owner:
- They avoid foreclosure on their credit record
- They may walk away with cash (the spread between what you pay and what they owe)
- They have control over the outcome rather than having the bank take the house
Why this works for you:
- You buy before auction — no bidding war
- You have time to do proper due diligence
- You can negotiate directly on price and terms
Approach principles:
- Lead with empathy, not a price offer — they’re in a stressful situation
- Explain what you’re doing clearly — you’re a real estate investor, not a government agency
- Offer a solution, not just a number: “I can close in two weeks and handle all the paperwork”
- Be prepared for rejection — most owners will say no; work the numbers to find the ones who say yes
Ask the user: How many properties are on your list this month? What’s your conversion expectation — how many contacts to get one deal?
Step 5: Bid at the Courthouse Auction (If Needed)
If you didn’t get to the owner in pre-foreclosure, you can still bid at the courthouse auction before the property goes to Zillow.
From Codie (CarCWCl1JFk.md):
“Millions of dollars of transactions in cashier’s checks happen same day on the courthouse steps.”
Auction mechanics:
- You must pay cash — cashier’s checks, often same day
- You’re buying the property as-is, with no contingencies
- You may not have been inside the property — you’re buying from the street
- Properties may have title issues you inherit
Risk mitigation:
- Never bid on a property you haven’t physically inspected from the exterior
- Never bid more than 70-75% of ARV (After Repair Value) to leave room for renovation and profit
- Have a title search done before the auction date if possible
- Know the debt stack — if there are senior liens you don’t know about, you inherit them
“The one thing that’s true about all of this: you need cash. You have to pay cash. You’re coming with a hundred thousand dollars in cashier’s checks to the auction.” — Codie Sanchez
Ask the user: Do you have the cash liquidity to participate in auctions? If not, the pre-foreclosure direct approach is your primary strategy.
Quick Reference
| Stage | What Happens | Your Entry | Requirements |
|---|---|---|---|
| Pre-foreclosure | Owner defaults, county files notice | Buy the list, contact owner directly | List subscription, relationship skills |
| Courthouse auction | Bank auctions the property publicly | Bid with cashier’s checks | Cash, same-day availability |
| REO / MLS listing | Bank lists on Zillow after failed auction | Compete with retail buyers | Standard financing, but worst prices |
Search the Archive
grep -ri "foreclos\|courthouse\|auction\|pre-foreclosure\|distressed.*real estate" transcripts/
grep -ri "Roddy.*list\|county registrar\|title.*lien\|cashier.*check" transcripts/
grep -ri "Codie\|door knock\|off.market" transcripts/
Output
After the session, deliver:
- List source — the county registrar website or compiled list service for their target market
- Research checklist — comps, physical inspection, debt/lien stack before any contact
- Owner outreach script — empathy-first approach with clear explanation of what you’re offering
- Bid ceiling — maximum price at auction based on ARV and repair estimates
- Deal structure — direct purchase terms if buying pre-auction from owner
- Cash requirements — liquidity needed to participate in auctions vs. pre-foreclosure deals
Source
How to Buy Distressed Assets, How to Network with Codie Sanchez | My First Million Ep. #176 — Sam Parr and Shaan Puri interview Codie Sanchez.