Bankruptcy and utility shut-off lists: the weak ones
By Josh MillerUpdated 4 min readBoth are real lists and weak ones: in two counties we piloted, owners with a bankruptcy filing sold at about the rate of a random house, and in one client's ranked market, utility shut-offs sold more often than free and clear but less often than nearly every filing list. A bankruptcy also puts a court between you and the house, so work these after foreclosures, expired listings, liens and tax lists.
Bankruptcy and utility shut-offs sound like the most motivated sellers there are. Someone who can't pay their creditors, or their power bill, must need to sell. The records we've measured don't bear that out, and the reasons are worth knowing before you spend money on either list.
Bankruptcy: the court gets there first
When an owner files bankruptcy, an automatic stay stops most collections, foreclosure included. In a Chapter 7 case, a trustee takes control of property the owner can't protect under the exemptions, and decides whether to sell it. In Chapter 13, the owner keeps the house on a repayment plan, and selling it usually takes the court's approval.
So the owner you write to often can't sell to you on their own, and the bankruptcy is often filed to keep the house, not to leave it. In two counties we piloted, owners with a bankruptcy filing sold at about the rate of a random house. Bankruptcy filings come from federal court through PACER, which charges per page.
Utility shut-offs: real, weak and rare
A shut-off is a sign of money trouble, and some cities and utilities publish them. In one client's market in Tennessee, with the market and the years held the same for every list, utility shut-offs sold more often than free and clear and high-equity owners, and less often than nearly everything else: foreclosures, tax sales, probate, code violations, vacant houses, divorce and owners living elsewhere all ranked above them.
And most counties don't publish shut-offs at all. Where they do, we pull them. We'd rather tell you it's a weak list than sell you one we can't measure.
What to mail first
| List | Of every 100, sold | Counties |
|---|---|---|
| Foreclosure filed | 13.1 | 99 |
| Listing expired or cancelled | 11.9 | 492 |
| Lien filed against the property | 4.2 | 249 |
| Sitting vacant | 3.8 | 468 |
| Behind on taxes, 2 to 4 years | 3.1 | 479 |
Source: GoForClose count of off-market, arm's-length deeds in county records.
Work those first. If you still have budget, a bankruptcy or shut-off record is best used to stack on top of one of them: an owner behind on taxes who also had the water cut off is a stronger lead than either list alone. Which list should you mail first? Three questions, your county's answer.
Questions investors ask
Can I buy a house from someone in bankruptcy?
Usually only with the bankruptcy trustee's or the court's approval. Filing bankruptcy puts an automatic stay on collections, and in Chapter 7 the trustee controls property the owner can't protect. Expect a slower, court-supervised sale.
Are utility shut-off lists good leads?
A weak one. In one client's market, ranked with the market and years held the same, shut-offs sold more often than free and clear and high equity, and less often than nearly every filing list. Most counties don't publish them at all.
Where do bankruptcy filings come from?
Federal bankruptcy court, through PACER, which charges per page. The filing lists the debtor's property, so you can match a house.
What should I mail before bankruptcy and shut-offs?
Foreclosure filings and expired listings, each at 12 to 13 of every 100 owners selling off-market within a year in the counties we measured, then liens and back taxes.