Foreclosure Starts Are Up in Key States—What Do Early-Stage Filings Mean For Investors?

In This Article

In real estate, timing is everything—and nowhere is that more true than in the foreclosure market. When a foreclosure filing first hits public records, it signals both distress for a homeowner and potential opportunity for an investor. The earliest stage of the process—foreclosure starts—is often the best chance for investors to act before properties hit the crowded courthouse steps or bank-owned listings. 

August 2025 data from ATTOM Data Solutions shows a notable rise in these early filings nationwide and in several key states. For investors who know how to interpret the data, this stage may represent a window to negotiate directly with homeowners and position themselves for acquisitions before the broader market reacts.

The Numbers: August 2025 Foreclosure Starts

According to ATTOM, 23,852 foreclosure starts were filed nationally in August 2025, up 0.56% month over month and 17.58% year over year. This steady upward trend points to a growing wave of homeowners entering distress.

State-level data reveals where the pressure is mounting:

Texas: 2,982 filings (+60.58% YoY) despite a sharp monthly decline.

Ohio: 1,067 filings, a 34.72% YoY increase, signaling elevated distress in the Midwest.

North Carolina: 728 filings, an eye-catching 46.48% YoY increase.

Florida: 2,803 filings, up 5.06% YoY, reflecting consistent pressure in one of the largest foreclosure markets.

California: 2,558 filings, a 4.71% YoY rise, suggesting stability but persistent underlying challenges.

Why Investors Should Care

Foreclosure starts matter because they’re the earliest warning sign of potential property transfers. At this stage, the homeowner still owns the property, which means investors may have options to step in creatively before the foreclosure process accelerates.

A spike in filings can foreshadow:

More distressed inventory hitting auctions and bank REO lists in the months ahead.

Regional softening in housing markets, even if national metrics appear stable.

Opportunities for investors to negotiate directly with motivated homeowners.

Investor Opportunities in the Pre-Foreclosure Stage

Unlike properties at auction or those already taken back by banks, foreclosure starts allow investors to work with homeowners in a more flexible, often less competitive environment. Strategies may include:

Short sales: Negotiating with both the borrower and lender to purchase the property for less than what’s owed.

Deed-in-lieu agreements: Arranging for the homeowner to voluntarily transfer ownership in exchange for debt relief.

Loan reinstatement or assumption: Where possible, stepping in to bring a loan current or assume an existing mortgage.

Cash for keys: Offering relocation funds in exchange for the homeowner vacating the property quickly and amicably.

These options can potentially lead to below-market acquisitions, while also helping homeowners avoid the lasting financial consequences of foreclosure.

State Spotlight: Where Filings Are Surging

Looking closer at the August numbers highlights why investors should be watching specific states.

Texas: With nearly 3,000 foreclosure starts in August alone and a staggering 60% year-over-year increase, Texas may present a wave of new distressed inventory in the coming months. For investors, this could mean more opportunities in both urban and suburban rental markets.

Ohio: The 34.72% annual increase puts Ohio on investors’ radar, particularly in counties where affordability challenges have collided with rising interest rates. Pre-foreclosure negotiations here could open doors to discounted properties in established rental markets like Cleveland, Columbus, and Cincinnati.

North Carolina: A 46.48% surge year over year is especially noteworthy in a state that has been a magnet for in-migration. Investors may find that distressed opportunities are emerging even in otherwise competitive housing markets.

What It Means for Real Estate Investors

Foreclosure starts don’t just represent individual distressed properties—they indicate trends that can shape investment strategy. A rise in early filings may mean:

More potential supply for investors willing to negotiate before properties reach auction.

A leading indicator of softening in local markets.

The chance to move ahead of other investors who typically enter at the auction or REO stage.

You might also like

For investors using self-directed IRAs, this stage may also align with the ability to acquire properties in a tax-advantaged environment—whether as rentals, rehabs, or future resales.

Don’t Just Watch the Market—Track It

Spotting opportunities at the foreclosure start stage requires access to the right data. Monitoring filings at the ZIP code, county, and state levels gives investors a competitive edge. By tracking trends over time, investors can identify neighborhoods where distress is building and act early—before the competition.

Imagine targeting a ZIP code where filings have doubled over the last three months. That trend line may give investors a chance to step in with short sale offers or deed-in-lieu negotiations, well before the property is scheduled for auction.

Take Control of Your Investment Strategy

Foreclosure data is not one size fits all. A rising tide of filings in Texas looks very different from a spike in North Carolina or Ohio. That’s why timely, granular data is essential for investors who want to stay ahead.

With Equity’s Foreclosure Reports—powered by ATTOM Data Solutions—you’ll get monthly updates on foreclosure starts, notices of sale, and REO activity—sortable down to the ZIP code level—so you can identify opportunities before the broader market reacts.

Subscribe today for just $19.95/year for a single state, or $69.95/year for the entire country. Visit our Real Estate Reports Page and click to view the Foreclosure Reports to start tracking foreclosure data now.

Equity Trust Company is a directed custodian and does not provide tax, legal, or investment advice. Any information communicated by Equity Trust is for educational purposes only, and should not be construed as tax, legal, or investment advice. Whenever making an investment decision, please consult with your tax attorney or financial professional.

BiggerPockets/PassivePockets is not affiliated in any way with Equity Trust Company or any of Equity’s family of companies. Opinions or ideas expressed by BiggerPockets/PassivePockets are not necessarily those of Equity Trust Company, nor do they reflect their views or endorsement. The information provided by Equity Trust Company is for educational purposes only. Equity Trust Company, and their affiliates, representatives, and officers do not provide legal or tax advice. Investing involves risk, including possible loss of principal. Please consult your tax and legal advisors before making investment decisions. Equity Trust and Bigger Pockets/Passive Pockets may receive referral fees for any services performed as a result of being referred opportunities.