Hey there, Cam Dunlap here…
After helping another student close a deal with a homeowner in foreclosure this week, I was reminded of something most investors never learn:
Distressed sellers go through an emotional journey during the stages of foreclosure — a predictable pattern — and if you understand it, you can help them and profit ethically from foreclosure deals.
Most investors completely miss this part of the process.
And honestly, it’s why so many struggle.
Let’s break down the 5 stages of foreclosure grief, how to spot them, and how to approach sellers at the right time.
Why Timing Matters in a Foreclosure Deal
Most homeowners don’t even appear on your radar until the bank files a Notice of Default (NOD) or lis pendens.
That doesn’t happen until they’re 90 days behind on payments.
Once that NOD hits public record, foreclosure has officially started — and so has the seller’s emotional timeline. From that moment forward, they begin moving through the same five stages of grief people experience during any major loss.
Understanding these stages gives you an unfair advantage when working foreclosure leads.
Stage 1: Denial — “This Can’t Be Happening”
This is the most common reaction immediately after the NOD is filed.
Sellers in denial will:
- Pretend they aren’t behind
- Blame clerical errors
- Ignore calls
- Insist the bank made a mistake
These sellers rarely convert.
They’re not ready to talk about solutions until they acknowledge there’s a problem.
Stage 2: Anger — “This Is Unfair!”
Once reality creeps in, anger takes over.
This is when you’ll hear:
- “How did you get my information?”
- “You investors are vultures.”
- “The bank is screwing me!”
Do not take it personally.
The key in this stage: Be calm. Be empathetic. Be brief. Don’t push.
Stage 3: Bargaining — “Maybe I Can Fix This…”
This stage looks like progress, but isn’t.
Sellers begin scrambling for unrealistic solutions:
- “I’ll just list it at full price.”
- “Maybe I can rent rooms.”
- “I can pick up another job and catch up.”
They’re talking… but they’re not grounded in reality yet.
You can educate gently, but don’t expect decisions.
Stage 4: Depression — Quiet Desperation and Paralysis
This is where deals happen — but it requires care.
Sellers often:
- Shut down
- Stop taking action
- Avoid calls
- Feel overwhelmed
- Fall into “do nothing” mode
Even sellers with huge equity freeze up.
Your job here is to gently surface the truth:
They have something to lose — and something to gain — but only if they act.
This is where your empathy and your math matter most.
Stage 5: Acceptance — “What Are My Real Options?”
Finally, sellers reach acceptance.
This is the perfect time to:
- Present your solutions
- Make offers
- Show timelines
- Walk through numbers
- Structure win-win deals
Not every seller reaches acceptance before auction day — but enough do that this is where your conversions spike.
How to Use Equity as a Motivating Lever
When a seller is stuck in depression or paralysis, equity becomes the tool that helps them move.
For example:
- House value (ARV): $325,000
- Balance owed: $73,000
- Equity at risk: $250,000+
Use clear, respectful language:
“Mr. Seller, you have over a quarter million dollars in equity. In 60 days, that could be gone. I want to help you walk away with money instead of losing everything at the foreclosure auction.”
This wakes people up.
Why Understanding These 5 Emotional Stages Matters Right Now
Foreclosures are rising nationwide.
Competition is dropping.
And sellers need help more than ever.
Understanding the 5 stages of foreclosure grief gives you a strategic edge:
- You know when to call
- You know HOW to talk to them
- You know what they’re ready (or not ready) to hear
- You avoid wasting time
- You position yourself as the solution, not the pressure
This is how you build a real foreclosure business that gets results.
Your Action Plan for Working Foreclosure Leads
- Check when the Notice of Default was filed
This tells you where they likely are emotionally. - Listen for emotional cues
Anger? Denial? Acceptance? Match your strategy to their stage. - Lead with empathy, follow with facts
“I understand this is hard. Here are the actual options on the table.” - Stay consistent
A seller who hangs up Wednesday may be ready Friday.
If you’re ready to start finding foreclosures in your market, check out this free trial of my motivated seller secret weapon…The Real Estate Data Feed.
Regards,
Cam Dunlap