Stage One: Starts, While the Owner Still Holds the Cards
A foreclosure start is the first public step: a notice of default in states where lenders can foreclose outside court, a filed lawsuit in states where a judge has to be involved. ATTOM’s half-year report counted 164,566 of them, up 18%. That makes starts the widest part of the funnel and the stage with the most owners free to act. They can reinstate the loan, sell the house, work something out with the servicer, or sign a purchase contract with you, and the choice stays theirs until a sale date takes it away.
A start is a notice, not a verdict, and that is the opening. Plenty of starts end with the owner curing the default, selling, or getting a loan modification, so the sale that happens before any auction is the one a wholesaler is trying to join. The catch is crowding. Every investor with a records subscription sees the same filing on the same day, so what separates you is how fast a trained caller reaches the owner and how the first minute goes. The pre-foreclosure leads guide covers pulling and filtering these lists.
Stage Two: Auctions, a Shorter Fuse and a Different Rival
Once a sale date is set, the owner’s decision window shrinks from months to weeks or days. Auction.com’s second-quarter 2026 report shows this stage recovering without flooding the market: completed auctions up 23% year over year and scheduled auctions up 13%, which leaves them at 66% and 71% of first-quarter 2020 levels. The loan mix leans toward recent and government-backed debt. Completed auctions on VA-insured loans reached 106% of pre-pandemic volume, FHA auction volume rose 47% from a year earlier, and auctions on loans originated in 2022 or later rose 104%.
Calling at this stage is a different job. Your rival for the house is no longer another wholesaler but the auction crowd and the lender. Meanwhile arrears, fees, and legal costs keep stacking onto the payoff as the clock runs, which quietly eats the equity a discount depends on. Reach these owners only when you have a buyer or funds ready to move on a short timeline. Check your state’s rules for dealing with owners in foreclosure before you dial, since some states regulate those deals closely.
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Book a Real Estate Fit CallStage Three: REO, Where the Seller Is a Bank
ATTOM counted 27,983 REOs in the first half of 2026, up 33%. By definition the lender holds the house, so there is no distressed owner left to call. The former borrower has nothing to sell, and the new seller is an asset manager working through a listing agent on the lender’s approval timeline. A script built on empathy and speed does not fit that conversation.
The growth still matters to you, just on the other side of the business. More bank-owned inventory means more competition for your end buyers’ attention, so ask the buyers on your list whether they are bidding on REO listings and what that does to the discount they need from you. Treat the REO count as a dispo signal and keep your cold-call hours for the stage with a person on the other end of the line.
Why You Cannot Divide REOs by Starts
It is tempting to divide the half-year REO count by the half-year start count and call the result a conversion rate. Don’t. The two counts describe different groups of properties. ATTOM measured an average of 563 days in the process for properties that finished foreclosure in the second quarter, so many of this year’s REOs entered foreclosure well before 2026. HousingWire’s write-up of the same report carries the same half-year totals.
Quarterly movement adds more noise: ATTOM’s second-quarter total was 115,714 filings, up 15% from a year earlier but down 3% from the first quarter. A better planning number is one you measure yourself. Pull new starts for your counties every week and track your connect and appointment rates by days since filing. After a few months you will know where your list stops answering. The first-half filing numbers give the national backdrop, but your pipeline lives in your counties.
A Calling Order for the Funnel
Put it together as a priority list. First, the newest starts, called within days of recording and revisited weekly as the owner’s situation changes. Second, properties with a scheduled auction, called only when you can move fast and your attorney has cleared the approach. Third, REOs, which get tracked for your buyers and left off the dial list. Inside the first group, the recent-vintage and government-backed loans Auction.com flags deserve their own segment, since a script for a first-time buyer on a recent loan sounds different from one for a long-time owner.
New starts arrive every week and the first-touch window closes fast, so this is a workload problem as much as a data problem. VA Horizon’s managed cold calling works your filtered pre-foreclosure list with trained callers and delivers qualified sellers to your calendar, and you pay per qualified lead rather than per hour.
Sources
The external data in this article draws on the sources below. Figures described in the text as estimates or industry triangulations are directional and are not attributed to a single dataset.
- ATTOM, "2026 Mid-Year US Foreclosure Market Report" (July 16, 2026)
- Auction.com, "Foreclosure Auction Volume Increases 23% to Match a Six-Year High in Q2 2026" (July 28, 2026)
- HousingWire, "US foreclosures rise in 2026: midyear ATTOM report"