Five inexpensive sources to find your next investment.
Sellers come in various shapes and sizes. Some simply want to sell, such as a family wanting to move up or down in the same area. Others, however, need to sell, such as an owner facing foreclosure.
Then there’s the matter of distress. Some properties are distressed, such as the result of a fire. Some owners are distressed, such as in a divorce. Other owners and properties are just fine, trying to implement a positive change for the future.
These distinctions are mentioned because they are pertinent to how sellers will be found, and how sellers need to be successfully approached by marketing and then in negotiation.
Wholesalers NEED to sell! They are people who put properties under contract with owners, then attempt to sell the contract. In essence, they are surrogate sellers. Of all the sellers described here, wholesalers are the most highly motivated because their contract will expire in 30 or 60 days. Then they will make nothing for their work, lose the modest deposit they put up, and risk the anger of the dissatisfied property owner.
Usually, wholesalers send a “blast” by e-mail, text, or social media platform to their “Buyers List.” For additional marketing exposure, and to add to their list of buyers, they also advertise on Craigslist, and sometimes additional classified advertising. So, Craigslist is the best, least expensive source of highly motivated leads.
“For Sale by Owners” (FSBO’s) are sellers who WANT to sell, but don’t want to use an agent or broker to do it. This works pretty well for FSBO’s in strong markets. In weaker markets, they usually list the property with a Realtor® eventually, so it can be placed on the Multiple Listing Service (MLS). Most FSBO sellers are fairly well educated, and therefore are confident about what they are trying to do.
FSBO’s usually employ several advertising methods. They advertise on Zillow, Craigslist, FSBO.com, Owners.com, among others, along with putting a for sale sign in the lawn. The key with FSBO’s is to respond to their ad, and gather as much information as possible. Ask for information to be e-mailed to you. Ask lots of questions to “draw them out,” and create a positive impression with them. Do not brag or be assertive. Just be polite and inquisitive. And NEVER make a verbal offer over the phone because: a) You don’t know enough yet, and b) in real estate an offer is not legitimate unless it is in writing and accompanied by an earnest money deposit (EMD).
Expired MLS Listings
Most sellers who list their property with a Realtor® to go on the MLS WANT to sell. When the listing expires unsold, they either make other plans (e.g., refinance or rent), or they are more motivated to sell. Oftentimes, they will reduce the price, sometimes substantially, due to the time they have lost.
Expired listings are best found by cultivating a Realtor® to provide a list every so often. If the property is owner-occupied, the phone number is often on the listing. If not, you still have the address and can write or drop by. If the property is not owner-occupied, look up the property tax records to see the address where the tax bill is sent. A letter should reach the owner or their representative.
Some hunters have trained dogs to find pheasant and grouse, among other birds. Perhaps you have heard of a pointer. In real estate, “bird dogs” are people “out in the field” who are paid when they find and refer a seller who closes a deal, an example is a postal or package delivery person.
Creating a roster of “bird dogs” first involves making a list of the possibilities. Then produce an attractive one-page flyer with your proposition and instructions. Give this to your prospective “bird dogs” with a supply of your business cards.
Driving for Dollars
This low-cost method involves driving neighborhoods for vacant and “junky” properties. Often low-income areas are more productive with this method for reasons that are fairly intuitive. It’s good practice to take a photo to remind yourself, and you could also dictate comments into a pocket recorder.
Owners can be located from property tax records, talking with neighbors, or posting some flyers on the property, if it is vacant. As a last resort, a “skip trace” company such as Lexis Nexus or Trans Union’s TLo can be used. Costs should be only a few dollars per search.
The five methods described here are meant to be not only the least costly approaches to finding sellers, but also highly productive because they address the seller’s need or want to sell.