HOW TO FIND MOTIVATED SELLERS
Before you can start your real estate investing journey, you have to find real estate to invest in. So, how do you find motivated sellers, and why do they need to be motivated? The world of real estate can be volatile and unpredictable. Sometimes people want to sell their houses, and sometimes they will change their minds. Finding a motivated seller is about finding a property owner that is invested in selling the property to you quickly and efficiently. A motivated seller is eager to sell their property to you. They don't want to waste valuable time on negotiations and paperwork. They want to part ways with their home, and they want to do it efficiently. Finding a motivated seller is a great way to find properties that are being sold under the market value. This means that you can save money and get a higher return on your investment.
If you want to become a successful real estate investor, then finding motivated sellers won't only be about finding willing property owners who want to sell their homes. Finding a motivated seller involves finding someone who is selling their property at a very low price, or someone who is willing to sell the property to you on your terms. If the seller is not willing to do this, as a real estate investor, you need to be willing to walk away and find another investment opportunity. And trust me, there will be many opportunities, so don't wait around for sellers who aren't going to work on your terms. The goal in property investing is to receive a high return on your investment. If a seller is demanding more money or more interest, then the return on investment will be less, and it may influence the success of your next investment project.
If you find a great investment opportunity but the seller is slow, unsure, and seems to be dragging the process on longer than it needs to be, then it might not be as great an investment as first anticipated. If you invest in this kind of property, the carrying costs, taxes, and utility bills might run up your budget for no good reason. This is even more frustrating if the deal falls through or if the owner backs out. However, finding a motivated seller doesn't need to be as difficult as it sounds. In this chapter, I will tell you how to find motivated sellers in 28 days or less. You won’t need to wait around for months before cashing in on your first investment.
Motivated sellers can be found anywhere, although it will require some effort from your side. Remember that no matter how great a property looks or how much potential it has, if the seller is not willing or motivated, this could result in disappointment. If you find an unmotivated seller, it may be best to move on to the next investment. Here are a few ways you can find motivated sellers and invest in your first property:
Make a List.
There are many lists available for you to determine which sellers are motivated and which are not. For example, sellers who are moving out of state, transferring jobs, or who are unable to pay their mortgage will be extremely motivated to sell. They are on a tight time limit and their constraints motivate the need to sell the property as soon as possible. This is where you, as an investor, can jump in and put in an offer at a lower price. If the seller is motivated enough to sell, then they are likely to accept a lower price. Locating these lists may be challenging, but they can be found at your local tax office or online. Here are a few lists that you can use to find motivated sellers:
Code Violation Lists: Look for properties that are on the code violation list. Normal buyers are likely to stay away from these kinds of properties, however, properties with code violations are perfect for real estate investors. For example, a common code violation is that the electrical panels of the house may not be up-to-date. As a buyer, this repair can be inconvenient, but as an investor, this repair is an opportunity to upgrade the property and sell it at a higher price.
Vacant Property Lists: Properties can become vacant for many reasons. They may be inherited properties or empty rental houses. Vacant property owners are often quite eager to sell because the property is of little use to them. Properties that have been inherited by people are known as probate leads and can be useful for finding motivated sellers.
Delinquent Tax Lists: Properties that are on delinquent tax lists are often auctioned. Find the delinquent tax list in your area and keep an eye on future auctions.
Absentee Owner Lists: Absentee owners are similar to vacant property owners, except they can be more difficult to track down.
Multiple Listing Service (MLS): Multiple listing service is an organization and database that real estate brokers can use to find properties and set up contractual agreements. It can be useful for finding motivated sellers in your area as it consolidates the available offers.
Create Marketing Collateral
Once you have established a few lists, you have to reach out to sellers. However, there is a strategy to reach out to sellers because, most of the time, you will have to convince them to sell their property to you. Yes, they can be motivated, but the real estate industry is competitive and if you don't approach sellers first, you have to make sure you approach them best. Check that your marketing is professional, clear, and concise. Contact them by mail, on the phone, or in person and paint a picture of what they could do with their lives if they sold the property to you. As a real estate investor, you are not only convincing people to buy property, you are also convincing them to sell to you. If you can get a good deal from a seller who didn’t even intend to sell their property before speaking to you, then you may be able to get a price far below the market value.
Send Direct Mail
Direct mail is a surprisingly effective way to get leads on properties. Even though we live in a digital age, research has shown that 90% of Americans still enjoy receiving mail (Esajian, n.d.). One form of direct mail marketing is to use yellow letters. These are small letters, often written on yellow notepad paper, that state the intentions of the real estate investor. For example, you may use yellow letters to find out if people are actively looking for buyers or if they would be interested in selling their property.
Yellow letters can be highly effective in generating leads, and the effects of using yellow letters are easily measured. If someone contacted you because they reviewed a letter, then you can gauge how effective using direct mail marketing is for you. However, while yellow letters tend to be more personalized, they can also take a long time to complete and send out. There are companies that you can hire to write yellow letters for you, although if you are trying to save on costs, then you might want to avoid hiring a company until you have found your feet in the real estate business.
When writing a yellow letter or direct mail marketing of any kind, the information has to be clear and concise. On average, humans have an eight-second attention span (Esajian, n.d.). So, if you aren't telling the potential seller what you want them to know in eight seconds, the letter probably won't be effective. Keep it short, sweet, and inviting. State who you are, why you are contacting them, and how they can contact you. You can also conduct follow-ups to determine whether there are motivated sellers available in the market.
Get an Emotional Response
A good tip for direct mail marketing is to get an emotional response first. If you want a seller to consider working with you, make sure to tug at their heartstrings. Tell them about the potential their property has, or about your journey as a real estate investor. Give them a reason to contact you, build a life for them with your words, and show them why selling their property to you is a positive step. Once you have established an emotional connection with a motivated seller, you can start talking business.
While yellow letters and direct mail marketing are quite effective, they only have a five percent response rate. If you send out 1,000 yellow letters, you may only get 50 responses. If you approach sellers with an overly professional and cold demeanor, they may be less likely to contact you and your chances of finding a motivated seller may become slimmer. Similarly to how you will invest in a property and add value to it, you must add value to the property owner’s decision. Would you sell your house to someone just because they asked you to? Probably not. That is why you have to sweeten the deal for them. It also helps if you make the homeowner think it was their idea. This puts them in the position of control and means that they are more likely to agree to your terms.
Online Platforms
Online platforms are a great way to find motivated sellers because most people are connected through the internet these days. The classifieds are not only for newspapers, and they can be useful for finding homeowners that don't want to go through multiple listing services or work with real estate agents. People advertise and post properties on platforms that are designed for buyer-seller interactions. Keeping an eye on these platforms can help you stay up-to-date with available properties in your area. Remember to change the notification settings on the platforms that you choose to use so that you can be regularly notified of new property listings. However, looking at some of the older property listings can also be useful. This is because older listings are often reduced, and they may be more motivated to sell than newer listings. Here is a list of platforms that can be used to find motivated sellers in your area:
Craigslist
We Buy Houses
Driving for Dollars
Zillow
Classifieds
These platforms are used to connect buyers and sellers in the marketplace and can be effective in allowing buyers to find properties they wouldn’t have otherwise known about. If you are looking for motivated sellers, it may be helpful to use all of these sites instead of choosing one or two. You want to see what is available in the market, and the more places you look, the higher the chances of finding the right property to invest in.
Expired Property Listings
Properties that have been on the market for 30 days or more often resort to reducing the price of the property. This is a tough game to play because you essentially have to wait, play your cards right, and hope no one will make an offer on the house before you. Generally, with properties that require extensive repairs, you might be able to play the waiting game. If you do decide to wait for prices to be reduced, keep an eye on the listings and their dates. As soon as the 30-day mark hits, watch the listing, wait for it to drop, and make an offer. However, keep in mind that the offer should still be worth your while. Even if the price is reduced, this doesn't mean that it will be a profitable investment.
Be Willing to Lose
When entering the real estate business, you have to be willing to lose out on some properties. Yes, opportunities may seem profitable, but if the sellers are unmotivated or unwilling to sell the property to you, then you need to learn how to walk away and move onto the next investment opportunity as quickly as possible. The real estate industry is a fast-paced business, and if you don't keep your wits about you, it could lead to missed opportunities and regret.
Troubleshooting
If you are struggling to find motivated sellers, and you find that the response rate to the direct mail marketing is low, then you may have to tweak your approach. Try to be more specific with the sellers you are approaching. If you are marketing to a wide variety of people, the odds of the marketing campaign being successful are slim. However, if you narrow your focus and put more effort into finding property owners who are willing and able to sell their property, then the response rate will likely be higher.
Also, check that you are sending mail to people and places that are active. There is no point in sending mail to vacant proper‐ ties because no one will read the mail. Instead, track down the owner of the property and send direct mail to their place of residence for more responsive results.
TIPS AND TRICKS FOR FINDING MOTIVATED SELLERS FOR WHOLESALERS AND FLIPPERS
As you become more experienced with real estate investing, you will figure out which methods work best for you. You will also be able to determine which areas are more profitable and align with your interests and target market better. You may even have to travel outside of your area to find more auctions and motivated sellers. However, if you travel too far outside of your area and decide to invest in a property, then it may require more time, effort, and money to complete the project. Consider which areas you want to invest in carefully. Some areas might have more motivated sellers, but the property may be situated in a neighborhood that won't allow you to sell the property at a higher price. Wherever you decide to find sellers, there are a few industry secrets that you only learn when you have been in the real estate business for years. Luckily for you, I have condensed them into a small list to help you find the best deals possible. Here are a few tips and tricks for finding motivated sellers in the property market:
Marketing
There are several marketing techniques that can be used in conjunction with direct mail marketing. Many real estate agents and investors use signs to find motivated sellers. For example, you could make a sign saying that you are looking for potential sellers and include your name and number on the sign so that potential sellers can contact you. Don't put these signs up aimlessly. Instead, put them up in places and neighborhoods that you want to invest in. If you don't want to invest in a million-dollar home, don't approach people with million-dollar homes. Perhaps one day, investing in a million-dollar home will be an option, but the stakes of investing in a property like that are too high if you are just starting out. Keep it small and simple while you gain some practical experience in the real estate industry.
If you are a wholesaler, then most of your time will probably be spent marketing distressed properties to cash buyers and wholesalers. If you are a wholesaler, you will have to find motivated buyers as quickly as you find motivated sellers. The focus on marketing is necessary because it is your responsibility to find new buyers for the property. One of the most effective ways to do this is by using marketing strategies. This is where using signage and direct mail marketing can come in handy when trying to find potential sellers and buyers. To make the marketing process easier and less time-consuming, there is an app called DealMachine which mails a written postcard with a picture of the property to potential sellers. This can also be useful for finding potential sellers as wholesalers in the marketplace.
Look In Unexpected Places
You might not be able to find the properties or sellers you are looking for on lists or through direct mail marketing, and if that is the case, you are going to have to get creative. Being cognizant of your target market is key when it comes to finding properties in unexpected places. For example, if you are interested in investing in middle-class neighborhoods, your target market and demographic will most likely be middle-class families. If you are not interested in investing in a higher end prop‐ erty, then you shouldn’t be approaching people who own those properties. Your target market will be similar to the demo‐ graphics of the sellers you approach. Although, if the repairs are extensive, then you may be able to turn a middle-class house into a higher end property.
Therefore, instead of sending direct mail marketing or approaching sellers that aren't aligned with your investment intentions, approach sellers who may own properties that you want. For example, send direct mail marketing or postcards to people between the ages of 45 and 65 who live in middle-class areas close to schools. Instead of feeling overwhelmed by the thought of sending an entire state direct mailing letters, you should narrow down the selling pool and make it easier to find a motivated seller. It is far easier to find a seller in a pool of 500 people than it is to find a seller in a pool of 5,000 people. Most of those people won't be looking to sell their properties, they won't be in the right neighborhood, or the properties won't be within your budget. If you have time, driving to certain areas that you want to invest in and going door-to-door is also an option. However, many people don’t receive this kind of marketing well, and it can be quite time-consuming. Stick to direct mail marketing and online advertisements if you want to reach the right sellers.
Customer Service
Just because you are focused on investing in property doesn't mean that customer service is not something you should be paying close attention to. At the end of the day, real estate investing is not just about the property, it is also about inter‐ acting with people, analyzing markets, and using marketing techniques to get what you want (which is a high return on investment). Plus, the more people you know and interact with, the more information you will have about possible investment opportunities. This is why good customer service is crucial in the real estate business.
Make sure your marketing is on point. Print professional business cards, interact with potential sellers in a clear, professional, and enthusiastic manner because this will ultimately allow them to trust you more and, therefore, increase your chances of investing and selling a property. You want to build a rapport with potential buyers and sellers. Even if they are not interested in selling a property to you or buying one of your properties, they may be able to contribute to your business in other ways. Don’t underestimate the value of building connections with people, even if they can't help you exactly when you need them. They can still offer insight, advice, or other connections that can benefit you.
While many aspects of real estate investing are crucial to the process of becoming a successful real estate investor, finding a motivated seller can be the difference between making hundreds or thousands of dollars or breaking even on a project. Look in unexpected places and exhaust all avenues before settling for a property that might not bring you a worthwhile return on your investment. Once you have found a seller and are ready to invest in a property, it is time to figure out how to do your due diligence in the real estate industry.
