How to Find the Motivated Sellers
by Ron LeGrand
Motivated sellers are the key to all good real estate deals. Read this sentence again and impress it on your memory forever. Whenever you remember it, you will increase your potential profit, make better deals, put more cash in your pocket, and save valuable time.
One of the primary reasons for failure in real estate is trying to buy from unmotivated sellers. It's like trying to push a rope. It will absorb all your time and energy, and it will get you nowhere. Find the seller who really wants to sell, and you will buy a lot more houses at far better prices. It is the secret to great deals.
Motivation comes in all forms. Some of the most common are divorce, relocation, extensive repairs, pending foreclosure, elderly owner, lender owned properties, and so forth.
Locate the Good Deals First
The first thing you should do is let the world know you are in the house buying business. Are you ashamed of being an investor or are you shouting it to the world?
Don't rely on just one or two methods for getting the word out. I suggest you pick at least five ways to find houses and put all five to work simultaneously. The more you put yourself in the way of opportunity, the better your chances of getting what you want.
Get the seller to call you first. Why is that so important? They are always more motivated when they call you first. Do not waste time dealing with unmotivated sellers who are just testing the waters. Instead, do everything possible to get sellers to call you first.
The more lines you cast into the pond, the better chance of getting a bite. If you use at least several of the following methods, you will receive more calls from motivated sellers than you can handle. More importantly--they will be calling you first.
Run Ads
The easiest way to find motivated sellers is to run an ad in your local papers and let them call you. You don't need anything fancy to get calls. The ad I have used for years simply says, "We buy houses, fast cash, two-day closing, any condition, any price, call xxx-xxxx."
Most of your calls will be worthless. But you only need one good call once in a while to make a good income. Don't be concerned about the competition in the paper. It amazes me how there can be eight or ten ads all saying the same thing, and yet we all get calls.
Most people will call only one or two ads before they quit. If your phone number is in their area or they like something about your ad, you'll get called. I like to use bold headlines and not crowd my ads. Practice will tell you what works best.
Read Ads
The other side of the coin is to call ads yourself. Don't think there are no good ads in the papers just because so many people read them. First, most investors only check a few ads before giving up. Second, your search will be much more effective if you know exactly what to look for.
For "subject to" deals, you should be looking for ads that say "no qualifying," "assumption," "take over payments" or something to this effect. For wholesale deals, look for ads that say things like "as is," "make offer," "estate sale," "needs work," "handyman special," "motivated seller" and so forth.
Maximize your time and effectiveness by calling only those ads that indicate motivation on the seller's part.
The Least Expensive and Most Effective Ads
Business cards are your least expensive, most effective advertising. They cost between $20 and $100 per thousand, depending upon how fancy you get.
A lot of cards will be thrown out. Sorry, but that's real life. Some of them will be saved. And a few will generate a phone call right away. Here's the bonus question: How many deals do you need to close to pay for your box of business cards?
One single card is going to do it. The catch is, you never know which card. So don't be shy about giving out your cards to everyone and telling them what you do. Even someone who has absolutely no interest in buying or selling a house may know of others who are. Everyone is either a prospect or a potential source of referrals.
Avoid phrases like "Real Estate Investor." That means nothing to motivated sellers. They are only interested in what you can do for them: I BUY HOUSES, CASH. Your business card should say something like, I BUY HOUSES, CASH, ANY CONDITION. Use your card as a billboard to telegraph your message. Make what you do crystal clear.
Hand them out everywhere. Leave them in restaurants, barber shops, stores, and offices. Put them in all your local bills when you pay them. If you do not need to order more business cards after three months, you are not getting the best use out of them. These methods of finding motivated sellers are just the tip of the iceberg. Next time, we'll explore a variety of additional ways to find the sellers who want to sell their house now.
FSBO Signs
It is amazing how many people do not advertise their home for sale. Some people are so sure the world will beat a path to their door, they just put up a single small, handmade sign. Sometimes it's not even legible from the street. Of course, this can work to your advantage as an investor. If you are the only one who pays any attention, you are also the only one to make an offer. Poorly advertised For Sale By Owner (FSBO) homes are an excellent source of leads.
Write down the phone number and call the owner. If there is no phone number on the sign, that's even better! Just knock on the door and start talking. Always look for FSBO signs when you are driving around. Take a different route home every day, and make it a point to cruise the neighborhoods looking for deals. Neighborhoods change every day and so do the houses for sale.
Referrals
Would it benefit you to have ten people searching for deals on your behalf? How about a hundred people? Could you afford to pay them all? The answer is "Yes!" You can certainly afford to pay someone $250 or $500 when they bring you a deal that makes you $10,000 or $20,000. These folks are called "bird dogs," and they are fine sources of leads you otherwise would never hear about.
It doesn't matter how many bird dogs you have because you only pay them if you actually close on the deal. If you're a serious investor, you should always get people to bird dog for you. Ask everyone you talk to if they know of anyone selling a house. Tell them that if you buy one on their referral that you will pay $250 at closing. Let the word get around town that you pay for leads, and you may have more than you can handle.
Flyers
Flyers are even better than direct mail. Design an 8 1/2" by 11" flyer and distribute it door to door in the neighborhoods where you want to buy. I promise that if you put out 3,000 flyers in this manner, you'll be very pleased with the results. I don't believe I've ever done that and not bought a house as a result.
Basically, the flyer should read like our ad. Don't crowd it; just get the message across. The best part is the flyer can last for years and produce results when you least expect them. I made $23,000 on a house I bought from a year-old flyer. You can hire students or people from your local labor board to distribute them. Two people can put out 500 flyers in three hours. Put flyers on every door in the neighborhood. Car windows and mail boxes are off limits.
Vacant Houses
Whenever you canvas the neighborhood with flyers, you'll also want to be on the lookout for vacant houses. Vacant houses make motivated sellers and good bargains. Looking for them is another way to find houses that are not even on the market.
Look for the telltale signs of vacant houses: the lawn is not cared for; weeds have begun to take over; a pile of newspapers in front; old coupon flyers attached to the front doorknob; and other subtle signs. Record the address of the vacant house and check with the neighbors for the whereabouts of the owners. These are excellent leads, yet very few people are willing to hunt for them. So you will have little or no competition. If the neighbors can't tell you how to contact the owners, go to the court house or local tax assessor's office to get their name and address. Most of the clerks at these offices are very helpful and willing to guide you through the system used in their office.
Leave several flyers at the vacant house (the owners may come back) and send the owners of the house a letter. If it is first class, it may get forwarded to them. Another way to find out who owns a vacant house is to go to the post office and ask if they have a forwarding address for the vacant property. The post office charges $3 for this service, but it will often give you the name and next address of whoever was living there last.
Obviously, not all the letters you sent to owners of vacant houses will lead anywhere. But some will. All you need is for one or two of these leads to turn into a deal every three months for you to make a fair living. We have still only scratched the surface of how to find motivated sellers.