Along with blossoming trees and the hum of lawn mowers, one sure sign of summer’s imminent approach is the steady increase of “For Sale” signs popping up in neighborhoods all across the country. As the weather warms up, so does the housing market. Sellers are getting busy finishing up those maintenance tasks to get the house ready for all the buyers pounding the pavements. As a real estate investor, how can you leverage this spring fever in your business to uncover some really good deals? The answer doesn’t lie in spending more time combing through the MLS. As prices in most markets continue their upward movement, so do the listing prices — and seller’s price expectations along with it. Of course you can always mail to the expired listings — but so can all the other real estate agents in your town. The MLS is not a place for shopping but rather for selling. If you are shopping, stay off the MLS. Information has become too perfect, and often real deals happen offline. To find the best deals, you have to look where no one else is looking. Here are some creative ways to uncover those sellers who either no one else knows about, or who’ve been pushed aside and forgotten about.
- Start mailing to for-sale-by-owner (FSBO) lists. It’s easy to get ahold of these lists or to create your own. There are plenty of FSBO websites that you can compile information from. To do that you can do a search for as many of these FSBO listing websites as you can find (e.g., FSBO.com and ForSaleByOwner.com), decide on your geographic area (which, remember, doesn’t need to be restricted to your immediate area — don’t be afraid to approach FSBO sellers out-of-state), and then you can pull together a mailing list of addresses or, better yet, hire someone such as a virtual assistant to do this for you. Once you have the list, mail them your best direct mail sequence, which in my experience is a personalized letter followed by a series of very brief follow-up notes. FSBOs can sometimes take their time to make their minds up, but if you’re persistent and keep mailing to them regularly, it will pay off.
- If you’re active on Facebook, you’re likely sitting on a goldmine of opportunity without even realizing it. There are so many ways you can leverage Facebook to discover motivated sellers. One is by searching for various groups that you could join in your area that might be related to specific reasons that would make someone move, e.g., divorce and separation, support groups for children of aging parents, etc. Do a search and you will be amazed at what comes up. I suggest you join these groups as a passive participant at first and, just like with all good marketing, work on building relationships. Take time to nurture the right relationships. REO agents, investors; keep an abundance mentality. Some investors are often deal rich and cash poor, so they may need to turn to you when they are unable to perform. Gift cards, lunch appointments, and simple emails congratulating them on good deals go a long way. Offer helpful tips if the topic of selling a house comes up. Or if it doesn’t, then sometimes you can work it into the conversation simply by asking a question. One word of caution — don’t just join a group and then bombard them with sales pitches. You’ll make people angry and maybe get kicked out of the group. Another way to leverage Facebook is to run an ad campaign. Facebook has some good tutorials on how to do this, and you can start out with a modest budget of as little as $10 a day to test your concept first. For any Facebook advertising you will need a fan page for your real estate investing business, and I’d strongly suggest you get busy and collect a sufficient number of Likes before launching your campaign to act as social proof that you’re a good business (200 Likes is a good number to start with). In general, make sure to continually update your social media profiles. Post items such as deals you’re looking at, construction photos of an existing project, or before and after photos. Let everyone know you are active in the marketplace.
- Start combing the newspapers for estate sales. Even better, do some research on all the companies in your target market that are involved in estate sales and start building a relationship with them. Often times these are the people that a family will call first so that the house can get “cleaned out” before it’s put on the market.
- Run an ad on Craigslist and advertise for “bird dogs” — these are people who will comb neighborhoods for you and send you the details of any houses that look ugly and/or abandoned. You’ll need to put in place some strict criteria for what you’re looking for, like single-family houses in a given radius, and I recommend that they also send you a photo along with the address of the house. Typically you pay bird dogs per lead that they bring to you, which will vary depending on the area that you’re targeting. For example, in metro Detroit you might pay a bird dog $5/lead because there will be so many, but in California this might be $20/lead. Once you have the address and picture, you look up ownership of the house using county records, and then start mailing to these people. Remember, for direct mail to be most effective, you need to mail continuously — not just once! I recommend you send them a follow-up postcard or letter every month or 2 months to let them know you’re still interested.
- One of my favorite ways to uncover new leads that no one else knows about is to mail to absentee homeowners, particularly ones who live out of state. They’re likely to be a bit more out of touch with the local market, and are dealing with the headaches of being a landlord from a great distance. You can obtain a list from most counties or online through services like the RealtyTrac MEGA marketing lists product. Mail them an introductory letter to hopefully get them to speak to you, and then keep mailing to them every few months.
- Advertise on Craigslist. It’s free — need I say more? Yes, you’ll get a lot of “tire kickers” responding to your ads, but you only need to uncover one motivated seller lead to make it worth your while. A tip when advertising on Craigslist — don’t make your ad sound like a real estate agent or a corporate-sounding real estate business. This is a mistake that a lot of investors make. You want to sound like a regular guy or girl who’s looking to buy a house and can help anyone who needs it. Use photos in your listing — they help to build trust.
So there you have it. Six great ways to find motivated sellers by looking for them in places that no one else is. Happy hunting! About the Author: Mike Baird was the star of the hit TV show Flip Men that received great acclaim on Spike TV. He has personally flipped over 1,000 houses and is known as the expert on real estate investment. Along with his partner, Greg Herlean, Mike leads Property Bank Education, a national workshop series for aspiring investors. His passion for the real estate business is unequalled and he lives to motivate, inspire, and assist others.