Being a real estate investor means knowing how to find motivated sellers.
Requiring a combination of research and action, locating and acting upon motivated sellers is the key to being a successful investor.
But as busy as real estate investors are, you must maximize your valuable time. The focus is working with sellers who are ready to move forward, rather than trying to convince homeowners to part with their home.
Sounds obvious, right?
While obvious, it's not easy. It's often a challenge finding the motivated sellers and then engaging with them once found. So let's get right into how to find and engage with motivated sellers.
What Is a Motivated Seller?
All this mention of a motivated seller, but what is it? Who are they? To put it simply, a motivated seller is a homeowner that is eager to sell their home. Simple enough, right?
Not so fast. A motivated seller typically meets one of the following conditions:
- They are willing to sell their property at favorable terms: no money down, financing, etc.
- They are willing to sell the property at a favorable price: typically 10% - 30% below market value.
As an investor, you're hoping for both conditions to apply, but we must remember that these are real people and it’s likely that only one condition will be met.
A motivated seller is looking to sell their home, and they're looking to do so quickly. Take the time to learn about your leads and understand why it is that they're selling and how you're going to help.
What Makes a Seller Motivated?
We know what a motivated seller is, now let’s understand why they’re motivated. Among the many reasons a homeowner is eager to sell, distress is often the most common. We can all understand that sometimes life happens.
As investors, we must put ourselves in the shoes of the scenarios that can occur to create the urgency to sell a home. What is a motivated seller experiencing? Why are they looking to sell their home now? Let’s take a look at some reasons why a seller might be motivated:
Change in income: A change in income is a big driver of a motivated seller. The owner may have lost their income, requiring a downsize, or they may have increased their income and are eager to upgrade to a larger space!
Relocation: A new job can require the homeowner to sell quickly.
Family changes: Each day brings something new. This may be welcoming a new member to the family, wishing one peace as they’ve passed, or raising a toast to the newlyweds! There are a plethora of circumstances that could encourage a seller to reconsider their current living situation and adjust accordingly.
Environmental and natural causes: Changes to the environment and natural causes may urge a homeowner to quickly sell their home. These instances are out of our hands, such as hurricanes, wildfires, rising sea levels, etc. Environmental damages, like pests, can be another driver.
Foreclosure: When a seller has entered into or near entering foreclosure, their motivation is fueled purely by force.
No longer feeling safe: An increase in crime is a sure way to have a homeowner uproot and move.
New projects: New zoning and construction in the area can be a big and quick driver in a homeowner’s choice to relocate. A new mode of transportation, such as a highway or railroad, can cause many homeowners to opt for selling their home quickly before losing any further value.
Raise in taxes and overhead costs: Oh yes, there’s nothing like an increase in taxes to drive you out of your home! All jokes aside, an increase in local taxes or newly required insurances may cause a family to relocate due to the inability to afford the unexpected rise in costs.
We outgrow many things, and sometimes that thing is our home. There are an abundance of reasons a homeowner chooses to sell and do so promptly. Time is money and speed is valuable. Use the expertise of your local market to understand reasons as to why a homeowner is urging to sell quickly.
Why Motivated Seller are Important to Investors
As an investor, you’re looking for properties that have low overhead and can quickly be passed on to the next buyer.
To be successful, motivated sellers are the gold you seek! And typically, the more motivated the seller is, the better deal you’re going to get. They need the property off their hands as soon as possible, and that’s where an investor comes in.
Having a lot of leads, especially those ready to sell, is essential to being a successful real estate investor.
How to Find Motivated Sellers
Now we’ve reached the part that calls for action. Because there are so many reasons a seller might be motivated, there isn’t just one way to find them!
Let’s explore a few.
Using public records to create a list of motivated sellers is a great place to start. Public records will show foreclosures, equity, death, and more clues as to why a homeowner might be interested in a quick sell.
Public records are quick and easy to access, but it’s likely that other investors in your area are doing the same. This is where your expertise and creativity come into play. How are you going to stand out? What are you doing differently than the many other investors using public records?
Persistence and consistency will always win and maintaining your efforts over a prolonged period of time should be an integral part of your strategy.
Sellers you can look for in public records:
Property owners with delinquent taxes:
Homeowners who haven’t paid their taxes for at least two years will have a public record. Because their home is on the line, they are an ideal motivated seller to contact. A risk that comes with buying a home that may be under a lien or that holds penalties and fines is that you will be responsible for those finances once you own the property. However, the silver lining here is that you can use this information to make an offer 10% - 30% below market value.
Out of state property owners:
Homes that are not lived in as a primary residence are a great opportunity to create a motivated seller. They may not know it just yet, but with the right offer, they may realize that their lack of attachment to the property will be worth what you’re offering.
Similar to the above, an absentee owner does not live in their property. This may be due to relocation or many other reasons. If where they are currently living is more preferable than the property that is absent, there’s a high chance of them selling.
Among many others, the above are great situations in which a property owner would be interested in converting to a motivated seller. When making your list, be sure these scenarios are on your list as well as foreclosed homes, homes in probate, and homes owned free-and-clear.
Use your marketing experience to brainstorm reasons why a seller would be motivated.
Public records are a great and valuable tool when locating potential motivated sellers, but not all life events are in the public record! We must put our thinking caps on and think beyond the public record. Applying our own expertise, let's think about who would be looking to sell their home quickly:
Newly divorced couple: You can imagine that a couple going through a divorce are going to want to separate. Not to kick anyone while they're down, but this is an ample opportunity as an investor to step in and offer help in selling their home as quickly as possible.
Raised county taxes: Nothing like that tax increase that no one was expecting! Homeowners may not be able to quickly adapt to the sudden tax increase and be forced to relocate.
Increase in property value: On a more positive note, a homeowner whose home value has increased will be looking to grab the opportunity to sell while it's hot.
Hired or fired: Hooray! Or nay? Whether a homeowner was just hired or fired, they could be looking to upsize or downsize.
Family additions or departures: A new family member or a family sending their eldest off to college will be in need of a change in home size.
Ok, great. You know who to look for, but maybe not sure how to find them. Something most of us use every day is one of our most valuable tools as an investor: social media.
Though it will take time and effort, success will be worth it. Using your social network and local news to stay in the loop about company closings, run relevant Facebook ads, or be in the loop with local events, your efforts will yield a successful list.
Not to mention, these leads likely aren't on other investor's lists, as they are a product of your own research and due diligence. Study your area, become a master in identifying the hot topics, and combine it with public records to develop quality, unique lists where you can offer your service.
What To Do With The List Of Motivated Sellers
Let's backtrack. We've learned what motivated sellers are, how to find them, and why they're important. All of this information is great and necessary, but utterly useless without knowing what to do with them. We need to execute a plan to express our interest to the property owners on the list.
Create Marketing Collateral
Now that you've formed your motivated seller leads list, it's time to create a marketing campaign. Sending the right message to your prospects will increase your chances of getting the right property at the right price.
Using programs like REISift will allow you to transform vague property data into qualified leads and market to those leads in a meaningful way, making your marketing dollars more effective.
Contact The Sellers
Now that you’ve developed a list of motivated seller leads based on the data you have collected, the next step is to reach out to them and make all the work you've put in worth it.
To contact motivated sellers, we recommend these methods:
- Direct mail (postcard, letter, or brochure)
- Calling the number on the "For Sale By Owner" signs
- Attending open houses
- Driving for dollars
Finding a method that works best for you is the goal here. Be diligent in pushing your campaign and work until you find what works.
Filter The Leads
The data collection is not over yet! Once you've begun to hear back from the motivated sellers, it's time to gather the last bits of information to learn more about the seller and their property.
You'll want to ask similar to the following:
- Why they want to sell
- How long they’ve lived there
- How much they’re looking to receive from the sale
- Where the property is located
- Who’s on the title
- What improvements have been made
- What is the current state of the property
Not only are you collecting more information and creating further segmented lists from your master list, but you're also building a connection. Client rapport is one of the most important relationships to foster in the real estate world. Providing value to your clients and providing a solution to their problem will create the trust that's needed to build a long-term relationship.
Using a Program
There are programs, such as REISift, that are geared towards real estate investors. This software aims to make the process of uploading your lists, building marketing campaigns, and generating more lists as simple as possible.
Ready To Find More Motivated Sellers?
The process of finding motivated sellers is never-ending. You'll want to continuously tweak your list, update it, and stay up to date with local occurrences.
The key to becoming a successful investor is to think of and try the things that the other investors aren't doing. As we've said before, put yourself in their shoes. Is this how you would want to be approached?
If you were in their situation, what would you be looking for? Relate to the seller on a personal level. Create the connection, build rapport, and become a successful real estate investor.