There are three key ingredients needed to successfully wholesale properties. Those ingredients are: a motivated seller, a property, and an investor-buyer.
Today, I want to spend some time discussing arguable the most important ingredient in our business…
Finding motivated sellers is quite challenging, and trust me, I know firsthand how challenging it can be.
There’s loads of information out there on how to find motivated sellers, and this can be quite overwhelming for a beginner.
Just think about it.
There’s online and offline auctions, bandit signs, attending local real estate club meetings, and the list goes on.
So here is my recipe on the most effective way to find motivated sellers!
Why Are Motivated Sellers So Important?
In order to understand how important motivated sellers are within your business, you must first understand the basic concept of real estate wholesaling.
Essentially, real estate wholesaling is when you find an off-market property that isn’t listed on the Multiple Listing Service (MLS), purchase the property at a discounted price, and then sell the property at a slightly higher cost — but still at a discount to an investor-buyer.
It’s that simple. Find a discounted property, then sell it.
Now, this step sounds simple but guess what’s standing between you and an off-market property?
The motivated seller.
So in order to find an off-market property, you need to know how to find and identify a motivated seller.
So, What Is a Motivated Seller Anyway?
A motivated seller is someone who is motivated to sell their property because of a catastrophic event that has occurred in their life.
Now, a catastrophic event comes in many forms and levels of severity, so here are a few signs of distress to look for to help identify a motivated seller:
- “I have a terminal illness.”
- “I’m going through a divorce.”
- “I live out-of-state.”
- “My parents passed away, and I inherited this property.”
- “This property is a mess.”
- “I can’t maintain the upkeep of the property anymore.”
- “My tenants aren’t paying rent.”
- “I can’t keep up with the taxes.”
The list goes on!
Really listen to their issues, and once you’re able to pinpoint the motivation behind selling their property, step in and offer a solution.
How Do I Find a Motivated Seller?
There are literally tons of strategies out there on how to find off-market deals. Here the most effective strategies to find motivated sellers.
If you’re just starting off and you don’t have much working capital, then I would highly recommend utilizing this strategy because it’s free! This is honestly one of the cheapest ways to locate motivated sellers. Simply hop in your car and drive around the city in search of distressed properties.
Look for properties that appear abandoned, that have weeds and tall grass, boarded up windows, etc., and write down the address. Once you return home from driving around the city, visit your local tax assessor’s website and locate the owner of the property. Once you have the owner’s name, you can search for their contact information using a skip-trace software called TLO.
This is another effective strategy that is absolute free! The only thing you need is access to a computer and internet.
What’s best about this strategy is that you can automate it to where you’ll receive property listings from motivated sellers directly in your inbox.
You can learn how to set up this automated lead generation strategy by checking out this blog post.
This strategy is has been the most effective for my company.
This strategy consists of mailing letters or postcards to a specific demographic of motivated sellers. Now, there are loads of demographics you can target, from age, zip code, and income level to tax records, probates, and the list goes on.
Once you have a targeted demographic, hire a company to send out the letters or postcards on your behalf, which will save you lots of time. Keep in mind that convenience comes with a high cost, and this strategy can be quite expensive.
For instance, my company spends roughly $10,000 a month on direct mail campaigns. We’re averaging 10 to 12 properties a month, so if you’re starting small, the cost would be much less than $10,000, but this gives you an idea on how much you need to spend in order to see results from a direct mail campaign.
The great thing about direct mail marketing is that you aren’t spending time chasing motivated sellers. If your postcard or letter spikes a motivated seller’s interest, then they’ll be calling you instead.
So with that, I hope you guys found this recipe helpful! If you utilize these strategies to find motivated sellers, I guarantee you’ll be cooking up success in no time.
Question: Do you have any tips on how you find motivated sellers that I didn’t mention here?