What to do when the market is high.

Question

I think most would agree that home prices around the USA are either average or high. I like buying when sellers really need a buyer. Recently, it's been a hot market in Atlanta.

So, where are the pain points right now? Who's desperate? How can I help out folks in dire straights? Is there some note buying, wholesaling, lending, or other strategy that could help out some needy people? The only desperate people I see these days are buyers... So, maybe selling is the only good game in town right now.

Curt Smith · Answer

@Matthew Trotter One's learning is multifaceted.  One is online 24x7 like BP and youtube videos and another essential facet is belonging to a few local REIAs at the same time.  I chose GaREIA dot org

The last paragraph of Keith sounds like its out of a book or from a weekend guru's course.   #1 everyone knows zestimate and by gollie thats what they want.  I've done various direct marketing campaigns in the metro counties of my own and those of students of our yellow letter mentorship in GaREIA.  Kent Clothiers find motivated sellers now vacant house lead list for the metro counties get the phone to ring reliably.   Hand written letters and addressed envelopes maybe 5% response.  Automated post cards via click2mail or yellowletters maybe 2% response using the same list.   Everyone wants zestimate and very little motivation to sell on average.  So how to the pro's get deals?  By mailing 1000's of cards / month and running the call backs through a Virtual Assistant system.  Or you taking all those tire kicker calls on your cell #.  :)

Some 90% of direct marketing deals are gotten on the 4th-6th touch.  Meaning the 4-6th post card.  Or on the 4-6th call you make (1 per month) Drip campaign ( you call folks back who call you every 30 days until the house is sold via some means you getting the deal or they sell).   The drip part needs to be automated or else you'll NEVER be able to keep up.  You'll stop calling and loose the deal because its a lot of work making all those calls.   you can use callfire dot com to send texts or voice mail...

Sounds like real work eh?  It IS a lot of work working the hot Atlanta metro market.  Getting deals today in Atlanta (every hot market) is a long patient process spanning many calls often spanning many months to EACH seller.  Where you may have several 100 replies to your mailing which means 600 call backs.

Side note is that we moved to small towns up and down the major freeways because we hate this kind of crazy hard work.  A whole different thread we've perfect lazy investing.  In small towns we work deals 10 minutes to a major freeway 30 minutes to good jobs.  You have to know where the jobs are!  (this last tip is for the sell or rent side).

What is my distilled best ideas for highest stress in Aug 2016 (this changes over time which is why Guru advice often doesn't work) is:

- late on taxes.  Problem is here in GA the counties do not publicize the OTC late on taxes list like many states.  The tax lien teacher Tom DiAngostino has a tax lien service that sells late taxes lists for most counties in GA (and every state). The tip of late on taxes being highest stress and converting to deals comes from my research not my first hand experience.  Unlike most who tout what they do I admit I'm forwarding 2nd hand helps.

Late on taxes is top of the heap from my research.  Other sources of stress:  divorce (can be searched for by short time of ownership and quit claim deed), probate is not as easy as it sounds and turn around is often >12 months, vacant house...

A vacant house, via Chris Clothier find motivated sellers now, recently was upgraded so you can filter on high equity or low equity AND older than 50 yr old.  I don';t have conversion stats on this improvement, but the high equity and over 50 leads and vacant looked like better leads than my prior mailings.  I just did a manual mailing of high equty over 50 and low equity lists pulled from Clothiers service that I have a life time membership.  Looking at the list I hand mailed (vs using click2mail) I think will be a decent mailing.  Lots of older womens first names (widows), vacant by definition is absentee...

There you have a rambling summary of how hard it is to reach truly begging you to take their house sellers today.  Best of luck.  Join a few REIAs for sure.

Oh, another tip that works in markets with few investors is zbuyer dot com.  These guys sell lists to many buyers at the same time (competition) of internet searchers searching on "have to sell my house".  They are real sellers and have motivation.   They convert well in low competition markets but don't if it's a hot market like Atlanta metro counties.  No seller is going to take a low ball offer if they have 10 investors calling them!

Hmm, another tip:  Call the free FSBO leads in craigslist.org.  Check box the drop down sell by owner.  The narrow by entering a geographic area.  Call everyone and put all decent prospects into your DRIP campaign.  Are you getting the picture, that DRIP is where the deals are?  :)

Adrienne Bryson · Answer

I'm sure there are always needy/desperate people...

There are always people in foreclosure, tax delinquency, inheriting houses they don't want/can't afford to keep, trying to get out of a terrible house/neighborhood...etc

Matthew Trotter · Answer

@Curt Smith, great stuff. I love the idea of direct marketing, but I'm not in love with actually doing it - very tedious as you know. I've done direct mailings to East Atlanta and have gotten 3% to 5% responses just like you mention.

I really liked one idea I read in a book (forgot which book) that goes like this:

• Record a very long voice message (3-5 minutes) that converts desperate homeowners into interested sellers. For example, "I know how hard it is to miss mortgage payments... What if you could make that stress disappear?... I can offer CASH... After the beep, tell me more about your situation and how you'd like me to help today!"
• Make bandit signs that get distressed homeowners to call a phone number. "Relieve yourself of those high mortgage payments! Call XXX-XXX-XXXX!"
• Set up an automatic voice message answering system that plays the message when people call and then records a response.
• Set up bandit signs on busy intersections around my neighborhoods of interest.
• Listen to the messages and call back the leads that sound interesting.

I think I will just save up cash now and wait until I have $100K or so make a deal. Then, I'll try something like this.

Ned Carey · Answer

Sometimes you need to change your strategy when the market changes. Take what the market gives you.

Buying for buy and hold when the market is really hot may not be the right time for that strategy. Wholesaling in a really hot market can work well. While it is hard to find a deal it is not hard to find a buyer who will overpay.

Keith Goodwine · Answer

There's always motivated sellers out there.  At least I'd like to think so.  Currently looking for my first one myself!

First get to know their motivations for calling you.  They saw your marketing and called you.  They wouldn't have called if they weren't at least a little bit motivated to sell.  Are they planning to move to a different state?  Move into a retirement home?  Need more space for a family?  Have they bought another home and haven't figured out a solution for their current home yet?  Just got a divorce and have to liquidate the house to pay for a judgment?  Behind on payments and they need cash quick?  Is the house a rental and they're tired of dealing with bad tenants?  Your solution is you can buy quickly and in as-is condition.

For high equity and 100% equity sellers, maybe they want to sell to cash in on their equity, but their home needs $35,000 in repairs.  A realtor might have suggested making the repairs they can't afford, or might have warned them that it would take months to find an interested buyer because of the repairs.  They don't have the time or money to put in to making repairs, especially for a home they want to sell anyways.  They might consider taking out a HELOC loan to make repairs (hurting the equity they want), or floating the price with the realtor only to see it sit on the market for months and getting investor offers which the realtor doesn't want to accept.  Your solution is the same - you can buy quickly and in as-is condition.

What to do when the market is high.

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