Buying a home that is not on the market

7 Replies

Hello all,

I am new to the forum, but I have always used to site to gain general real estate info.

I have a question, but first let me give you some background info for the sake of receiving any other advice that the forum topic did not ask about:

I am a recent Graduate student grad (23) and will begin starting working full time in January. I majored in Accounting & Finance and will be sitting for the first part of the CPA exam come January. I will also be starting full time in January and will be making 47K before taxes. My monthly debts (student loans & credit card debt only) will come out to around $350-375, or even less once I pay off the manageable balance on my credit card bill.

After running throw some numbers, my gross monthly income will come out to 3.9k and my net (with projected taxes) will come out to around 3k, give or take a thousand with the new tax plan. 

I currently live in Atlanta and it's still reasonably affordable and an easy city to get the home buying process started. There's are tons of up and coming areas in the city and I truly believe that this will be the next city in the entire country to boom given the formation of the Beltline, Amazon likely moving its 2nd headquarters here, 2 new stadiums professional sports stadiums, planning for street cars/trollies all throughout the city, great schools already here, billions worth of investment in the city and the fact that the actual city of Atlanta (not focusing on the metro) can be expanded even more, amongst other things.

The city is going through a mini boom right now for sellers, but it seems to be sellers who bought their homes back in 2010-2015 who are now trying to make a profit on it because they bought it for dirt cheap. Yet, I'm not worried about this being a bubble (at this point) because the prices aren't even half of what they were back in the 05/06/07s, and with my max offer price ($155k), I would still be able to afford the mortgage payment even with my current salary of $47k, which I undoubtedly expect to increase over the next five to ten years.

^^^^ Just wanted to give some background info

So my question is what's the best way to buy a home that is not on the market? 

I've identified an area which I think will have the most appreciation and growth (my investment strategy) and would like to buy a home in that area of town. 

I've searched tax records to locate the owner and know that whole trick of the trade already. However, I'm asking what's the best way to convince or persuade them to sell me the home? I know everyone isn't going to sell, that's a given...but for those who are on the fence or have been thinking about it...what will win them over? I plan to write detailed letters expressing my interest, but any advice will help.

I've heard that recommending a rent to own situation can work (of course, this is when the home isn't occupied), but what about when the home is occupied? 

I know that this is more of a "throw your boomerang and see what it comes back with" kind of situation, but any advice or alternative views are welcomed.

Thanks, 

Mike.

In order to convince home owners to sell their property to you. You have to tell them what the advantages of selling to you are.

1. Sell their home as is.

2. Fast closing 5-10 days

3. No realtor fees

4. All cash.

Explain these to the seller and then just keep them on a constant loop. Then when they're THINKING about selling they'll call you.

You're asking the $5,000,000 question! 

Seems to me, there isn't anything you can do to convince them to sell to you. You can introduce yourself, tell them what you're trying to do, explain how it will benefit them, and all that via your letter. Actually convincing them to sell is another story. Make your letter as informative as you can, while being succinct, friendly, and all that. If you have access to a phone number service you could cold call; if you're bold, you could knock on doors. I'd expect to get treated unkindly as often as not. 

You don't mention if you're looking at preforeclosures, or tax lien situations, or any of that. It sounds like that's what you're looking for, but I'm not certain of your intentions. If you're looking at people that aren't in any kind of distressed situation, then I think your odds are slim to none. Normal people in a positive situation aren't looking to sell their house to a potential investor type for less than what it's worth. 

I’m piggy backing on this thread because I’m in a very similar situation and have a related question - is it even possible to get an off market deal if you don’t have all cash to close?

I want to get a great deal with my first purchase (live in and rent to room mates) and keep my cash using an FHA or 203 loan and I’m not sure if people do this or not with off market deals

Originally posted by @Johnny Hastings :

You're asking the $5,000,000 question! 

Seems to me, there isn't anything you can do to convince them to sell to you. You can introduce yourself, tell them what you're trying to do, explain how it will benefit them, and all that via your letter. Actually convincing them to sell is another story. Make your letter as informative as you can, while being succinct, friendly, and all that. If you have access to a phone number service you could cold call; if you're bold, you could knock on doors. I'd expect to get treated unkindly as often as not. 

You don't mention if you're looking at preforeclosures, or tax lien situations, or any of that. It sounds like that's what you're looking for, but I'm not certain of your intentions. If you're looking at people that aren't in any kind of distressed situation, then I think your odds are slim to none. Normal people in a positive situation aren't looking to sell their house to a potential investor type for less than what it's worth. 

I originally planned to look at any and all properties and figured that the sellers market and the current real estate climate down here would convince them to sell. When I would do tax record research, I would see that most bought their homes for sub 50k back in 09-14. With a 150k offer, perhaps they would consider selling. But I understand that is also a double edged sword.

I have started to use the pre foreclosure feature on Zillow and have come across a property I like however, but the picking is somewhat slim. Perhaps this would work out best if I find an (out of state) real estate investor/bank who bought his property shortly after the crash and is looking to cash out on his/her investment now. The only issue with that is finding a house I like and then hoping it meets all of the aforementioned criteria.

@Mike H. Jones as @Johnny Hastings said you are not going to convince anyone to sell.  The best deals come from motivated sellers. The job of an investor is to find the  motivated seller. There is no "Best way" to do that. What works for you will depend on your specific skill and personality and you market.  Most active investors use multiple ways of finding deals. 

Your post  makes me believe that you are looking for a home to live in. Because it is you home you can pay more than most investors.  In addition to the intrinsic value of owning a home, you get to take advantage of mortgage rates designed for homeowners.  (you won't get the same kind of loans ad rates for investment properties if that is your plan).

You may be able to get a good deal from listed properties by being patient and good negotiating. One of my beliefs is that good deals are negotiated as much as they are found. 

There are lots of threads here on how to find deals. A search should bring up  lot of info. Here is a few ideas to get you started.

  • vacant houses
  • estates
  • code violations
  • auctions
  • direct mail
  • tax liens 
  • foreclosures

@Harrison Sharp most of the above applies to you.  I would add that sometimes off market deals are the best way to buy with little money up front.  i have bought houses cheap enough to put on a credit card. (although noting I would want to live in) Off  market deals are probably the best way to get owner financing. Another option is a rent to own and you live in it and sub lease to roommates. 

Good luck to you both.

Thanks for the response @Ned Carey

Quick follow up question on owner financing as I didn’t really ever consider it to be an option. But basically when you approach or contact a motivated seller you’re setting up a note with them similar to what you would with a bank loan and present to them the benefits of getting monthly payments with interested instead of a 1 time lump sum? 

@Harrison Sharp yes that is right. However it is important how you present it.  Anytime I have asked about owner financing the seller didn't get it.  "How would that work? Where would I get the money to loan you?"

It is better to ask if you can pay over time, they understand that. You can even say "I can pay you a little more if you are willing to take payments over time"  But before you ask about financing ask about their situation. What will they do with the money?  A question I learned to ask is "What is more important selling fast or getting top dollar?" If they say fast you give a low offer. If they want top dollar then you offer more but over time. 

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here