How much focus should be put on finding motivated sellers.

[Liron Yech]

I am somewhat conflicted with the idea that wholesalers should only be looking for motivated sellers (preforeclosure, liens, divorce filings, etc.). I understand that with motivated sellers, you are more likely to get a better deal, but I also notice that there isn't much, if any, competition when it comes to "unmotivated" sellers. With motivated sellers, people are all lined up trying to get them to sell their property and the high demand, in turn, eats at the property's discount. Am I wrong? Are there not as many people as I'm imagining who are contacting them? My sole purpose as a wholesaler is to get a property for the best deal possible to the flipper and leave some meat for me (and do so ethically, of course). Wouldn't going the route with less competition be a good idea as well or is the opportunity cost not as desirable as I'm imagining? Thanks in advance.

[Don Konipol]

@Liron Yech

By definition “wholesaling” requires the wholesaler to purchase, or put under contract, a property at a price below market value. If someone has no particular motivation to get rid of his property, why wouldn’t he wait for a buyer willing to pay market value?

However, you are correct about the competition for purchasing property at less than market value, and targeting specific groups felt more likely to be motivated to sell. These same groups are targeted by buy and hold investors, fix and flip investors, and real estate agents, as well as wholesalers, and a wide variety of people with no idea what their doing or how to close a deal but who just completed a weekend training seminar and are as high on excitement as they are lacking in knowledge.

What it takes to enter the wholesaling business and make it profitable enough so that you aren’t working for less than fast food wages, is, besides knowledge, salesmanship, persistence, etc …MONEY. That’s right, MONEY, the lack of which is what people cite as the reason they’re entering wholesaling.

But the reality is that the ONLY way to create a DEAL FLOW sufficient to sustain a profitable, worthwhile business is to judiciously spent money on a consistent basis on various marketing and advertising activities.

First and foremost is a website, optimized to take advantage of SEO for local, and or long tail keywords. Since Google criteria, competition, and information changes constantly, a professional needs to be engaged on a consistent basis to reach and maintain first page positioning for selected keywords.

However, this alone will probably not provide enough deal flow to sustain a profitable wholesaling business on a consistent basis. SEM, Google Ads, social media marketing, blogs, specific targeted landing pages, email marketing, real estate site listings can all be used to further enhance deal flow. Traditionally, many wholesaler have used non internet marketing protocols such as direct mail via either letter or postcard, signs, print advertising, radio, event sponsorship, and cold calling, either robo dial or a telephone solicitor. Think $5,000 a month to be competitive.

Do “wholesaler” who spent nothing but their time close deals? Sure, but so few and at such a “time” cost that even if they close deals they’re working for no more, and often a lot less than they could earn at Wal Mart.

[Will Barnard]

Wholesaling is a marketing business, not RE investing. To be successful, you need deal flow and as such marketing to motivated home sellers is 90% of the business and the most difficult aspect during competitive ties like this.
Knowing how to properly and accurately estimate the resale value and rehab costs are also essential, but not rocket science with enough practice and education on the subject.
So it all comes down to finding deal flow. End of story.

[Jerryll Noorden]

Hey man,

Just read this:

https://www.biggerpockets.com/...

[Nick C.]

Sometimes it's good to be contrarian, but in this case there's a reason everyone is after the motivated sellers. If a seller has no motivation you'll be selling ice to an eskimo. Very difficult to do. The key is finding and contacting the right seller at the right time. As you can imagine this is difficult to do, and requires being clever at marketing, spending a lot of money marketing, and ideally both. 

[Dwayne Poster]

Originally posted by @Liron Yech:

I am somewhat conflicted with the idea that wholesalers should only be looking for motivated sellers (preforeclosure, liens, divorce filings, etc.). I understand that with motivated sellers, you are more likely to get a better deal, but I also notice that there isn't much, if any, competition when it comes to "unmotivated" sellers. With motivated sellers, people are all lined up trying to get them to sell their property and the high demand, in turn, eats at the property's discount. Am I wrong? Are there not as many people as I'm imagining who are contacting them? My sole purpose as a wholesaler is to get a property for the best deal possible to the flipper and leave some meat for me (and do so ethically, of course). Wouldn't going the route with less competition be a good idea as well or is the opportunity cost not as desirable as I'm imagining? Thanks in advance.

How much focus?, all of it. If you think there’s little competition for low motivation, you’ll get really excited to know there is no competition for non sellers. What you might be experiencing is repercussions of not being first in the lineup for an opportunity. That’s where you need to put your effort. If your working with a Realtor or broker, you’ll get the scraps that their top clients leave behind, until you can work your way up. Your other option is to discover high motivation before anyone else, and take decisive action upon discovery.  Buying, or paying for a list is, in my books, the worst approach.

[Liron Yech]

@Dwayne Poster

It could be that I'm experiencing repercussions of not being first in the lineup for an opportunity, but I would also like to look at different ways of finding these sellers (one that may be abnormal, but efficient), and see what works and what doesn't for others. I would love to hear your input though, on why you think paying for a list is a bad approach to finding motivated sellers and what the best ways to find those sellers are.

[Dwayne Poster]

White pages was my best list, but I'm old school. I believe that being in first has tremendous advantage, only second to being able to assess and act. I put most of my effort into segmenting and evaluating, which generates my own list of prospects. I look for profit up front and play the long game, so lists aren't as important as touch and feel. 

[Jeff He]

As wholesalers, do you measure "customer acquisition cost", where the customer is the seller. If so, what's a good customer acquisition cost?