Watching the A&E show Gold Rush got me inspired to write this post. While watching the show, I was thinking about how mining applies to real estate. Well real estate deal mining is basically what we call “prospecting”. Successful real estate investors mine for deals on a daily basis.
Prospecting for real estate deals is a mining activity as you are looking for real estate “pay dirt”. I wanted to share a few tricks that I have picked up on how to prospect for more “pay dirt” real estate:
My top three MLS prospecting tricks are as follows:
I. Age is Good: A lot of investors try to jump on new properties that have been listed onto the market. They usually think that deals that have been on the market for a long period of time have something wrong with them as someone should have bought them by now if they are that good. The problem with them is typically the price.
Look for deals that have crossed the market average days on market (DOM) threshold. I have usually found that the agents are willing to present more creative offers once the listings pass this threshold as they are trying to show an offer to the seller indicating that they should consider the offer or drop their list price to be more price appropriate to market.
II. Back on Market Plays: Utilize your MLS Hotsheet feature to get a daily list of back on the market listings. These are listings that were initially under contract, withdrawn or expired and now have been relisted. I like these listing as the sellers are typically more motivated as they have been waiting on their property to sell and they maybe getting desperate to end the frustrating selling process.
My best advice with these sellers is to approach them with multiple offers so that they have an opportunity to negotiate with you on items other than price. Here is how I setup my offers:
Offer A- All Cash at Price X
Offer B- Terms Offers at Price Y with interest only payments to the seller
Offer C- Financing Offer at Price Z with a seller credit for closing costs and credits
III. Expired Listing Gems: I have daily email feature setup that advises me about all the listings that have expired in my target markets and asset classes. I comb through this list every morning with my cup of coffee and I narrow down to one or two expired listings that I want to approach as they match my target investment strategy. I write them a simple letter on yellow legal paper and handwrite an envelope that is mailed to the seller mailing address as indicated on their tax records.
A Sample Prospecting Letter
Below is a sample letter that I have sent out in the past:
Dear Owner Name (Tax Record)
My name is Ankit and I buy real estate in Town Name. I recently noticed that your property listed at Property Address had expired. I am looking to buy more real estate in Town Name as I want to build a real estate portfolio for my family future. I know that not selling your real estate can be frustrating. You know have two choices:
CHOICE A- Sell Your Property. If you are still interested in selling your property then call me at xxx-xxx-xxxx or email me at [email protected] to discuss what I can offer for the property located at Property Address
CHOICE B- Not Sell Your Property. If you are no longer interested in selling your property, please feel free to throw this letter in the trash.
I look forward to talking to you soon and helping solve your real estate problems.
Prospecting for real estate is an ever-learning experience, and I am picking up new tricks every time I source for deals. I hope you find these tips helpful in your
Do you have any tips that have served you well? Please feel free to share them in the comments section below.