Motivated sellers are the most important ingredient needed to become a successful real estate investor. You can take every real estate investment course available today and become a master of creative real estate investing, but you’ll be a starving expert if you don’t have someone to apply your knowledge too. I regularly advise students to spend their first year in real estate learning how to locate motivated sellers. Then, once they know how to find this valuable commodity, they must learn techniques for buying and selling real estate. Imagine buying all the equipment needed to drill an oil well but never learning how to determine where to drill? It can be an expensive and frustrating experience. So let me give you some advice on who is likely to be a motivated seller and how to locate them. Here is my top three.
Probably the number one reason a person needs to sell their home quickly at a reduced price is because of a divorce. Mortgage payments that were easily manageable with two incomes suddenly become a real burden when one income disappears. With divorce rates approaching the 50% level, this creates a lot of motivated sellers on a regular basis. Some people may see buying property in a divorce situation as a way to take advantage of the weak and needy. I see it just the opposite. Divorce is also the number one reason for foreclosure. These people desperately need to sell their home and if you are not available to help them sell their home, they end up losing their home and their credit in foreclosure. You are providing them with a valuable service and a good income for your family by working with motivated sellers caused by divorce proceedings. Networking with good divorce attorneys can generate quality leads for you on a regular basis.
Another situation that creates motivated salespeople is job loss or a job transfer. A person may have no problem making a mortgage payment on their current income, and then all of a sudden they are laid off, downsized, or relocated and are now earning substantially less income than they are charged with. This creates a huge burden for the homeowner and quite often leads to a motivated seller scenario. They have to sell their home before they transfer it or, if they stay, they can’t pay their mortgage with their new income level, so they need to sell it quickly or risk foreclosure. This is a very common problem that you can benefit from if you pay attention to local working conditions in your city or town and keep up with layoff notices and job advertisements in the local newspaper and on local TV. If you’re watching the news tonight and hear that the local potato chip plant is closing in your town, it’s time for you to take action. I have personally gone to a place of business like this and put flyers on car windshields describing my skills to help them if they need to sell their house fast. If this seems too aggressive for you, then you should find another way to contact the plant workers. An ad in the local paper or a penny that says “Attention Recent Nalley Workers” will attract their attention. Also try posting ads on your local unemployment office website or bulletin board. A fair share of laid-off workers will use those services. Remember that they need your help! You have a service that will benefit them. Don’t be afraid to tell people you can help them with their property.
Here is a tip that I will give you that is so powerful, if you develop it and work on it, it will bring you endless amount of quality leads. There is one person you see regularly in your area who knows all the people who are behind on their bills, they know who is in foreclosure, and they know who is moving out before anyone else. This person carries a lot of information that few people know. Who is this person who can fill your pockets with cash? Your postman! Think about this. Your postman delivers all important letters and documents to every house in a neighborhood. If a person is behind on their utility bills, the mail carrier delivers the disconnection notice. If they are behind on their mortgage, the postman delivers all warning letters from the lender, including the Notice of Default. If they are thinking of moving, they will ask the mail carrier for a change of address card. If the house has been abandoned, the mail carrier will know and will discontinue mail delivery to this property. As you can see, your mail carrier is better connected than anyone else when it comes to motivated potential sellers. Make friends with them; ask them if they know of any potential offers. Do not ask about any personal information about the seller because this would be unethical. But you could ask them if they know of anyone on your route who might be in a position where they need to sell their house quickly. Treat them well and they can provide you with a world of valuable information. I was a letter carrier for 10 years and I can assure you that I knew who all the motivated sellers were in my area long before anyone else. It’s the kind of information that can make you rich.
Motivated sellers are everywhere you go. Learning where to look for them will take your real estate investing to the next level.