Just a few short years ago, I attended my first real estate seminar and decided this was the business for me. I could do it in my own time, at my own pace and still make money. Considering I was still working a full time job, this seemed to be just the scenario for which I was looking. One of the things they taught me in those seminars was that finding truly motivated sellers was going to be the key to this business.
After spending a number of years in sales prior to becoming a real estate entrepreneur, I knew that when the prospect contacts you first, you have a much better chance of making a good deal. At the time I didn’t have a lot of money to work with and needed to make every marketing dollar count.
I discovered the same theory holds true with motivated sellers. A motivated seller is the key to all good deals, and if they contact you first, this significantly increases your opportunity to make a profitable deal. There are lots of opportunities for those who want to find sellers, and some are more labor intensive and time consuming than others.
Learning to influence motivated sellers to contact you first will increase your profits, help you make better deals and most importantly, save you valuable time. One of the primary reasons for failure in this business is trying to deal with unmotivated sellers. It’s like trying to push a rock uphill. You spend all your time chasing dead end leads and getting nowhere. This is discouraging and can cause you to quit the business before you ever get to see the long term financial benefits it can bring you.
Locating these motivated sellers is the key to your success as a real estate investor. Your money is made at the point at which you purchase the property, so an effective marketing plan is essential to your business. The key point to remember is that most sellers are not motivated. The biggest mistake you can make is to try to make a deal with someone who really doesn’t need to sell to you.
Effective marketing is the process of delivering
your specific message to a targeted audience
through the use of various types of media.
Using this method enables you to find the sellers who really need to sell, as opposed to those who just want to sell. When you find the sellers who really need to sell, you’ll end up buying a lot more houses at much better prices and terms. The secret to the really great deals is to find them before anyone else even knows about them.
A lot of the deals you find won’t even be actively marketed. These sellers have a variety of problems they simply don’t know how to solve. Their motivation comes in a lot of forms. Some of the reasons motivated sellers need to sell have to do with the sellers themselves, such as: age, health problems, financial difficulties, change in marital status, liens and judgments, job transfers, landlords who are tired of having their properties abused, or change in family size, just to name a few. Other reasons are more directly related to the property itself, such as estates, properties needing extensive repairs, code enforcement violations or properties that have been vacant for a significant period of time.
So how are you going to find these sellers and how should you market to them? As a real estate investor, you have lots of choices. You can use classified ads, flyers, signage, web sites, business cards, billboards, radio and television ads or direct mail. This is YOUR moment to find motivated sellers.
KNOW THE SELLER’S MOTIVATION
You should pick at least three to five ways to market your business. Put them to work for you simultaneously in order to promote your business and draw as many different sellers to you within your market. You must begin to understand a seller’s motivation for selling a property in the first place. This is important for you because if you try and reach sellers in only one way, and you don’t find a property in a relatively short period of time, you may become discouraged and quit. You really don’t want to do this. There is more business out there than you can imagine! Accept the fact that you’ll need to do more than distribute some flyers and hope some motivated sellers call you.
One of the first things you need to do is to identify your market, decide where you want to buy and what types of properties interest you. Then develop a marketing plan that fits your personal needs and budget. This way, you eliminate the need to call sellers. You want them to call you…FIRST!
As a real estate investor, you need to find a seller who is either flexible on the price of the property or on the terms of the sale. If a seller wants full price and all cash for a property, it’s almost impossible for you as the investor to make a good deal. The investor who wants to help people and make money should be looking for a seller who is flexible on the terms of the sale. Many of the people I direct mail to practically beg me to take their properties off their hands for a variety of reasons. These are the kinds of motivated sellers you want to deal with.
USE DIRECT MAIL
The best way that I’ve found to “niche” market to motivated sellers and control the number of leads coming in is through the use of direct mail. The BIG secret to using direct mail successfully is to mail the right letter to the right list, and then mail to them over and over. As you will discover, given time, almost every potential seller’s circumstances change and make them more motivated to sell. You must let the world know you buy real estate. The best thing about direct mail is that you can specifically target the types of sellers you want to reach and cultivate quality leads to work from.
I also find these mailings are very residual. These potential sellers will hold onto your direct mail pieces until their circumstances dictate that they contact you. When they are ready to sell, they will contact you first, since they probably haven’t had any contact from anyone else. Usually, their properties aren’t even being actively marketed. Therefore, there is no competition for these deals. In the meantime, you’ve gained credibility with these sellers by doing REPETITIVE mailings.
The biggest part of the secret in using direct mail is to find the sellers who really want to sell. I use different direct mail campaigns to locate specific types of motivated sellers, such as out of state property owners, properties which have been quit claimed from one person to another, expired listings, burned out landlords, and pre-foreclosures, just to name a few.
The best part is that you can customize your business to reach exactly the kind of motivated sellers you want to deal with. This can best be done by locating mailing lists, refining them to meet your individual criteria, and then mailing to them again and again. Investors often neglect to market to sellers in this way because they think the list is just too difficult to get or they only do the mailings once and quit.
These are some of the easiest lists for you to obtain and it will be very profitable to you to do so. You can go to a list broker or your local property appraisers’ office and ask them for a list, or you can create the lists yourself. It’s fairly easy to do. Go to the courthouse and research the divorce cases, death notices, liens and judgments, tax liens, marriage licenses, bankruptcies and notices of default, which is the first step toward foreclosure.
Find motivated sellers by
cultivating relationships with individuals
who can help you find deals.
Write letters to attorneys who handle family law, estate planning and probate law, divorce and marital law, and corporation and business law and let them know you are in the business of buying houses. Once you develop relationships with some of these attorneys, they will call you when they have a client who needs to sell a property quickly. This is just another way to build another lead source using direct mail.
Write letters to the owners of vacant houses or houses that look like they need a lot of repairs. If you can find the owners of vacant houses, these usually represent deals waiting to be made. The harder the owner is to find, the better deal you will make. There are lots of ways to find the owners of vacant houses. The easiest way is to simply use a “skip tracer” to locate them for you. I have resources for “skip trace” services on my website at marketingmagiclady.com.
You can also work with Realtors who can give you expired listings. The longer a house sits without selling, the more motivated the seller will be. If you get expired listings for out of state owners, these sellers are usually even more motivated. You can often make a deal with a Realtor who will supply you with the list. Tell them you will use them to make the offers for you, or simply tell them you’ll pay them a fee for their services.
Mail these potential sellers a personal looking and personal sounding letter. Let them know that you are interested in helping them find a solution to their problem. Even if you don’t get a response right away, repeat your mailings at least every thirty days until you do get a response.
The main reason that direct mail works so well is that you are reaching targeted sellers, and you become the seller’s first option when they need to sell. Even if you are on a limited budget, direct mail is an excellent source of leads for you since you can buy more houses from fewer leads, thus maximizing your marketing dollars. As your business grows, you can increase the amount of mailings you do. You can also target specific neighborhoods or dominate certain parts of town. In doing so, you become a “property value expert” in those areas, which makes the offer making process that much easier for you.
In addition, you create an ongoing relationship with your target market that makes it easy for you to follow up with past inflexible or unmotivated sellers. Since these mailings are so targeted and so residual, there is virtually no competition for these properties. It puts your lead generating system on auto-pilot, leaving you more time to make offers.
When you learn to get motivated sellers contacting you and then learn a variety of ways to purchase properties, the possibilities become almost endless. If you use several different ways to get motivated sellers contacting you, you will have more opportunities than you’ll be able to handle.
Using direct mail to develop a “cookie cutter” system to accomplish this is one of the most affordable, reliable, and effective ways I know to build your business quickly and have all the deals you will ever need.
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August 27th, 2009 at 8:33 am
Since marketing dollars are scarce, it is very important to target specific areas. You can do that best through neighborhood direct mail programs. This can allow you to become the “go to” realtor in desired neighborhoods.