This is the BEST Way to Find Motivated SellersReading Time: 7 minutes
Finding an investment deal is great, but finding a deal directly from a motivated seller gives you the added option of wholesaling the property since you can get it for a cheaper price.
Kenn is an experienced wholesaler and real estate investor who is willing to share his tips and tricks with us. While marketing for motivated sellers in every market is going to have different results, Kenn has had great luck with postcards in particular. He shares other methods he has tried, as well as some tips for marketing yourself by word of mouth (Hello free marketing!). Let’s see what he has to say…
Send it in a Letter
Direct mail marketing, even though it seems kind of antiquated, is still probably the most effective way to market for motivated seller leads. A lot of the people you’re dealing with are distressed sellers and a lot of times they may not necessarily have access to internet or be very tech savvy. Distressed sellers fall into a lot of categories because people who find themselves in a situation where they need to sell their house quickly are from all walks of life.
Think about it: Everybody checks their mail (for the most part), right?
Yellow Letters and Postcards
Yellow letters are best utilized if you’re doing driving for dollars, or if you have a specific market that you’re trying to target. It has a higher conversion rate or a higher return rate, but it does cost more. Typically, twice if not one and a half times more than the cost of a postcard, at least from the vendors that I use.
Postcards are better if you’re targeting larger areas, such as zip codes or entire neighborhoods (rather than specific properties). They don’t convert as well, but you can cover a much larger area than yellow letters.
More Direct Mail Options…
Flyers are another option, and sometimes you can find other local services to partner with. Say you want to team up with another real estate service in your neighborhood, a lawn company, or even a pizza company or other local service—you can split the cost of printing and postage and cover a larger area.
Take Care of Your List
The list is the most important thing about marketing with direct mail! That’s why marketing really is the most important part. That’s the lifeline of your business. Especially, if you’re a wholesaler. As a wholesaler, the bulk of your time and effort goes into marketing, and that’s why investors are willing to pay a fee.
Find Absentee Owners
One of the biggest and most successful lists you can pull from is absentee owners…but it’s also your most saturated. At the same time too, it’s tried and true.
Absentee owners are a good group to hit because these people obviously don’t live in the house. They might be tired landlords or they might be distressed owners who had to move out for some reason. They might have been foreclosed on. Or maybe they just inherited the house.
Absentee is usually your bread and butter, but at the same time, keep in mind that it’s very saturated because everybody goes for absentee owners. They might get 10, 15, 50 postcards in the mail—what makes yours stick out? Sometimes it’s just the luck of the draw.
Who has High Equity?
I was on Bigger Pockets when I heard the owner of yellowletters.com say something interesting…
His podcast was brilliant, and he essentially said that even before you consider absentee owners, you should consider houses with high equity. You want somebody who basically owns a lot of the property.
Ideally, you want to find a list where the person has owned the property, whether they lived in it for 10, 15, or 20 years. The longer they lived in it the better because that means they have more equity in the house, which might also mean several other things…
They probably haven’t been taking care of the house as much. There is often a lot of deferred maintenance in house people have owned for a long time.
They could be renting it out, so the house is not in as great of shape as it used to be.
On top of that, they probably own a larger portion of the house, so you can negotiate with them more easily. Someone who has only owned the house for a couple years can’t afford to lose money, so is less likely to negotiate than someone who has their house paid off, or has enough equity to walk away with some cash.
For example, let’s say you find someone with a $100,000 house. If they’ve lived in the house for two to five years, they probably still owe $80,000 or $90,000 on the house. You don’t want to buy that house for $80,000 or $90,000. You want to buy it at $50k or $60k, but they can’t go any lower because they owe $80k on the house.
Property Size Does Matter
Depending on your market, the bread and butter of single family real estate is usually three bedrooms/two baths. If you’re looking at lower income, then two bedrooms are okay. If you focus on the bread and butter houses in your target neighborhood or zip code, you’ll have a much easier time finding buyers. You don’t necessarily want the biggest, most beautiful house in the neighborhood (or the smallest and cheapest either).
Pay Attention to that 5-Digit Number (Zip Codes!)
When you’re looking for zip codes, be cognizant of where those zip codes are. It sounds really silly but some people choose zip codes randomly only to find out they blasted out to one of the richest neighborhoods in town.
It’s not likely that you’ll find distressed properties in rich neighborhoods. You’re going to get very few calls back from that versus a more blue collar neighborhood or a lower income neighborhood that has more probability.
Think about what your target market is—what is it that you, personally, are going after?
Just pick where you want to go, and be cognizant of where you’re sending. Sometimes you might want to mix it up and send to higher or lower end areas.
The Good, the Bad, and the Ugly of Advertising Online
Advertising online is really expensive…
Direct mail is tough. You get a hundred calls, ten of them are legit, and out of the ten you get one that you end up wholesaling.
That’s a lot of time spent but, but most people who do online advertising are bigger wholesaling companies. These guys that have large campaigns, and more funds for campaigns.
Your regular Joe can probably do it too, but just expect that it’s going to be more expensive. If that’s what you excel at and if you can generate organic traffic, then by all means do it.
Shout it from the Rooftops
A great way for a wholesaler to market is just by word of mouth.
You tell people, “Hey. I’m a real estate investor.”
You tell all your friends. You let everybody know this is what you do. Someone will come out of the woodwork and say, “Hey, my friend’s brother just passed away and he inherited a house that he doesn’t want…”
It’s like direct mail but you’re advertising wherever you go if you’re okay with doing that.
Nurture that Relationship with a Seller
The most important thing in all of this is providing customer service. Once you get a lead, don’t let it go to waste.
Sometimes some sellers will get 50 postcards from investors, and they’ll just go down the list and start calling. Whoever responds well, communicates well, and frankly, whoever they like will get the deal.
Be prompt. Answer your phone. Set up the appointment. Go to the appointment. Be prompt and proactive or someone else will get the deal.
You cannot make somebody sell a property, but the moment somebody WANTS to sell, you cannot stop them from going to the first person that shows up for them and works well with them.
That’s why, as a wholesaler, you have to be really good about customer service. And remember, your main active role as a wholesaler might be conflict resolution.
How do you help the seller sell their property, and how do you help the buyer find an investment property they like?
And the BEST Way to Find Motivated Sellers is…
Ultimately, the best marketing strategy is the one that works for you. It’s the one that you’re doing consistently. That’s really what it boils down to.
If you’re doing online marketing then keep on doing online marketing and get better and better at it.
If you’re doing direct mail, keep doing it over and over until you start seeing results. Is it going to be from that first batch that you sent out, or is it going to be the fifth batch, or the seventh batch?
Direct mail takes time. That’s why you just keep it up, and eventually you’ll figure out what works for you and get better at it.