If you’re ready to begin finding motivated seller leads for your real estate business, but don’t know where to start, you’ve come to the right place.
In this guide, you’ll learn what motivated seller leads are and how to find them at any price point.
You’ll learn the key points in speaking with sellers, and most importantly, how to close the deal whether you’re wholesaling, flipping houses, or building a rental property portfolio.
Let’s dive in.
Motivated seller leads are people who are interested in quickly selling their property. Their motivation to let go of the property can vary and is usually connected to financial hardship.
For investors, motivated sellers are ideal because the sale usually works more in their favor; the investor generally has more strength in this negotiation.
The more motivated the seller, the more likely they will settle for a lower offer, especially if it is tied to a quick and convenient sale.
The following are four common types of motivated sellers.
People who do not live in their homes are more open to selling their property.
Since the homeowner lives elsewhere, likely, they are not emotionally attached to the home. Or at least, this house probably feels less sentimental than the one they currently reside in.
Absentee homeowners with vacant property may grow tired of paying property taxes on real estate that isn't earning any profit in return. Empty homes are also more likely to deteriorate or be a target for trespassing, vandalism, theft, or housing squatters.
Even if the property owner has the space profitably occupied with tenants, the property may still feel like a burden. Being responsible for the constant communication, maintenance, and repairs of a rental property can be exhausting work.
Some people dive into landlordship without understanding the full scope of work. After some time, many would prefer to walk away with cash and their freedom.
When looking for motivated seller leads, keep it in the back of your mind that some owners won't realize how motivated they are until the possibility of freedom and some extra cash is presented to them.
The property's new owners (sometimes called probate leads or trust sales) are often surprised by their recent acquisition and feel overwhelmed.
Losing their loved one is stressful enough; adding the responsibility and financial burdens of a new property is a lot to take in.
New owners may feel relieved to have the option to unload the property for a tidy profit.
Houses that are not up to their state and municipal codes are a liability to own and expensive or time-consuming to correct. In some cases, the owner is susceptible to owing additional fines, fees, criminal charges, or even jail time.
Usually, there are a few underlying issues just beyond the evident code violations. These houses may also be distressed, vacant, or going through probate.
People who own code violating properties are some of the most motivated sellers.
The word "distressed" in real estate usually refers to property owners who are facing tough situations. Typically, the duress is financial, but it can also be familial, such as an imminent divorce, death, or family growth.
Distressed can also refer to the state of the home; natural disasters, accidents, or other forms of damage can leave the home in a state of disrepair. Owners of these properties may be motivated to off-load them.
We will discuss distressed property owners in further detail in the next section.
The most motivated sellers have substantial stress, financial duress, a tight deadline, or a combination of the three.
Usually, the most motivated sellers are financially distressed property owners. It's no revelation that cash is most appealing to those who need it.
Families with life-changing emergencies such as substantial debt, divorce, separation, aging, the death of a breadwinner, job loss, remarriage, or even the expansion of the family (and, therefore, the need for more room) are likely to be motivated to sell.
Financial distress can be related directly to the property or a more personal issue that isn't because of the home.
The financial issues can be related to delinquent taxes or mortgage payments, personal debts, a lack of cash flow, or other economic matters.
Be kind to these property owners. Not just for the sake of humanity, but keep in mind that they are in control of this situation. They may be in distress, but they can still find other investors if they don't feel respected by you.
Inherited property is almost always overwhelming for the recipient.
The loss of a loved one is devastating enough. Adding the burden of maintaining, repairing, and financially supporting a whole new piece of property is beyond stressful.
Many probate owners are open to the idea of selling the home, so long as you respectfully approach them at an appropriate time (i.e., not at their loved one's funeral).
In many high cost of living (HCOL) areas, property owners get priced out of their homes thanks to rising property taxes or changes to tax laws.
Even homeowners who own their home free and clear- mortgage-free- are not exempt from the possibility of not being able to afford their home.
Many areas are seeing property taxes rise fifty to one hundred percent in just a few years.
For instance, in the Paulus Hook neighborhood in Jersey City, New Jersey, the median assessed home value jumped from $238,000 to nearly $1,800,000 in just one year.
These rising home values mean that the median property tax for this area rose from $16,500 to almost $30,000.
If the homeowner's job position relocates, or if they find a new job in a new town, or they simply want to work-from-home in a new area, they can be motivated to sell.
Most people are not willing (or able) to turn their current residence into a rental property. It takes time, a certain level of knowledge, patience, and cash flow, especially if the residents intend to purchase a new home in their new city.
People with failed investments are usually motivated to sell the property. To them, the house represents lost time and money, their mistakes, and their bruised ego. For these situations, investors want to walk away and start over elsewhere.
Be on the lookout for attempted flips that ended up running into legal issues, substantially more damage than anticipated, time-consuming flips, or instances where the investor ran out of funds to complete it.
Complex rental properties also make for motivated sellers. Houses with destructive, delinquent, or otherwise unfavorable tenants are good candidates. So do landlords who live considerably further away from the property. Rental homes with extended, unexpected vacancies or significant property damage are also good places to look.
Lastly, look for investments that failed due to a partnership split.
While going into business with a friend or family member may seem like a good idea, the results can be unfavorable. Differences of opinion, opposing strategies, or uneven workloads can be a death sentence for investment partnerships. In these instances, the investors may separate and walk away from each other and their joint ventures.
This is where you can come in with an attractive cash offer, as well as the freedom to leave one another and their headache property.
Lead generation is the process of finding potentially motivated home sellers.
Two factors make up motivated seller lead generation: finding qualified leads and then getting their contact information.
You can find leads on your own and ask them for their contact information, or you can source lists (and their data) from other businesses or services.
There are two primary types of lead generation strategies:
We'll dive into the details of how to do this over the remainder of this article.
Now that you're sure you know who you should be looking for in a motivated seller, you're ready to learn where to find them.
While you can technically source motivated seller leads anywhere, the following are the most effective places to begin searching.
The Multiple Listing Service (MLS) is one of the best options to find motivated seller leads. Some may believe there’s no reason to access the MLS because there are similar options and services available (think Zillow, Realtor, Redfin, and Trulia).
The MLS can also be confusing and intimidating to newbies, so many avoid it altogether.
But here's the thing- most real estate sites, like Realtor and Zillow, pull their information from local MLS databases. These sites have detailed, yet incomplete snippets of the real estate listings.
When you skip the MLS and go straight for aggregator sites, you're often missing important seller disclosures, property files, HOA paperwork, offer procedures, agent confidential remarks, preferred showing times, contact information such as broker phone numbers and email addresses, and more.
MLS listings may also have gate and lockbox access code details so you can walk through properties quickly.
When you or your agent look through the MLS, take the time to look at the expired listings too.
Sometimes properties sit on the market, don't turn up any favorable offers, or the homeowner loses hope and begrudgingly decides to keep the place.
These factors can create a potentially motivated seller, so always check the expired listings and pursue those leads.
Read Also: Can You Wholesale MLS Properties?
Driving for dollars is a great way to find properties in your local market that aren't listed online or found in any lead generation lists.
You can find high-quality leads by manually searching for real estate investment properties the old-fashioned way. Drive around your area and look for properties that look abandoned, damaged, or unmaintained. Make a list of the addresses, and later on, look up the owner’s contact information.
If the property is off-market and can't be found through the MLS, lead lists, or other real estate sites, you're likely the only one who is reaching out to the homeowner; your competition is slim to none.
Read Also: DealMachine Review: Is It Worth It?
Wholesaling pre-foreclosures can be a profitable and rewarding business venture.
Information about homes that are in foreclosure and pre-foreclosure status is available to the public. You can find information in your local newspaper, local government agency websites, at your nearby courthouse, on mortgage lender listings, bank foreclosure websites, and foreclosure-specific websites.
Another great option to find foreclosure or REO leads is to get in contact with a local real estate agent who has access to the MLS.
Zillow, Realtor, Trulia, and Redfin are free tools that allow users to search for home listings.
To find motivated sellers on these sites, set your search parameters to include properties that have been on the market for a while, foreclosures, and cheaper homes.
Trulia, recently acquired by Zillow, offers an impressive 34 map overlays for neighborhoods. These overlays show local school information, nearby restaurants, activities, and most notably, local law enforcement and news reports. The crime map overlay is a comprehensive way to look into the safety and changes to neighborhoods over time.
ListSource is a website created specifically for generating property leads.
It offers the following lead lists:
With ListSource, it's easy to search properties, find homeowners, generate lead lists, and then target your prospects. Note that users must pay per lead acquired on ListSource, so be sure to have a budget.
PropStream is a website and real estate software service that offers essential data on 153 million properties across the US. It makes it easy to identify, research, develop, and market to your lead lists.
PropStream also works well with the driving for dollars strategy, since you can dig up data on many off-market properties. PropStream is also great for wholesalers because it combines so many of the necessary features to create a successful real estate marketing strategy.
After you identify leads and research properties, you can directly market to the property owners with text messages, ringless voicemails, and emails. This service also allows users to make phone calls or send customized postcards to potential sellers.
Propstream is one of our favorite real estate software tools for comping, creating lists, and lead management.
Read Also: PropStream Review (2021 Edition)
While Craigslist was not likely one of your first guesses for advancing your real estate investment business, it can be a healthy part of your marketing campaign.
In your desired area, look in the "Real Estate for Sale" category, then choose "For Sale By Owner."
Most people listing their properties on Craigslist as FSBO do not want a realtor to take part of their profit for commission, so they opt to sell the house on their own. This means that your cash offer will mean more to them.
Because they are selling on their own, their property does not show up on the MLS and will slide under the radar for many other investors and agents who are searching for leads.
You can also use Craigslist as a digital bandit sign. Create a post that you are looking to purchase a home, and see if you can attract motivated sellers that way. In your post, make sure you make a compelling case for homeowners to contact you. Some examples include:
If you plan to start real estate wholesaling or any type of real estate investing that requires consistent lead generation, you should look into search engine optimization (SEO) for your website.
High-quality search engine optimization makes your digital presence more visible. Increased visibility means more traffic. More traffic results in reaching more motivated sellers, and more motivated seller leads may translate into more deals and profits for you.
SEO is comprised of content creation, backlink building, and keyword analysis.
Basically, you want your website to be useful for people, to contain the correct keywords that point crawlers to believe your site is the best suited for the search queries, and also full of backlinks from several high-quality, authoritative websites.
Learn all about SEO on your own, or check out Investor Carrot, a platform specifically designed to help real estate investors find motivated seller leads.
The best way for real estate investors to get motivated seller leads is through a combination of methods. No one technique, software, or website is perfect. It’s best to carefully, and wisely, use an array of systems and tools to connect with motivated sellers.
The best way is the way that works for you. Do you have a solid marketing budget, say a few thousand to $10,000 per month? Then, perhaps you might consider direct mail or pay-per-click advertising.
If you prefer to spend $0 on marketing and start making offers immediately, we highly recommend trying the MLS. Since you don’t spend money on marketing, your MLS deals end up being more profitable all things considered.
Check out our brand new free training on how to use the MLS to find motivated seller leads.
There are dozens of additional ways to get motivated seller leads. Try driving for dollars, door knocking, foreclosure lists, real estate agents, wholesalers, Craigslist, lead lists for sale, SEO tactics, bandit signs, estate sales, and even social media advertising.
See which yields the best results in your market and stick to what works the best for you.
We believe that the best-motivated seller leads list is one that you create. Not only does creating your own list keep you more in tune with your research and comps on the houses, but it also familiarizes you with the housing markets and makes it easier for you to spot potential sellers.
Some lists you should be considering using are:
With practice and experience comes expertise, and that hands-on education is arguably one of the best aspects of becoming a seasoned and successful real estate investor.
Of course, if you aren't interested in being hands-on, you can also purchase motivated seller leads lists.
Here are some of the best places to find and purchase motivated seller lead lists:
The best places to search for free real estate seller leads are social media platforms, your local public information (websites and newspapers), and by calling title companies. Driving for dollars, cold-calling, cold-emailing, putting up handmade bandit signs, or searching real estate websites such as Zillow and Realtor are other great options.
In some ways, running the cheap or free route will make you more conscious of how well your efforts are performing and can teach you to spot deals and motivate sellers more easily.
Finding motivated sellers for free is time-consuming but effective.
The best way to contact motivated sellers is to come from a place of authenticity and a genuine desire to help out. The medium that you choose to communicate your words is secondary.
With that said, here are some of the best ways to reach those potential sellers.
Postcards and yellow letters are each effective ways to reach motivated sellers.
As social media and email began to dominate the communication world, physical letters and postcards have begun to feel a little more like a lost art form. While many people simply skim emails and bulk "mark as read", almost everyone still looks at every physical piece of mail they receive.
This means that direct, physical mailing can still have a place in your real estate toolbox to generate new leads.
If you are looking for real estate deals in your vicinity, in-person conversations could work, but use extreme safety precautions, and be sure to read the room. Some people do not appreciate strangers knocking on their door, even with an attractive cash offer; be mindful of this.
Another option is to connect with potential motivated sellers over the phone. Text messages, cold calls, and ringless voicemails are all viable options that can yield agreeable results.
Another new option is to connect over email or social media.
You can message one another directly, or you can even set up a chatbot to handle higher influxes of motivated sellers at all times of the day and night. Facebook ChatBot gives you access to over a billion Facebook users. This can increase sales, boost engagement, and boost your investment business' productivity.
You should also consider running Facebook ads. It's possible to become very specific about the type of audience you want to present your ads to, and an effective campaign will generate lots of leads at a very affordable cost. You can also add a Facebook Pixel to your website for Facebook retargeting ads to significantly boost your ad campaign's effectiveness.
No matter which avenue you choose, you absolutely must follow up. It takes many people several exposures to an offer or idea before they warm up and start to even consider the possibilities.
Unless you are asked not to contact them again, keep politely following up. It's not over until you find a deal, or they ask you to leave them alone.
“The fortune is in the follow-up.”
The most effective way to negotiate with motivated sellers is to come from a place of understanding, compassion, and authenticity. No matter how distressed or motivated a seller may be, they have the right to turn you down for any reason, so be respectful and kind. They aren't obligated to help you.
The second most important thing to remember is to ask lots of meaningful, insightful questions. You need to figure out why this seller is motivated so you can help them, and push to make the deal a reality. Speak with the homeowner, or the homeowner's agent to identify these pain points.
If, for example, the sellers plan to move abroad within the next 30 days, make an all-cash offer in 24 hours and offer a quick sale. You can drop the price a bit to help yourself while making sure that you get their money to them as fast as possible to cater to their needs.
Here are some tips on negotiating with motivated sellers:
The more you work to find motivated seller leads, the better off your real estate investing business will be.
It is intimidating to begin the process of finding distressed homeowners.
After you make your first successful investment or sale, your confidence will be boosted and you'll find the process is much easier, fulfilling, and rewarding - physically, mentally, and financially.
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