In our last article, we discussed the challenges that most sellers face in a slow market, and how we, as real estate investors can create true winning deals for both parties. This is a follow on from where we left off in Part 1.
We have talked about the art of creating a deal that works for the seller to take away their pain, but we have not talked about how we even find these sellers in the first place. Time and experience have taught us that when we want to create a winning deal for the buyer and seller that it’s always best to be working directly with the seller and avoiding real estate agents as much as possible.
Why would we say that we want to avoid working through real estate agents, when 80% of people tend to sell their homes through a real estate agent? The answer is quite simple really. A real estate agent is motivated by three things. Listings, Sales and Commissions. The more stock they have, the greater the chance they have of selling one of the many listings they may have.
In a slow market, sellers who have an urgent need to sell don’t normally have the time sell through a real estate agent. In many cases, they don’t have enough equity to pay the real estate agents commissions, so it’s not worth their while anyway.
So how do you reach these sellers to be able to work with them in the first instance? We have found that the most effective way to find these sellers it to go directly to the source.
We have found the three best ways to do this as follows:
1. Run a continual classifieds advertisements in your local paper, under the Houses Wanted section, educating the seller of your Fast Home Buying Service.
2. Target the areas that interest you and do a small to medium sized flyer run in that area. Use attention grabbing headlines like “We Buy Your Home Today” and under this, add some bullet points that show problems that you can fix.
3. Drive around the area and make note of homes that have been for sale for over two months, and write directly to the seller, informing them of your Home Buying Service, and to contact you if their real estate agent does not find anyone to buy their home.
The above three methods generate phone calls. We know this from experience. This creates a serious sales funnel that can be repeated over and over again. You must always be asking yourself the question “How Do I Make Money From This Deal?”. It’s easy to get caught up in the “Solution Man” mentality and try to help everyone that calls, but you will only end up wasting the seller’s time and yours, if you don’t qualify each seller and tell them up front if you can or can’t help them.
If the numbers don’t work, tell the seller right away, and if possible, make some suggestions that could be an alternative for them. This way, you may have been able to provide them with some alternatives that could help them, even if you can’t make money on the deal. We have even given some sellers the phone numbers of similar companies, just in case they have a way of helping the seller when we could not help.
When you are talking to the sellers and you have identified that you can help them, its best to sound them out on the styles of deals that you might be able to work with them on. If they sound open to these ideas, then you should make the appointment with the view of putting a winning deal together.
By following the above methods over and over again, you will have an endless supply of motivated sellers and no shortage of homes to purchase with the most flexible terms available. Your income streams for the homes you buy are endless as well. In the articles to follow, we will talk about creating winning deals for tenants who would like to share the equity in these deals or even enter into a rent to buy option to help the tenant become a home owner over time.
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