By James Vasquez
If you’re like most real estate agents, you probably source deals for your clients who are looking for fixer uppers or rental property using only one tool, your local multiple listing service (MLS); ours is San Antonio Board of REALTORS® MLS. When I first got started in real estate seven years ago, I fell into the same mindset that most practitioners are stuck in today: That I should only use the MLS to find deals for my investment company, House Buyer San Antonio, and my investor clients.
And for a few years it was working for me, then the market shifted, and competition for “listed” properties became so fierce in my local market of San Antonio, Texas, that I was forced to make my own shift from the MLS to sourcing “off-market” deals through marketing and networking. Finally, with the laws of supply and demand working for me instead of against me, I was able to get a handle on my business and consistently find equity-rich deals for my own company and my investor clients. Here are just a few of the many ways that I have had success in finding off-market, equity-rich properties.
Send Direct Mail To Find Motivated Home Owners
Why on earth would any real estate professional want to spend the time and money that’s required to send out direct mail to find deals for their clients? Because when you market directly to home owners to find deals for your clients instead of searching a source that’s saturated (the MLS), you’ve essentially cut your competition out of the equation and simultaneously removed the commission limitations set by listing agents.
I’ve spent well over $150,000 in direct mail (letters and postcards) over the last seven years, and I can attest that there are, at any given time, only a small handful of investors who are actively sending mail to find deals. But here’s the kicker, only a very small subset of those investors are even willing to pay up to what your buyer might be willing to pay for a property, especially if your buyer is looking to build their rental portfolio, and not flip.
If you can get home owners calling you from either a post card or a letter, and you are able to make “reasonable” offers on your client’s behalf, you might be pleasantly surprised to find that sourcing deals for your client’s using direct mail is easier than you thought. Here are a few other benefits of buying directly from the home owner, on your client’s behalf:
- You typically won’t be in multiple offer situations, even on great deals.
- You get to decide what your commission should be, not a listing agent.
- You get to structure the deal the way you and your cash buyer want it.
- You can easily scale your marketing up or down depending on needed inventory.
Work Through Local Wholesalers To Source Equity-Rich Deals
Ever seen those annoying “we buy houses” signs strewn throughout your city around major intersections? Well, those are usually your local cash home buyers/wholesalers. Wholesalers typically don’t actually close on deals, they just negotiated a deal, put it under contract, and then sell that contract to another investor for a fee. Although we’re not one of those companies that claim to buy houses using handwritten signs, we do buy houses directly from home owners. Once we have the deal under contract, we start looking for a buyer that can close on the deal, that’s where you and your buyer come in.
What if you had just a couple of trustworthy wholesalers like us to go to where you could get “off-market” deals with tons of equity for your clients without all the competition that’s inherent with the MLS? What would that mean for your client that wants to build his or her rental portfolio and is looking to you to help find and purchase five houses in the next two months?
Should you decided to network through your local wholesalers/investors to find deals for your clients, you don’t need to worry about not getting a commission, because you can easily add your fee onto any sales price that you negotiate for your client; Of course, you and your client can determine the amount in your representation agreement.
Make Offers Directly To Expired Listings On Your Client’s Behalf
For some agents, working expired listings is the lifeblood of their business. Most agents have found that sending direct mail to expired listings or even door knocking works and can be lucrative, but it’s a lot of hard work.
What I’ve found is that many investors don’t go after expireds, for two reasons: One, they think that if the listing expired, the seller isn’t flexible; and two, that niche is over saturated with agents. Both schools of thought probably have some validity, but there are exceptions to both.
A seller that wasn’t motivated while their house was overpriced on the MLS, just might be tired of dealing with it when you call to make a cash offer for it for your client. They might be ready to trade equity for peace of mind.
Also, the expireds niche is saturated with agents, but those agents aren’t making offers, they’re trying to secure a listing. You can separate yourself from the crowd by “bringing them a buyer,” instead of trying to convince the seller that you can “find them a buyer.”
If this strategy interests you, you can use The Red X to help you locate expireds’ contact information.
Find Vacant Houses & Track Down Owners
We’ve all been driving our farm area and noticed that house with grossly overgrown grass and newspapers in the driveway. Don’t keep driving; that’s potentially the next deal for your client. Take down addresses of the abandoned looking houses that you pass by all day anyway. Then, when you get back to the office, grab the current owner’s contact information from your local county tax assessor’s office and look the owner up on the white pages or a paid service like Intelius.
Instead of going for the listing, present your client’s cash offer. Most of these types of leads won’t sell to your buyer right away, but the gold is in the follow up. Just add them to your CRM, we use Podio because it’s highly customizable, but no matter what CRM you use, follow up at least two times a month until the home owner either sells the house or asks you to stop calling.
In my seven years of experience in this area, I know that the “vacant house” home owner will eventually sell to an investor; why not your buyer?
To Sum it Up
Those that think creatively and separate themselves from crowded niches, especially in the real estate industry, will be richly rewarded. Think of the profit potential that you might achieve by sourcing, negotiating, contracting, and selling your own deals for your real estate investors.
James Vasquez is the broker-owner of Done Deal Buyers in San Antonio, Texas, a real estate company that buys houses directly from home owners. Learn more at DoneDealBuyers.com