Finding Motivated Sellers
What makes a real estate deal, a deal? Well there are many reasons why, but one of the most significant sources of great real estate deals has nothing to do with the real estate itself. Sure...there are rundown homes that are selling for pennies on the dollar, but its selling for pennies on the dollar for obvious reasons!
Where the hidden "gems" are found is within the people who own the home. It's actually the situations that they are in, such as foreclosure, divorce or maybe a death in the family that present the opportunity. It's the situation that gives the real estate investor a chance to get the property cheaper than it's actually worth. Why are these situations so valuable? They present a possible problem to the current owner, where they may need to sell the property very quickly and at a price more favorable to the buyer, namely you!
The urgency to solve their existing problem gives you a chance to be a problem solver. This generally creates an opportunity if you know how to solve problems.
Uncovering The Hidden Gems!
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Since the majority of the time, "distressed sellers" aren't in plain view, we have to search for places that will provide us the information that will gives us hints as to their possible situation. These "hints" of information can be found at your local County Recorder's office.
The County Recorder's office has a myriad of information that can lead you to where the deals are. Here's some of the examples of listings that you may investigate through public records and some other tips that don't require research via public records:
1) Notice Of Default - this is a notice that the bank sends out to the borrower notifying them that they are delinquent on their mortgage payment. This information is readily available as it is public record. Ask your County Recorder clerk to assist you on finding this valuable information.
2) Notice To Condemn - this is a notice that is sent out to the homeowner notifying them that all or a portion of their property doesn't meet building or zoning code for that particular county. The homeowner has a certain time frame to fix it, or the County will force the owners out and condemn the property. You don't want to deal to much with the major fixer upper type, but sometimes people put on add-ons to their homes, without hiring a contractor to do the work. The results are sometimes not up to building code, which if not fixed within a certain time frame, can lead to the County to condemn it.
3) Notice Of Divorce - this is a preliminary filing to an inevitable divorce. Usually before the actual divorce, there is a hearing, and that hearing produces a formal date in which a divorce will be finalized.
4) Delinquent Property Taxes - these are self explanatory, however there are certain laws on how the State proceeds on recouping property taxes. You would do best to talk to an attorney about the process in your State.
5) Pending probate court cases where the beneficiaries live out of State. These cases are assigned to an "executor" to liquidate the assets for the beneficiaries. They can be a relative or possibly an attorney. You would simply contact the executor to see what price range the beneficiaries are asking for. Most times, the beneficiaries want to sell fast, because they have no interest in handling the affairs in a different State or they don't have the time to.
6) Out of State owners can usually qualify as a possible lead to a good deal. The property or situation though, has to dictate the reason as to why these owners would be motivated.
7) Rental houses - the idea behind rentals is that some rentals are on the market, because owners may have tried to sell in the past with no success, and are no stuck with a property that they really don't want. A good indicator you might want to look for, are houses that may have uncut trees or grass within the front yard. Broken window or graffiti may also be a good indication of an unwanted property. These are all things that are cosmetic, and can be fixed up with a clean up crew.
8) For Sale By Owner - some of these homes may not have enough equity to pay a realtor. These are prime candidates for a subject to type deal.
When doing any of these deals, you should always let the seller talk more, while you listen to their situation. People who are in difficulties tend to talk about their problems to make them feel better.
If they don't like to talk much, ask pertain questions as to why the house is selling or how quickly do you need to sell the house. By understanding their situation, you can better understand how you make an offer on the property. As a real estate investor, you are always looking for a reason to give you, the real estate investor, a benefit in the deal.
Here's some of those benefits you are looking for:
1) Lower price offering.
2) Subject to deals (see my other article on this topic).
3) Flexible pay plan or price offering.
4) Low to no downpayment required.
The main theme in these techniques, are two fold: getting a good deal for you the investor, and picking up the property before it becomes known to everyone else!
Another good idea is to have a handyman check the property to ensure that it is in good condition and if repairs are necessary, to get an estimate on the cost. This combined with the seller's situation, gives you a better idea on what your offer is going to look like.
Happy Property Hunting!