Finding Off-Market Real Estate Deals: Part 3 – Realtors, Foreclosures and Driving for Dollars
Real, actionable content that you can implement NOW to start buying cheap, profitable deals. And that’s the key: IMPLEMENT. Otherwise no information in the world is going to help you.
My advice is that you read this carefully and then actually put this education to work. Try different strategies discussed here, test them, and as per Part one of this series, track everything!
Speaking of Parts one and two, if you haven’t read those yet, then start with those. Part one talked about creating your real estate marketing plan and the importance of testing and tracking. Part two walked you through some free deal-getting strategies that don’t require a budget.
So now, if you’re caught up, let’s move on Part three.
Today we’ll cover referrals from agents, various ways to find real estate foreclosures (REOs), and driving for dollars.
Realtors, REOs, and Driving for Dollars
“Just one great partnership with the right person can have an
incredible impact on your business success.”
~Janine Ogg and Jo Foster, business coaches
I think most of us can relate to the quote above. Phenomenal partners can have a remarkable impact on our businesses. Referral partners – in particular – are an invaluable and indispensable resource (for information on how to attract potential partners, click here).
As an investor, I’ve gotten some amazing “first looks” at deals through Realtors. As I’ve mentioned before, not all investors are fans of Realtors, but I find that good business partnerships with Realtors are essential.
If you ever get into commercial investing, great relationships with top commercial brokers become even more (far more) instrumental in your ability to secure deals that others don’t have access to.
When I say “first look”, I mean you want Realtors to send you new listings before those listings are even made public. Having a trusty Realtor partner can really give you a competitive edge over other investors who are scavenging for off-market property deals in your area.
So today, I want to talk about how Realtors can help boost your wholesale real estate investing business. But I also want to cover a number of other deal-getting strategies, such as finding foreclosures (REOs) and driving for dollars. All are fundamental deal-getting strategies that you should at least test in your target market.
You’ve Got a Friend: Working with Realtors
Let me give you a brief word of advice, to start: not every Realtor is going to be the right fit as a referral partner for you.
Mind-blowing, I know.
Find a Realtor who specializes in distressed properties in your area. You probably don’t want someone whose clients generally buy and sell luxury homes, and you don’t want someone who does Realtor work “on the side.” The last thing you need is someone whose knowledge of your local market is sub-par – you want an expert. You want someone who hustles night and day.
Once you have your go-to guy or gal, keep in mind that short sales might be a topic of interest to bring up. When short sales fall through at the last minute, it makes Realtors want to pull their hair out – because they often put a ton of effort and time into getting those sales ready.
Here’s where you get to be the hero.
Serve as the “back-up plan” for Realtors when their short sales fall through. Tell your Realtor partners to call you if they have a short sale that was under contract, got approved but didn’t close.
Remember, though, not ALL short sales are good deals. Do your due diligence and make sure the deal is right for you.
Realtors are also obviously a prime source for finding new listings. They have the inside scoop on when prices are reduced, which sellers are the most motivated, and so on.
Ask your Realtor partners to set you up on their email lists, so you’ll get their alerts on new listings. You can even set up alerts that meet your criteria such as location, price, size, etc.
You have two options when it comes to working with realtors/agents:
- Option one: Work with a buyer’s agent. This agent will go out and bring you every single potential deal that is on the market and that may be coming on the market. They will hit their connections (other agents and sellers) who may have deals. You will then use this buyers’ agent to make offers and negotiate all deals.
- Pros: This agent will save you a lot of time and if you find a good one, they will constantly work on your behalf to find you deals and keep a constant eye on the market. You will have a trusty advisor on the market conditions, areas, values, comps etc.
- Cons: Other agents with “pocket listings” or listing about to hit the market may not be so quick to let you or your agent know about those deals because they’ll have to split commission with your buyers’ agent. They would rather do a deal where they got both halves of the commission.
- Option two: Work without a dedicated buyers’ agent and form your own relationships with many agents. If they bring you deals, they get to keep the entire commission. Btw this is a HUGE TIP!
- Pros: I’ve gotten a number of great deals this way. By letting the listing agent keep the entire commission, they’re much more likely to give you an early heads up about a deal and any inside information (that they ethically can share).
- Cons: You won’t have a dedicated agent that represents you and works on your behalf. You’ll likely have to spend more time yourself building relationships with multiple agents and scouring the market.
Finding Foreclosures & REOs: How to Do It Right
Aside from short sales, foreclosures are also something you want to keep your eyes peeled for.
Foreclosures are homes that have been seized by the mortgage lender. REO stands for “Real Estate Owned”. REOs are homes that have been seized by the lender, but haven’t been sold yet.
So, what’s the best way to go about finding foreclosures?
It’s the 21st century, folks, so try these websites:
I want to discuss those first three sites a little more, because I think you’ll see that they’re super constructive when it comes to finding foreclosures.
This site allows you to sort by state, city, county, zip code, price, and more – to really narrow down your results to the deals that best fit your business. For instance, if you’re looking for a minimum of 3 bed/2, 1,500 square feet and at a certain price point – you can filter out those properties that meet your criteria.
This site is chock-full of info on each property, such as the repair escrow – and all the details on the repairs that need to be made.
On this site, you can see the starting bids for properties and decide if any are worth putting in a bid.
One interesting thing about this site is that it starts bids extremely low. Keep in mind, though, that they do have reserves. And, unless that reserve is met, you won’t be able to purchase the house.
Auction.com also has aggressive earnest money deposits that you have to put in up front, even before you start bidding. If you’re outbid on a house, they will refund your money.
A non-internet option for finding foreclosures is to attend trustee or sheriff sales at your local courthouse. These auction sales are announced in the newspaper (and sometimes online) regularly.
Keep a list of local auction companies, subscribe to their email updates and check their websites frequently to find foreclosures that might be solid deals.
Give ‘Em an Offer They Can’t (or Can?) Refuse
Once you find the property you are interested in, contemplate these ways to make a strong offer:
- Offer all cash: This is always going to be your strongest offer.
- Offer a high earnest money deposit.
Ensure a fast closing.
- If you can buy it “as-is,” that’s a big plus.
Quick Tip: For the HUD Homestore, the number of days on the market determines the discount they will accept. If you really study the listings on HUD Homestore, you could get feel for when they’re going to discount a specific house. After a certain number of days, the properties will also open up to everyone (instead of just owner-occupants).
If you take notes, you’ll see patterns and start to develop an instinct for when the discounts will appear. Plus, it’s easy to make offers on this site.
If you’re debating whether or not to make an offer sight unseen, remember that this isn’t recommended for everyone. BUT, if you’re going to try to make some lowball offers off the MLS, sight unseen, make sure you:
- Have a strong contingency (for financing, but primarily for inspection)
- Look CAREFULLY at the photos
- Estimate what the repairs are
- Figure out the ARV
A technique you may want to try for sight unseen properties: Make a low offer that you know the seller won’t accept. Then, when they make a counteroffer, you can decide whether or not it’s worth your effort to go physically look at the house. Brilliant, right?
They See Me Rollin’ (Driving for Dollars)
Driving for dollars simply means that you literally drive around, looking for properties that might be good deals. But, if you’re not careful, this method can be a waste of your time. So don’t waste your time!
Just have your bird dogs do this… when they see “For Sale By Owner” or “For Rent” signs, ask them to get that info for you – so you can call the owner. Your time is better spent elsewhere. We talked about bird dogs and how to use them to find off-market real estate deals.
Also – have your bird dogs search for properties that look rundown or abandoned. Tell them to look for boarded up windows, high grass and other signs of neglect. Those are ideal properties to target as well.
If you’re diligent and willing to be like Sherlock Holmes, you can find an incredible amount of info on these seemingly abandoned properties.
Here are two great resources:
- Google the address and search online tax records. So much information is online now. The online tax records will often have the owner’s mailing address and it will be a different address than the subject property. That’s where the tax bills go.
- Use a skip trace service (such as FindTheSeller) – these services can provide you with a phone number.
If you’ve found the owner, here’s what to do next:
- Get on the phone! Have a conversation to see if the owner is interested in selling. If it’s a landlord struggling to find tenants or they’re overwhelmed with too many properties, they may be willing to sell.
- Mail a letter. Sometimes you’ll find properties that belong to the former owner’s distant relative in another city or state. If you find the current owner’s address, mail them a letter with a photo of their house in it – it will capture their attention right away, and they will likely call you out of intrigue, if nothing else. It might seem a little weird, but it works.
Two other techniques that you may want to try – look for code violation and eviction leads.
Finding Code Violators
You can usually find these online as well. If not, go to the code enforcement office in your city or municipality. If the people there give you a hard time about seeking this info, mention the Freedom of Information Act. But most of the time, you won’t encounter any difficulties getting this list.
Remember, if it is a little bit difficult to get this info – that’s a good thing – because most of your competition will not go through all that trouble! It’s just another hurdle that other investors may not be willing to jump over for off-market real estate deals.
Finding Eviction Leads
You can do the same thing with eviction leads. I’ve found that it’s hard to find this info online, so you can try one or both of these approaches:
Build relationships with the attorneys that are doing the evictions and ask them to feed you some leads.
Go down to the courthouse on eviction day, and start looking for the mom-and-pop landlords who are evicting people. If you approach them when they’re in the midst of an eviction, they’re often motivated.
Side Note (but still related to the topic at hand): Part of being a successful real estate investor is the willingness to engage with strangers. It may feel uncomfortable at first, but you’ll find that this methodology will often get you deals on properties you would have never stumbled upon otherwise.
Bringin’ It Home
So, I know I threw a lot of information at you today, but as you can deduce by now, there are so many great deal-getting strategies out there. And I want to arm you with as many of them as possible.
Relationships with effective and knowledgeable referral partners – especially Realtors – are very advantageous. And knowing how to pursue deals such as foreclosures and short sales is another strategy that you should explore. And remember, if you’re using the driving for dollars method, hire bird dogs to do it for you.
As we continue looking at tactics for finding deals, I want to talk more about pursuing For Sale By Owner (FSBO) leads. Then, we’ll switch gears and dive into paid marketing strategies – including bandit signs. That will all be covered in the next section.
Talk again soon,
What are your “outside the box” ideas for finding property deals? What’s the strangest encounter you ever had that led to a terrific deal? Talk to me in the comment box below.