How to Develop the Best Motivated Sellers List for Real Estate Investing

I remember purchasing my first home from a motivated seller very fondly. He was a young gentleman who inherited a home that he didn’t want to pay the property taxes for. The mortgage, he said, was a financial encumbrance. After he saw a billboard that I had commissioned, he reached out to me and we settled on a price within the next day. The flip was worth it, and I’ve been hunting for more motivated sellers like him ever since. 

But most of my deals with motivated sellers weren’t anywhere near as easy to come by as that first one. For months, I would spend thousands of dollars on outreach and advertising—only to come up with a short list of supposedly motivated sellers who in reality were anything but. I quickly learned that a seller’s motivation is no ticket to a good fix and flip opportunity. I also learned that simply finding motivated sellers is a process in and of itself.

With that being said, I’ve since become an expert at building lists of motivated sellers to follow up on later. If you’re thinking about increasing the proportion of motivated sellers that you make deals with, you’re on track towards improving your business. Follow along with me as I explore why motivated sellers are worth pursuing, how to find them, and how to choose the right one.

Agent holding miniature house model while handing keys to new owner.

Building Your Lead List

Motivated sellers are opportunities to make more money with less effort. In short, people who want to sell their property due to extenuating financial circumstances are easier to negotiate with, and they’re also often willing to sell at a lower price. That means you’ll be able to clear it off your deal book faster.

While it’s true in the broadest sense that someone is motivated to sell a house if they list it for sale, it’s not exactly what I’m talking about here. Motivated sellers are interested in selling sooner rather than later, and they often have a deadline to do so before they face financial consequences. At the same time, their properties may be in better condition than many of the fix-and-flip opportunities you’ll find elsewhere. So, if you can reliably find motivated sellers, there’s a good chance you’ll have an easier time growing your business. 

Still, it’s not enough to find just one motivated seller and call it a day. 

Just being motivated alone doesn’t guarantee that flipping a property will be worthwhile. Remember, some people will be interested in selling homes specifically because those homes are in terrible condition and they aren’t willing to perform the repairs themselves. Many sellers may need to move faster than you are willing to, or their idea of what their property should sell for is inconsistent with yours.

The more motivated sellers you have to choose from, the better your odds are at finding a lucrative opportunity. Besides, if you have a list of leads for potentially quick sales, you can always circle back to them later if your main prospects don’t work out. Or you can refer the leads to another investor and get some brownie points—which is especially important for reasons I’ll get into later. 

Finding The Right Sources

The foundation of every best motivated sellers list is a collection of sources and techniques that you will be using to find leads. 

For example, many investors find motivated sellers by:

  • Looking at public records describing preforeclosure properties and homes with tax liens
  • Surveilling local MLS listings for highly underpriced homes
  • Conducting outbound marketing campaigns via mailers or calling potentially motivated sellers on the phone (while being mindful of data privacy and consumer laws)
  • Buying lists of leads from brokers
  • Conducting inbound marketing campaigns via billboards or fliers
  • Working with real estate development agents
  • Talking with other investors 

Every investor has his or her preferred method, but it’s highly recommended that you understand the current market landscape and maintain basic proficiency with every option available to you. 

It’s better to have a backup plan that you know how to execute in the event that your favorite sources run dry for a time. Likewise, if you enter a new real estate market because you suspect there will be a lot of motivated sellers, the most fruitful sources may differ from the markets you’re more accustomed to. 

Let’s take a closer look at a few sources that I rely on to find motivated sellers so that you can understand the nuances of each. 

Public Records

Public records documents such as back taxes, underwater mortgages, assessed home value, and property ownership are the most reliable tools for finding motivated sellers. All of this information is critical when you’re developing an idea about whether a potential seller might be sufficiently motivated to make a deal with you. 

Many of the public records that are relevant to you will be filed with local housing departments. In smaller areas without fully differentiated municipal services, the city hall’s website is the best place to start looking. You may also find useful databases listed on county-level websites in regions where county authorities have a larger share of the burden of governance. 

One important thing to remember about using public records when finding motivated sellers is that you can’t use the same sources as you would for finding non-motivated sellers. For instance, foreclosed properties aren’t going to have motivated sellers; they’re going to have a bidding process which might actually drive prices up beyond what you’d get with someone looking to make a quick sale. So, you can probably skip cruising through foreclosure databases administered by the local sheriff’s office, as by definition they won’t have what you’re looking for. 

On the other hand, public land and tax records can be your best friends when determining if a property might be worth investigating further. 

If a home has a lien due to unpaid mortgages or taxes, there’s a good chance that the owner is in financial distress, which might make them a motivated seller. You can also use land records to find out the demographic information about property owners, which can be helpful when it comes to judging who would be amenable to a sale. But be aware that there are ethical issues to consider if you choose to do so.

Finally, remember that your competition is undoubtedly sifting through the same public records that you are. To beat them, you’ll need to move faster and drive a better bargain, so don’t let leads from public records searches linger in your possession for too long.

MLS Feeds

The MLS (or multiple listing service) feed is the bread and butter for most home buyers, and it’s a wonderful tool for many different types of sellers and real estate investors too. 

As great as they are in general, MLS feeds are (unfortunately) a mediocre tool for finding motivated sellers for several reasons. 

First, MLS feeds are filled with listings that are created by—you guessed it—real estate agents. When agents craft their listings, they always provide some color commentary about the merits of the property and the disposition of the seller. As any experienced real estate investor can tell you, claims in MLS posts about motivated sellers are only weakly correlated with the existence of someone who is actually interested in making a quick sale. Put differently, there are way too many sellers that are advertised as being highly motivated. In reality, they are just impatient.

It isn’t too surprising why that’s the case. Real estate agents are incentivized to close the loop on deals, and any information that piques the market’s attention gets them closer to that goal. 

Therefore, you’ll need to look at MLS listings with skepticism when there are any claims about motivated sellers. Following up a promising MLS listing with a public records search can help to confirm that the owner will actually be motivated to sell. Be sure to do that before confirming that something you saw on a listing warrants further investigation. 

Direct Outreach

Sometimes, the best way to find motivated sellers is to ask people if they’re interested in selling their homes.

Direct outreach to homeowners can take the form of door-knocking, phone calls, emails, or mailers. It’s one big fishing expedition, and the sky’s the limit for how you decide where to search as long as it is within the bounds of the law. 

The upside of direct outreach is that you’ll find opportunities that aren’t listed elsewhere. In fact, someone might not even be thinking about selling their property until you talk to them. That means you’ll have the leads you find all to yourself, assuming that you judge them to be worthwhile. And, if you use a low-cost outreach method like mass mailings, the amount of time you spend at the margin for each lead will be much lower than practically any other method.  

The downside is that direct outreach is typically a very low-yield strategy. Most of the people you contact aren’t going to be interested in selling their homes, and most won’t respond at all. Of the ones you find that are willing, they might not be motivated enough to make a quick sale. And even if you do find people interested in making an expedient deal, you’ll still need to ensure that the property will make for a good flip. 

If you can develop a direct outreach strategy that works for your business, that’s great. But don’t beat yourself up if your efforts aren’t working as well as you’d like. Some markets are likely more amenable to certain channels than others. Generally, hotter markets will have worse results with direct outreach than cooler ones as homeowners in hot markets are less likely to need prompting.

Inbound Marketing Campaigns

Inbound marketing header with three people discussing marketing around table.

Marketing campaigns are one of my go-tos for building a best motivated sellers list.

If you aren’t familiar, marketing campaigns ensure that well-trafficked areas have advertisements that prompt people to consider selling their homes. Then they’ll reach out directly to you and start the process. Campaigns can take the form of billboards, internet advertisements, paper postings, dancing mascots in suits, or practically anything else you can dream up. The trick is to work with marketers who understand how to target and encourage motivated sellers specifically.

The big advantage of using marketing campaigns to find motivated sellers is that you get people reaching out to you rather than vice versa. It’s a significantly better indicator that a homeowner is interested in making a quick sale because the ball starts off in their court. Plus, campaigns can scale depending on how much success you’re seeing with them. And once you get them set up, they’re very hands-off.

You should be aware that your communications with potential sellers will be the biggest ongoing, non-financial cost of the process. You may not be interested in buying what people are willing to sell, even if they’re quite motivated. Furthermore, because property holders need to reach out to you to start negotiations, they may have the upper hand when it comes to picking a price. That can make things a bit more complicated than they need to be, but it’s usually not an insurmountable obstacle.

Networking

Of all the methods for finding motivated sellers, networking with my fellow real estate investors is by far the best one. 

There’s often a plethora of leads or opportunities that you don’t have the resources to chase. But someone else might. And they might have something that’s just right for you to pursue, even if it isn’t working for them. 

Networking for lead generation doesn’t have to be complicated. Just talking with some of your counterparts on a weekly or monthly basis can go a long way. More importantly, other real estate investors aren’t going to talk up the level of motivation that a given seller has in the same way a seller’s agent might. If there’s a motivated seller that an investor knows of but isn’t going to be able to approach, you’re likely to get a more accurate view of the situation. And the fact that there’s another investor looking at a property provides a basic level of assurance that it might be worth flipping. 

The difficult part about getting leads via networking with other investors is that you need to have a network in the first place. If you don’t have a strong investor network, you should work on building one because it typically takes a long time. And don’t forget to pay it forward when one of your peers tosses you a lead.   

Picking The Cream Of The Crop

Once you’ve built your best motivated sellers list, it’s time to prune your leads into one or two high-quality prospects that you’re interested in moving forward with. 

During the pruning process, narrow down your list of leads by excluding opportunities that:

  • Have thorny legal or tax issues 
  • Would be prohibitively expensive to purchase or renovate given your financial resources
  • Are in less dynamic housing markets 
  • Might require extensive, time-consuming negotiations with the seller due to them being less motivated they initially appeared to be
  • Have any other peculiarities which might lead to a low or negative profit margin on the flip

You’ll need to develop and use your judgment when identifying the best opportunities amongst your leads, and there’s a good chance you’ll end up throwing out a few winners along the way. But still, the most important thing is to make sure that you are discarding all of the weaker opportunities. Advancing on an ultimately unprofitable flip will harm your business, but making a thinly profitable one doesn’t harm it at all. 

Use Other Investors To Gain Confidence In Your Choices

When you’re just starting out, you might be anxious or even hesitate when trimming down your best motivated sellers list to a smaller list of top-level candidates. The same is doubly true when deciding to move forward with a candidate. Thankfully, you don’t have to go at it alone. 

Investors in your network are some of the best resources you have available to help you assess flips. For example, when you have a mentor who’s a bit more experienced than you are, it’s often a good idea to discuss any pending opportunities to get some additional perspective. Other folks will help you identify potential issues with deals, experiences with other motivated sellers, and even how to handle your deal flow in light of your financing capabilities. 

You should probably make sure that the people you reach out to aren’t the same as your local competition, though. 

Streamlining The Process

For new real estate investors, launching marketing campaigns and getting your network off the ground may seem challenging. Without any direct links to colleagues in your market, you’ll be trying to connect to people without any common context. And if you’ve never organized an inbound marketing campaign before, launching your first one will be a learning experience that may be fraught with cost overruns or other minor obstacles. 

That’s why it’s incredibly helpful for real estate investors to team up with a reputable franchise like HomeVestors® to build their best motivated sellers list. 

All independently owned and operated HomeVestors® franchisees receive initial week-long training, 1-on-1 mentorship, and access to a nationwide network of highly experienced investors. You’ll be able to participate in national inbound marketing campaigns conducted by HomeVestors which target motivated sellers of flippable homes for you. And with the proprietary HomeVestors lead generation platform, you can look for pre-vetted listings of motivated sellers anywhere.

If you’re not sure whether an opportunity is a good fit for your business, HomeVestors® franchisees constitute an entire network of friendly faces to discuss properties with. You’ll get direct access to some of the best lenders across in the country. Franchising with HomeVestors brought my business to new heights, and it could do the same for yours, too. 

If you’re considering starting a real estate investing business and want to know more about how to build a best motivated sellers list, request information about becoming a HomeVestors® franchisee today

Each franchise office is independently owned and operated.

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