Are you feeling overwhelmed by the numerous ways to find a motivated seller willing to sell their house at a discount? One of the biggest reason why people don't find their deals quickly is that they hear about all the ways to find deals, try them all, and ultimately get burned out without truly investing enough time into any certain strategy to get results.
In this blog post, we'll break down the top five ways to find a motivated seller, in the order that you should approach them.
1. Driving for Dollars
If you're just starting out, the number one way is driving for dollars. These are homes that are run down that you're going to drive around and look for. You'll write down the contact info, look up the owner, and either door knock or reach out with mail, a text, or cold call to see if they want an offer on their house.
This is very helpful to them because these homes are in such disrepair that they wouldn't qualify for a normal buyer to come in and buy it with a loan. If they need to sell their house quickly, you could help them liquidate it within 30 days or less. They're often willing to give you a discount for that speed and convenience.
Some advanced investors may not be driving for dollars as much as you can because they could just spend dollars to reach them in more expensive ways. But you can actually drive around, find these lists, and you'll have less competition.
2. Tax Delinquent Properties
The second way to find motivated sellers is to look at tax-delinquent properties. The county publishes this list, and you can also get it inside of the DealMachine software. For example, in Indianapolis, there are a million residents and about 1,700 people that were tax delinquent in 2023 that had single-family homes.
Our CEO David reached out and found someone in Utah who bought five investment properties two years ago but hadn't had any success getting a contractor to fix them up. He was pulling his hair out and sold one of those properties to David for $20,000 less than he paid for it, plus he paid for the back taxes. It was a great scenario where a high earner still took a loss on that property just to get rid of it.
This is a great motivated list and it's free to get from the county.
3. Liens
The third way is property liens. These are homeowners who maybe didn't pay their contractor to remodel their bathroom, and the contractor is saying that they can't sell that house unless they're given a portion of it first. This means they're in some type of financial trouble.
There are many types of liens. It could be that they didn't pay their federal taxes or their homeowners association needs them to pay dues. This can be a great list to pull and get motivated sellers to help them out of a tough situation that they might be in.
4. Code Violations
The fourth way is code violations. This means that somebody maybe hasn't cut their grass and the city had to do it for them to keep the environment safe for their neighbors. That's not cheap - it could cost $400 to cut a small lawn.
If they're not taking care of their property, it means it's not rented out, they have a renter who's not cutting it, or they're just not paying attention. This could be a great way for you to just unload a problem property for them and typically get a great price for that.
5. Pre-foreclosures
The fifth way is pre-foreclosure listings. Again, all these lists are free, provided by your county in some type of format.
Pre-foreclosure means they've actually not paid their mortgage payment. In some states, that means they have 30 days before it's auctioned off after missing just one payment. Crazy, I know.
You could get the list in the courthouse, where they're often posted to a bulletin board, and then you could actually drive, reverse drive for dollars. That means you go to all those properties, knock on the door, and say, "Hey guys, I just wanted to let you know you're on this list and we could help you save your credit. But most importantly, we could give you peace of mind that you can take money away and have a place to live instead of wondering when your house is going to be auctioned and if you'll be able to stay here next week." You can give them that certainty by driving around and seeing if they want to sell their house.
Bonus: Probate
A bonus way to find motivated sellers is probate listings. Let's say the owner has died with no will. Oftentimes these types of properties are going to be owned by the kids that have four children, and maybe they don't want to deal with a rental property or can't agree on what to do with it. You can reach out and actually do those deals.
These lists are given in this order because the simplest is, of course, driving for dollars when the owner's still living. That's a list that you can find just by getting out there and looking. You'll learn your area. The next ones are all free lists you can get from your county if you know where to look, and of course, DealMachine provides all this data (except code violations) in the app as well.
Thanks for reading this blog post on the top 5 ways to find undervalued real estate in 2024. We hope it helps you start your journey to financial freedom and start real estate investing. And as always, Happy DealFinding!
