How to Find the Deal Before Everybody Else
By Rich Danby
When someone looks to sell a property, there are typically three options they can take. They can sell it themselves, go to a real estate investor like The Easy Home Buyer, or go to a realtor. When they go to a realtor, we are able to check them out and put in an offer for it. I’ve put in at least a hundred offers since I began investing in real estate and you win some, you lose some. I recently submitted an offer on a property and found out I won in a multiple competition by $3000. Five minutes later a friend approached me and said, “Darn, I just found out I lost by $3000 on a property I made an offer on. ” We had a good laugh once we discovered we both submitted offers on the same property.
This probably happens more often than most of us are aware because after all, REIN has been teaching Canadians where and why to buy for over 23 years. However, it’s not usually REIN Members we’re competing against. It’s usually the unsophisticated investors who get caught up in the emotion of competition or average homebuyers who willingly overpay because they love the place and plan to live there.
In a hot market, many REALTORS ® are advising their clients to hold offers at a later date. This is a strategic way to drive up the price through supply and demand, forcing potential buyers to compete against each other. As REIN Members, we’ve been trained to focus on the math so we know what our maximum offer is before we even start negotiating. This protects us from overpaying, but it can become a very frustrating experience to lose over and over against other buyers who don’t follow the same system. The good news is there’s still plenty of opportunities out there; you just have to work for it a little bit harder.
Make REALTOR ®s your Best Friend
Approximately 90% of all residential real estate transactions happen through MLS, which means having a great REALTOR ® is imperative to your success. However, the mistake many of us make is that we only have one REALTOR ®. How can they possibly be aware of every deal that comes up? It’s unrealistic to expect anyone to spend 24 hours a day sitting at their computer waiting for your next perfect deal to arrive.
A good way to find out about upcoming properties is to be on multiple email lists. REALTORS ® will usually email their client database to let them know when a good opportunity comes up. Also, do thorough research on the different realtors available in your close vicinity. For example, let us assume you reside around Charlotte, you can ask a few friends and family members about realtors Charlotte, compare and select one service that is most suitable for you. It’s also helpful to stay connected and remind the realtor that you’re actively looking to buy something. The squeaky wheel usually gets the grease.
Go Private
Although private listings can still be a fantastic place to find deals, be wary when approaching one. Private sellers’ properties are often overpriced so it’s important to remember that a good deal has nothing to do with how much you were able to talk the seller down. The main reason is rather because you get direct access to the seller, which means you can ask them whatever you want. This can be incredibly helpful when having a conversation with a private seller because you can find out why and when they’re moving. Knowing these details and building a rapport with the seller will help you create a better understanding of what they want, which may help you get what you want. There is also less competition because the majority of buyers and REALTORS ® spend their time looking on MLS.
Knock On Some Doors
Hitting the streets in your free time can produce some amazing results. Often you can catch people during a time when they’re just starting to think about selling. Or maybe your “in-person ” visit will open their mind to the possibility of cashing out. If a property is rundown it may be vacant or there’s a strong possibility the owner doesn’t have the funds to maintain it. This may be the perfect win-win scenario.
Here are 5 things to look for while door-knocking:
1) Dumpsters, storage pods or moving trucks in the driveway,
2) Excessive garbage is an indication people may be purging before moving,
3) Overgrown landscaping or piled up snow over the walkway,
4) Front porch filled with flyers and an overflowing mailbox, and
5) Big ticket items that need replacing such as roof, windows or driveways.
Go Online
Naturally, the next step after hearing “I ‘m moving out ” from your tenants is to place a “for rent ” ad online. It’s during this time when many of us ask ourselves if now’s the time to sell? Sophisticated investors may see the opportunity to make minor improvements and increase the rents, but many landlords simply throw up an ad and assume people are going to line up, which is usually not the case. As a buyer, this is your opportunity to engage the property owner to ask if they’d consider selling. If a landlord’s ad is well written with professional photos, it’s unlikely they ‘re going to sell. Typically you ‘ll have better success if you target ads that are poorly written and have less than desirable photos or no photos at all.
It ‘s always best to wait until you have funds lined up before you start marketing yourself as a buyer. Otherwise, you run the risk of becoming known as “all talk and no action ” which is the quickest way to lose credibility. You also run the risk of being unable to close on the property with the potential of being sued by the seller. We can’t always be in buying mode, but when we are there are many ways to attract deals. The easiest route is just to let people know through email, phone or social media. This could include REALTOR ®, mortgage brokers, trades people, co-workers, tenants or friends and family. If you’re willing to spend money you can also place internet ads, create lawn signs and even a website that advertises “We Buy Houses! ”
Ask For Help
Finding properties on your own can become a full-time job and sometimes even an addiction. Asking for help regarding the same is no shame. Its not like you would think twice before hiring professionals to do many things for you. For instance, when you reach the stage of moving houses, won’t you seek out the help of some Local Movers instead of lugging large pieces of luggage around yourself? Similarly, the process of buying a house should be no different. Instead of almost losing your mind drowning in options and offers, you would be much better off with the help of an expert. It’s very easy to lose track of time while window-shopping on MLS. To avoid this scenario, it’s better to connect with a reputable REALTOR ® and ask them to set you up with automated notifications. This way you’ll only receive emails when your specific criteria are met. You can also hire “bird dogs” to help you find properties. These are people who do the door knocking for you. You simply set the criteria of what you’re looking for and pay them a commission for anything you buy. It’s extremely important to be specific so they’re not wasting their time looking in the wrong places. Offering financial incentives will motivate people to help you! This can be anything from cash, gifts or even free rent, but always make it conditional upon whether or not you buy the property.
Finding the deal before everybody else is a great way to maximize profits. If you become proficient at attracting deals you may end up with more properties than you can handle. This could provide you an opportunity to earn even more income by assigning the deals to other investors who are willing to pay you a fee. Although it sounds easy, buying privately is extremely risky. Without comparable sales and a second opinion you may run the risk of overpaying or being sold a story by the seller. This is why there is no substitute for having good relationships with at least one investor-focused REALTOR ®. If you’ve purchased through them in the past, they’re more likely to help you out, especially if you find a way to compensate them for their time.
Rich Danby is a full-time real estate investor, an accomplished public speaker, a real estate coach and the Owner of Rich Ottawa Investments Inc. In 2014, REIN named him as a “Joint Venture of the Year ” Finalist and he was awarded a “Top Player Award “. Rich is also an REIA and graduate of the Dragon’s Den Business School. You can reach him at rich@richottawainvestments.com.
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