I'm going to save you a lot of time with one sentence right now...the best, discounted properties come from finding the right seller rather than the right property. Specifically, you need to find motivated sellers.
It's all about problem solving.
You need to find somebody that has a problem that you can solve with your expert property knowledge and availability of funds.
BUT...and this is a big 'but'...this is not grounds for exploitation.
We are in a position to help people and that's precisely what should be done...and in return they will usually be flexible on either the price or the terms of the deal.
Can you find good investments at the same time as helping somebody?
Absolutely...and that's what it's all about.
Creating ethical, win-win solutions so that everybody ends up in a better place and everybody is happy.
The question I always ask when dealing with motivated sellers...is this person going to be in a better position once we have completed the deal?
We should only ever move forward on a deal if the answer to that is yes...
But conversely, you aren't a charity remember, you also have to be in a better position afterwards too...and this is what makes it win-win.
So, with that in mind, let's take a look at some of the reasons people could be motivated to sell quickly...
Reasons for Motivation
Since I've been working with motivated sellers I've heard a whole array of reasons to sell quickly - from the understandable to the downright bizarre.
Here's a list of potential reasons in no particular order that includes but is not limited to:
- Mortgage arrears
- Clear existing debt
- Probate / Inheritance
- Broken chain
- Can't afford required repairs
- Tired/Retiring/Accidental landlord
- Need money to keep business afloat / buy business
- Need money for a better investment
- Job relocation
- School catchment area
- Change of circumstances
- Ill health
- Bad memories in the property
- Haunted property
- Fear of uncertainty
- Going into retirement home and need to pay for it
- Need to move by a certain date
- Want to buy their dream home
- Expanding family
- Move closer to family
- Two homeowners getting together and have a surplus property
- Bad neighbours
- Change in area
- Planning permission issue
- Need different type of accommodation
- The seller is in jail
- Concerned about economic stability
- Need to pay inheritance tax
- Fund lifestyle or hobbies
As you can see, there isn't a shortage of possible reasons.
Just reading this list alone should set the creative juices flowing.
It's worth sitting down with a pad of paper, working through this list and having a brainstorm as to creative ways of finding these people. You never know what you could come up with.
From setting up house clearance companies to arranging referral deals with solicitors...you're only limited by your creativity and resourcefulness.
Let me talk you through a few ways to find motivated sellers...
How to Find Motivated Sellers
I know, I know...I did just say that the secret is to find the seller rather than the property...so how are the search portals going to help?
This is the easiest and lowest effort place to start, by the way...and arguably the least effective but it is still possible to find motivated sellers on there.
Get your dear-stalker hat on and have a think about what clues you could pick up from the listings that may give away motivation.
Use the list above to correlate and cross-reference.
Is the property on with multiple agents?
This is quite a big giveaway that somebody is keen to move quickly.
Is the property currently empty?
If it's a rental property this could mean it's costing somebody money in monthly costs. Perhaps it's inhabitable and needs work so requires a cash buyer as it's un-mortgageable.
Perhaps it's an inherited property...which could also mean somebody could want to shift it quickly. These are pretty easy to spot as not only are they empty, they usually need some "modernisation".
TIP: And an easy way to find these kind of properties is on Zoopla as it has a keyword search in the 'Advanced Options' section...
Why Rightmove doesn't have this functionality I have no idea. They're seriously missing a trick.
This is an incredibly helpful feature to utilise and, again, you're only limited by your creativity here.
There are certain keywords that will bring up certain listings...such as how "modernisation" will give you properties that need some work.
Keywords like "Public Notice" will bring up repossessed properties which nearly always need work doing and often come cheap.
Don't forget to search using the speech marks so that it searches the "whole phrase".
TIP: Another clue to find motivated sellers can be deduced from the behaviour of the listing itself.
By that I mean, how long has the property been listed?
Has there been any/many price reductions in a short space of time?
Has it been listed as 'sold' and then returned to 'for sale'?
All of these are indicators of problems that need solving and you'll potentially find motivated sellers that need your help.
An incredibly helpful tool to help you find out all of the above points is something called Property Bee.
This is a free plugin for your browser that will extract all of the changes to information on a property listing on Rightmove...which is unbelievably useful.
As you can see, having this information can help to paint a picture of what's been going on with the seller.
The only issues are that, unfortunately, it only works in Firefox browser and whomever created this fantastic plugin has discontinued updating it anymore.
As such, it doesn't work any more with the latest version of Firefox but I've found a work-around, which works fine as I use Chrome usually and only ever use Firefox for Property Bee...
- Uninstall Firefox if you have it installed and updated already.
- Download the older version from this external website. They are .exe files but they're being downloaded directly from Mozilla's FTP server, who are the people that make Firefox. It all works fine, I've tested it and scanned it all for viruses so you needn't worry.
- Temporarily disconnect from the internet and then install this version of Firefox.
- Go into Firefox's Preferences and change to 'Never Update'.
- Turn your internet back on.
- Reinstall Property Bee as normal.
Then when you go on Rightmove you'll see it works fine!
TIP: Another good little trick is a feature on the website Mouseprice.com.
If you search a location, click "for sale" you then have the option to sort by "Most reduced price"...
You'll see that all the listings within your criteria will be ordered as to the most reduced...as well as letting you know how long it's been listed for.
If you see one that's been reduced considerably in a short amount of time then this likely indicates somebody wanting to move quickly.
You could then, potentially, find the property using Property Bee to get an idea of what's been going on. It might shed some more light on the situation for you.
Using a combination of all of the above works well, as those methods help to identify the right sellers rather than the properties themselves...but remember, estate agents have a habit of over-promising what sellers can achieve simply to win the business. This can then be accompanied with considerable price drops...but that doesn't mean it's below the market value, it could have just started above in the first place and come down to a more realistic price...however you may still find motivated sellers if the price is dropping quickly.
That's why it's critical as part of your due diligence to be doing thorough research on the local market as well as comparable sold properties so that you can glean a solid idea of what the property's intrinsic value is...that is, how much it's actually worth. Its Open Market Value (OMV).
(NOTE: Need help crunching the numbers on potential property investment opportunities? We’ve made a handy spreadsheet that does it all for you. Simply input the property details and it’ll do all the calculations. Above all, this is a massive time saver. You can download it for free by clicking here.)
Some people will recommend speaking to agents to find these kind of deals but, in my experience, your time is better spent elsewhere.
Agents get people coming in on a daily basis saying that they're an investor looking for discounted property...most of whom are legitimately time wasters.
They will have a little, black book of investors that have confirmed to deliver. Investors they have sold property to before will always get first refusal.
If you can get in that little, black book, that's great...but it may not be easy.
Above all, there are a few more issues with using agents to find these kind of deals...
Firstly, they rarely let you speak directly to the vendor.
You ideally want to be able to speak to them so you can understand their situation and come up with something that works...agents typically do not help this process one bit.
In their defence, they are there to represent the seller and get them the best possible price but sometimes they do get in their own way.
Most of them are hugely against anything that isn't the 'norm'.
That flexibility in price and/or terms of a deal is fuel for fear to the agent.
You may get the odd agent every now and then that is open to it but they're considerably in the minority.
The next issue is that, due to the amount of time it typically takes to sell on the open market, if somebody wants to sell with speed and certainty, the open market is not the place to achieve that.
The whole process will almost never take less than two or three months.
Motivated sellers will usually look off-market for "quick sale" companies. Companies that move fast, offer a guaranteed solution and provide a discrete/confidential service...all of which is essentially what you need to be doing.
You may find relatively OK to decent deals on the open market...but if you consistently want the best, you need to go off-market.
Regular readers of the blog will have heard me say:
The value of anything comes down to supply and demand.
Would you rather be competing against all the other potential buyers...a problem made even worse in an auction room?
Or would you rather be the only potential buyer?
Supply and demand.
Would you also rather spend your time trawling through the internet trying to find motivated sellers?
Or would you rather have the deals come and find you? Not just any deals either...the best deals.
For me, it's a no-brainer...and it's precisely what I do.
Another of my regular sayings is:
It doesn't matter what business you're in...you're in the marketing business.
I genuinely do not believe that there's any more beneficial entrepreneurial skill than being adept at marketing. I'm not saying it's the only important skill...but I'd say it's definitely the most important.
Spread The Word
First and foremost, start getting the word out there.
Tell EVERYBODY what you are doing.
Never make any assumptions about who is or isn't likely to be a motivated seller...I've learned that literally anybody could be in a position where they need or want to sell quickly and, as explained above, for countless reasons.
Make a point of actively making it known that you help people and this alone will help you find motivated sellers.
Tactically inform people who speak to lots of people or view lots of properties...think builders and postmen. Anybody that loves to chat.
Perhaps offer a referral fee for successful referrals.
These are the very simplest of things that you can do...and should be where you start.
This is a topic that goes far and beyond this article.
People spend years studying the subject of marketing...it's impossible to cover everything simply in one post.
There are countless resources online to help with all the different elements of marketing and it's absolutely something you should always be improving your knowledge on...as it's always changing.
To get you started, a simple trick to remember is 'AIDA'.
- A - Attention - The consumer becomes aware of a category, product or brand (usually through advertising).
- I - Interest - The consumer becomes interested by learning about brand benefits & how the brand fits with lifestyle.
- D - Desire - The consumer develops a favourable disposition towards the brand.
- A - Action - The consumer forms a purchase intention, shops around, engages in trial or makes a purchase.
Marketing is a relationship and needs to be treated the same way.
The AIDA principles above can be applied to an entire marketing strategy or even to a simple leaflet.
Catch their attention with a clear headline, build interest and desire in the copy and then have a call to action.
As I said, there's a huge amount to learn when it comes to marketing but AIDA is enough to get going.
Traditional marketing is essentially offline marketing, it's been around for hundreds, if not thousands, of years in some shape or form.
With regards to being able to find motivated sellers, traditional marketing can be very effective if you have a specific area that you want to target.
You could be utilising things like...
- Postcards in shop windows.
- Knocking on doors in your target area.
- Stickers on cars.
There are many, many ways of doing traditional marketing...all with varying degrees of cost and effectiveness.
The problem with offline marketing is that it's incredibly expensive to scale effectively...and it's generally very untargeted.
It's more of a case of casting out the net and hoping something catches...although it does work. Especially in a concentrated area.
When you look around you, if somebody has a spare moment...what are they doing?
Chances are they're on their phone mindlessly scrolling through social media.
Marketing is all about going where the attention is...and in this day and age, that's digital.
I'm talking about the likes of Facebook ads and Google Ads etc.
My company exclusively does digital marketing to source projects. It's an incredibly effective way to get in front of a large and VERY targeted audience.
That said, the barrier to entry is relatively high.
I've invested a lot of time and money to get our marketing systems where they are...but they work. And they work very well indeed.
It can be quite complex for a beginner though and it's not cheap...
As you can imagine, it's a highly competitive space and you're competing with the big boys...the likes of We Buy Any Home and National Homebuyers etc.
On the other hand, you can be incredibly accurate in testing and optimising your campaigns so you know precisely what you are actually paying per lead.
You know the average conversion rates for your adverts and landing pages...and it's all scalable. You can test and adjust and optimise every last element...from the images you use to the words in the headlines. It would take years to achieve offline what you can do in minutes online in regards to optimisation...and you can be up and running in a fraction of the time too.
You can turn it on or off whenever you like, scale it up or down or even change location at the click of a button. It's massively flexible.
You can reach far more people than you would with traditional marketing for a much cheaper price but that doesn't mean it's cheap...so approach with caution. Of course, you may not want a particularly large volume of leads.
However, it is targeted.
You can have your ad right in front of somebody that has just actively searched for a solution to sell their house quickly.
You don't get hotter leads than that.
But...you have to know what each lead is worth to you and consequently how much you're willing to pay to acquire them...which is true for any marketing but especially when it comes to digital.
You have to make as many leads as possible count. Wastage is expensive.
Whatever method you choose, you have to have the systems and processes in place to deal with the leads effectively.
I would recommend utilising a Customer Relationship Management (CRM) system to help you with this.
There are plenty of free and paid options out there...I've tested quite a few.
One of the best ones I've used...and still do for some elements of the business, is Hubspot CRM.
Not only is it free, it's feature packed and does absolutely everything you need.
Make sure all of your leads go into the CRM and you update it after every point of contact so that no information gets lost or forgotten.
It's incredibly important to keep it up to date but it's easy not to bother.
Most of the leads that get in touch with you will say no at first I've found...but it's vitally important to follow up with them regularly as situations change all the time.
I know people that have secured incredibly profitable deals from people that said no first...so follow up. Trust me on this - spend the time building the rapport and the relationship...and don't be a motivated buyer!
By all means, if you want to keep it simple and use a paper version of a CRM in a folder...that's fine. It's about finding whatever works for you...as long as it works and you do it, that's what's most important.
Or...you could just get somebody else to do it all for you.
You could leverage other people's time, knowledge, expertise and already established marketing systems.
Of course, this comes at a cost but that's to be expected...but then you're saving time and money not having to do your own marketing and lead management.
And lead management is an incredibly time-consuming thing...relationship and rapport building, research, due diligence, negotiation, viewings, problem solving etc etc.
It's not insignificant.
There are many sourcers out there and their numbers are growing...although, you need to be very careful with the quality of the deals that some of them put on the table.
It will take a bit of time to learn who the good and bad sourcers are and it's best to get recommendations from people that have used them successfully. Get networking.
I've had deals come across my desk from sourcers who have literally no idea what they're doing...they're just looking for an easy way to make money and many share deals for a 'fee split' that other sourcers have found.
Sourcing fees are usually a percent of the purchase price...it can vary depending on who you're dealing with and how much value they've added. Although some sourcers simply find a property on Rightmove, don't bother securing it or often even viewing it and expect you to pay a huge fee.
Just be careful who you're dealing with. Doing your own due diligence is a must...check everything and don't take anybody's word for anything.
Despite sounding rather doom and gloom, there are many great deals to be found with sourcers...I just felt the need to offer the warning about whom you deal with.
You might be wondering why the sourcers would sell on the deals they find rather than buy them themselves...and that comes down to funding most of the time.
In an acquisition phase when I scale up our marketing, I get a huge influx of leads. I'd absolutely love to be able to do all the deals and help all of those people but unfortunately I only have a finite supply of private investors and thus a finite supply of funding.
That doesn't mean I simply discard the other people, I will continue to work with them to package up and sell the overflow as ready-made investments to anybody that wants to buy them. I just won't be the one buying it but I still treat it like my own all the way through to completion.
Of course, the luxury of running your own marketing means that the very best deals you will likely do but that doesn't make the others deals bad. I would only ever package and sell good deals...if there's no deal to be made then I'd follow up until there is. It has to be win-win for everyone. The deals wouldn't get sold if they weren't worth investing in.
And what is a good deal for you may not be for somebody else, and vice versa, everybody has different strategies...so always look to sell your overflow if your marketing is working well and it's a good deal.
Another benefit of using sourcers is that you can expand your area.
You can leverage their expertise in a certain area as there may be better returns there, for instance. I know London-based buyers that utilise sourcers up North because of the improved yields.
The primary goal for most people with all of these investments is to improve cash-flow and consequently replace income through passive investment...so it doesn't really matter to you where the property is if it's fully managed in good hands. As long as it brings in good returns and is in an area of strong rental demand so you're not going to be lumbered with an empty property. Ideally in an area that will have good long-term capital growth too...but it doesn't need to be anywhere near you. Sourcers can be very valuable in this instance.
So there you have it.
Hopefully now that should give you plenty to take away and start putting into action.
Whether you decide to do your own marketing to find your own deals or decide that you just want to leverage other people to source them for you, either way you should definitely be en route to find motivated sellers, secure some below market value deals and momentum invest your way to an empire.
Just remember, it's about action. Even small actions over time will add up and move you in the right direction towards your goal.
So go do it!