7 Secrets Investors Use To Find Off-Market Properties: Deeply Discounted (Part I)
Have you ever wondered how investors are buying properties at a deep discount? Where do they find these properties? How do they get the funds for it?
In this article I will discuss the strategies investors use to find these deeply discounted off-market properties. Note: the list is fairly long so I'm breaking up this article into 2 parts. Part I will only include 7, 6, and 5.
How To Find Off-Market Properties
7. Driving For Dollars
Driving for dollars is an easy way to find properties in your neighborhood that are in disrepair.
What do properties in disrepair look like?
Properties in disrepair can be easily spotted. They have noticeable conditions like chipped paint, unkept and neglected lawns, roofing in bad condition, or lots of trash in the yard.
Chances are these properties have also received code violations from the city or local municipality.
When this happens, you know the owner hasn’t taken care of the property and could be willing to sell it to get it off their hands.
How do you contact the owner?
There are a few ways to do this.
You can leave a note on their door letting them know you’re in the market to buy a house.
You can knock on the door to find out more information or talk to the owner directly.
You can look up county records to find out who the owner is.
You can even write down the address and skip trace it to find the owner’s information.
Once you have the owner’s contact information, you can contact them directly to see if they’re willing to sell their property to you at a discounted price.
With persistent follow up and effort, you can come across great deals to buy an off-market property in your neighborhood at a great discount.
6. Foreclosures, Auctions, and REO Properties
Foreclosures
Properties go into foreclosure when the owner has not paid their mortgage for a while or after they default on their mortgage.
The bank or the lender proceeds with a formal process (either through the court or directly with the owner and their trustee, depending on the state you’re in) to take the property back and sell it at a discount.
Banks and lenders are not in the business of selling houses—they are simply trying to get rid of their underperforming inventory. Banks and lenders simply want the loans to be paid back along with any accrued unpaid interest and associated costs and fees. They will typically sell the house at a price lower than the actual value of the property, so long as the loan and fees get paid.
Auctions
Where do banks and lenders go to sell these houses?
They sell them at an auction.
Investors typically attend these auctions to buy houses at a discounted price. You can find active and upcoming auctions at sites like auction.com or RealtyTrac.com.
REO Properties
When the bank is unable to sell a house at an auction to a third-party buyer or investor, that house is now labeled as an REO property (Real Estate Owned).
This simply means the bank now owns this house.
They then hire REO managers or asset managers who deploy real estate agents specializing in REO properties to manage and sell these underperforming REO houses.
So, another good place to find houses at a discount are through real estate agents specializing in REO properties. You can find them through your local MLS. Look for certified REO real estate agents.
Finding properties in foreclosure, properties being sold at an auction, or REO listing properties with an agent are great ways to find amazing real estate deals at a discount.
5. Expired Listings
Expired listings occur when properties are listed for sale on the market (on the MLS) with an agent but did not sell. Now the listing is considered expired.
Why do houses not sell on the market?
73% of all houses that do not sell fast enough are over-priced.
Usually, the owner of these properties are emotionally attached and over-value their house, despite their real estate agent’s advice.
After the property sits on the market for a while without any movement, owners are sometimes willing to sell it at a cheaper price because it costs them more money to keep it. Every month they have to keep up with the payments like cost of insurance, taxes and mortgage.
Another benefit of finding these properties is that when these listings are expired, the real estate agents no longer have the exclusive right to sell it.
That’s another negotiating point with the seller. You can now negotiate directly with the owner even more since they won’t have to pay realtor commissions.
Where to find expired listings?
You can find expired listings on sites like Zillow.com or redfin.com.
Using the strategies above, you can easily build a list of properties or leads to follow-up with. With determination and consistent effort in contacting these leads, you will soon be able to buy an off-market property at a deep discount.
Stay tuned for PART II of this article where I list strategies #4 - #1 in finding off market properties at a deep discount!
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