How I Stumbled Upon Unexpected Owners (My New Secret Lead Source)

September 22, 2014 | By | Reply More

In today’s post you’ll learn about the most recent seller lead source that I’ve stumbled upon. I call them unexpected owners. This is now the group that I mainly target because of the high-equity properties, highly motivated sellers.

So why would anyone be an unexpected owner? You’re about to find out.

Today I’m pulling the curtain back to share with you great stuff about this lead resource. I’ll tell you about my first deal and exactly how it came about…

Would you believe me if I said there is a group of people – they may be right in your neighborhood – who own their property free and clear, and yet they’re highly motivated to sell…

Sounds a bit unbelievable, right?

Well then read on because I’m going to prove it to you.

My newest lead source

So here is this group of people who I have come to call “unexpected owners.” Here’re a couple of quick facts about this group – they:

(i) Own their homes free and clear (or at the very least have a lot of equity).

(ii) Are truly motivated to sell their properties.

It’s all good so far, right? But that’s not the best part. The best part is that there’s little or no competition. I’m not seeing a lot of other investors out there jumping on this opportunity. And of course, that makes me very happy.

I let all the other investors clamor and fight over foreclosures, HUDs, and REOs; meanwhile, I’m over here fishing in my own little pool of motivated, equity-rich sellers. And easily scoring deals at 40%-50% of retail value.

Here’s exactly how all this came together.

Check this out…

We sent out a direct mail campaign and quickly began receiving responses from it. In fact, we received 23 unique calls from sellers on the first day alone. By day 3, we were up to 43 calls and had our first scheduled appointment with a seller named Ashley.

I have a partner who works with me on these deals. My partner agreed to meet with Ashley at the property on Daffodil Street in Summerville, SC.

lawnVery quickly into the meeting my partner discovered that this was an unexpected owner. She was the beneficiary of this house following the death of her father. Thus she had a house on her hands that she had no idea what to do with.

The property was sitting vacant and was in need of repairs. Ashley was doing her best just to keep the lawn mowed – having to drive 2 hours every two weeks to do so – and with her 8-year-old son in tow.

There was one thing on Ashley’s mind – “How can I get out from under this burden?” And we had the answer to her dilemma.

When my partner offered her 18K for the property as-is, she snapped it up in a heartbeat. Suddenly we had a smoking hot deal on our hands.

Wholesaling marketing campaign

The mail campaign that Ashley responded to was specifically for wholesaling deals. That meant we had to make sure we got deals far enough under value so they would still appeal to our investor buyers.

We wanted to get a property under contract for 50% of value or below. In order for everyone to profit (us and our investor/buyer) we underestimate the ARV and overestimate the repairs. Now we have a margin that ensures that we pocket a hefty fee, but still gives the investor/buyer a profit as well.

As soon as we got Ashley’s house under contract we sent a contractor to the property to estimate repairs. His said it would probably take about 10K to bring it up to a salable condition.

We had it under contract for 18K – the ARV was estimated at 65K. We then decided to price the property at 25k. We felt that would be a great deal for our investor buyers, and we were right!

Within 2 days of getting the contract, we had 3 full-price offers, and all we did was call a couple investor friends and email our small buyer’s list.

But wait, there’s more

Our standing agreement was that Ashley would receive 10K down, and then the additional $8K as soon as we sold it to an investor. The deal looked good no matter which way you turned it. But we wanted to see if it could be made any sweeter.

We did that by asking Ashley this question:

If we paid you all cash at the closing (rather than the 2-part payment originally agreed to) what amount would you accept?

She said that if we paid her in cash at closing she’d be good at $12,500. And just like that we cleared another $5,500 on the deal – just because we asked.

What if we’d offered her the $12,500 at the outset? She may have thought that was way too low. But once she agreed to the 18K, she was already emotionally committed to the sale. (And was probably already giving a huge sigh of relief and thinking about how she was going to spend several thousand extra dollars.)

negotitateSince she had already agreed to the sale, we were no longer in the negotiation stage. Our offer at that point was simply a friendly suggestion. It wasn’t as though we were backing out. We just suggested a way for her to get more money into her hands faster. It was an offer she could take or leave – and we even let her set her own price.

Human nature being what it is, most people would rather have money in their hand now than to wait and opt for more money later. It’s just the way most humans operate. And she was so done with this house – that helped to motivate her to take the money and run.

Don’t let this truism slip by you. You can do it just like we did here. Negotiate the terms, but then before closing ask if they would accept less if you were to pay an all cash, lump sum at closing. You have nothing to lose, and money to gain. So why wouldn’t you want to do this?

Bottom line

Since we ended up with a better deal, we decided to pass $1000 to our investor buyer by shaving that much off his purchase price. (You think he was glad he was doing business with us? You bet he was.)

Here’s how it all shook out:

  • Our final purchase price was $12,500 – all cash at closing.
  • We wholesaled it for $24,000, scoring us an $11,500 assignment fee.
  • With an ARV of $65K and an estimated rehab of $10, our buyer scored a sweet deal too.

Who these people are

These unexpected owners are simply those who never intended to own a property but through a variety of causes, now they do. It may have been through a divorce, or inheritance, or business breakup.

These are people just like Ashley who are owners of a property they don’t want and don’t know what to do with. And the great thing is that many of these properties are free and clear or have a lot of equity, and the owners are motivated to sell.

So there you have it. Just do as we did, and you too will be finding unexpected owners who are ready to sell.

Patrick's signatureTalk soon,

– Patrick

PS: This is working so well that I’ve started teaching others how to find unexpected owners.

Thoughts, questions…

If you have any questions or comments about this deal, let’s hear it! Just drop me a note below. I’m would love to hear your thoughts.

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Category: Marketing, Real Estate Investment Buying Strategies

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