Bob Leonetti’s Real Estate Blog

Finding Great Real Estate Deals in Today’s Market February 8, 2010

When you’re looking at real estate, finding real estate deals is the fist and obviously, the most important step in your real estate investing career.  And in today’s market, with all of the banks failing and people losing their houses, finding deals should be easier than ever.  Or…are they?

You’ve got to hand it to the marketers of real estate courses, tools, techniques, and widgets. They’ve convinced us that the only way to rise to our hopes and dreams in today’s market it by buying their wares.  In fact, how in the world did we ever succeed in real estate without their product?

The answer is simple:  when it came to finding real estate deals, first of all, we learned the business and second, we took action!  That’s right – the only thing separating the successful doers from the unsuccessful non-doers is one simple word and deed:

Action.

Amazing, isn’t it?  The difference between the doers and the non-doers?  I could go on and on with differences in income, success, properties owned, vacations taken, etc. but I’m sure that you get the point!  And MY point is that I see real estate investors content to do the analysis, but often scared to take ACTION and really acquire the properties.

So…what I’d like to do is share a few techniques that are currently being used by my students in their quest to find good deals.  We’ll showcase one student in each blog, and in the next several blogs, we’ll have a comprehensive list that you can use to find properties.

Oh…and more thing:  while they may not be the newest and shiniest tool to hit the market the reality is…they work.

This from Kory Kempton in Eagle, CO.

Kory writes that he uses Yellow Letters when contacting Motivated Sellers.  He also uses Realtors, and chases Bank Owned Properties.  So, let’s see EXACTLY what he does and how you can do it, too!

Yellow Letters: First of all, Kory is using a technique created by my friend John MacNeil.  John felt that ‘shorter’ was better than longer, so he created the Yellow Letter as a way to introduce himself to potential sellers.  The basic concept is handwriting a note on a yellow-lined piece of paper and mailing it to the homeowner.  I could write volumes on how to best use the Yellow Letter, but instead,  I’ll defer to its creator, John.  Click on the Yellow Letter link for more information.

Motivated Sellers: How in the world do you know if a seller is motivated before talking with them?  Kory approaches MLS listings that have been on the market for more than 90 days.  You can also find people who are ‘motivated’ to sell based on ‘don’t wanter’ criteria:  are they behind in their payments?  behind in property taxes?  going through a divorce?  experienced a recent death in the family? facing foreclosure?  And then there are the banks and lending institutions as well as government backed agencies such as FDIC, VA, HUD, FHA, and USDA (yes, they back loans in rural areas).  Each of these can be found through public records.

Realtors: Real estate agents are sometimes known as Realtors, but keep in mind that those with the Realtor designation are members of the National Association of Realtors.  I know that a lot of real estate ‘gurus’ suggest that you don’t use real estate agents – I say that you should ALWAYS use them to find good deals for you and in many cases, negotiate them (as in the case of short sales, wherein the bank has to agree to a reduced sales price). Realtors can also help you facilitate buying a property out of your area.  If you’d like for more information on buying properties out of your area, check out my blog at Real Estate Profit Coach.

Bank Owned Properties: Finally, Kory loves Bank Owned Properties, also known as Real Estate Owned or more familiarly REOs.  If the lender takes ownership of the property, either through an agreement with the owner during pre-foreclosure or at the public auction, the lender will usually want to re-sell the property to recover the unpaid loan amount. The lender will then typically clear the title and perform needed maintenance and repair; however, according to Realty Trac, the potential bargain for these REO homes is typically less than a pre-foreclosure or auction property. Bank foreclosures can become government foreclosures if the loan is backed by a government agency such as the Department of Housing and Urban Development (HUD) or the Department of Veterans Affairs (VA). In that case the government agency would be responsible for selling the property.

That’s it for this installment – see you next time when we’ll talk about more great, low-cost techniques that will catapult your finding real estate deals to the next level!

RL