Investing in real estate is a numbers game. The more opportunities you are presented with the better chance you can convert an opportunity into a deal. There are many profitable deals that come from unlikely sources. One of the best under the radar sources for deals are fsbo properties. These are properties where, for a variety of reasons, the owner has decided to bypass a real estate agent and sell the property on their own. While some owners have success many find the process more challenging than they anticipated. A segment of these owners become frustrated with the process and are willing to take a below market offer to simply move on. If you can find them before they get to this point you will have the inside track on a new deal. Here are some tricks and tips in finding and dealing with fsbo properties.
WHERE TO FIND FSBO PROPERTIES
- Driving For Dollars: You have probably driven by a fsbo property without even realizing it. Even if you have seen a sign in the front yard you may not have put two and two together. If you hop in your car on a Sunday morning you can most likely find at least a half dozen fsbo’s. Instead of riding around a random area pick a specific market or two where you want to buy. The idea isn’t to get a homeowner to agree to your price but to find a property you can make a profit on. With the right market, you know that almost any property you find is one you want to pursue.
- Craigslist. There was a time when Craigslist was the go-to source for many real estate investors. Even though the popularity has certainly worn off it can still be a great outlet to find fsbo sellers. In almost any market you can find a list of properties for sale on Craigslist. At the top of the property for sale page there is a tab to filter the properties sold by owner. Depending on the specific market you can probably find a dozen, or more, listings daily. Some of these may be duplicates from the previous day but there are still a few new listings every day.
- Newspaper. There is plenty of valuable real estate information in your local newspaper. Most newspapers have a section where they print properties for sale. On both weekend days, you can usually find open house listings in addition to current properties for sale. In these listings, there will always be a handful of fsbo properties. As you did with Craigslist you should narrow your fsbo search only to the towns where you are interested in buying.
HOW TO APPROACH A FSBO OWNER
- To talk to a fsbo seller you need to understand their mindset. There are many reasons why someone would sell a property on their own. For some they simply want to control the transaction and don’t want to have to deal with a middleman. Others don’t see the value of a real estate agent and think social media is enough to find a buyer. However, the main reason why someone sells on their own is to save money. They do not want to pay the real estate commission. There are times when this is a necessity because of their equity position while other times they just don’t want to pay the 3% fee. Knowing that all fsbo sellers are motivated by saving money should give you an idea of how to approach them. After you have accumulated a few fsbo names and addresses here are a few ways you can approach them.
- Door Knocking. It is amazing how much times have changed. Instead of knocking on a front door we are inundated with phone calls. While door knocking can intimidate the homeowner it is still an effective way to start dialogue. It is a good idea to have a plan before you go knocking on the front door. Start by introducing yourself and asking for the owner. If the owner answers explain that you are a local real estate investor who was just driving by and loves their property and location. At this point they may tell you to take a hike but if they continue the dialogue try to retain as much information as possible. Find out why they are selling, what the asking price is and if they are having any trouble finding a buyer. Now is not the time to make an offer but always try to exchange contact information before leaving. You should plan on following up in a day or two.
- Mailing. If the thought of door knocking is not something you would feel comfortable with you can try a mail campaign. It is a good idea to try to find the owners name instead of sending a basic “dear homeowner” letter. Your letter should be short and sweet. Explain who you are, what you want to do and the timeframe for which you may be interested in buying. Come up with three different letters and send one every week. The downside of mailing is that time is of the essence. The property is still for sale and an offer can come in at any time. The quicker you can establish contact the faster you can see if you have a deal.
If you talk to ten fsbo sellers eight will probably not be interested in a quick sale right now. One may have lukewarm interest while the last one is a warm lead. This warm lead may have to be worked for several weeks before they are ready to commit. All it takes is one fsbo deal to make it worth your while.