Helping Distressed Sellers & Buyers
How can real estate investors help more distressed buyers and sellers in 2015?
While more traditional housing sales are fueled by rising property prices and new construction, there are still a substantial number of distressed properties in the United States. So how can real estate investors assist more of these property owners, while aiding the growing pool of distressed buyers too?
Finding the Sellers
Between REOs, auction properties, pre-foreclosures, and those just struggling to keep up housing payments, there are still billions of dollars in distressed homes and commercial properties in America. Some real estate investors might feel like it has been harder to connect with the owners of these properties due to competition and how fast the foreclosure process has been speeding up. It’s really a matter of identifying who is holding this inventory, and finding the best ways to connect with them. Some solutions include:
- Connecting with bank managers
- Reviewing public records
- Buying lists
- Driving neighborhoods to scout neglected properties
- Direct mail
- Networking with local real estate agents
- Providing assistance to corporate HR departments for relocation
- Interacting on online forums
- Social media
Getting Purchase Offers Accepted
Of course, many real estate investors have found that the biggest challenge isn’t just finding distressed properties and motivated sellers, but connecting with them, and getting them to accept offers. It’s not just about price. Sellers are incredibly fearful today. Many have tried reaching out for help before and have been shut down, or have had transactions fall through. They have been programmed to be paranoid by the media, and many have lost all faith in finding real help.
There is a lot that real estate investors and other industry pros can do to change this mindset. Yes, everyone should be cautious about being sucked into real estate and mortgage fraud and scams, but paranoia is preventing many from obtaining critical and valuable help. Blogging, writing articles, speaking in the news and more can go a long ways towards fixing things.
Even if property owners have seen their hopes of selling crushed in the past, it doesn’t mean that they can’t be helped. Savvy real estate investors can negotiate down and get liens released. Even those that are underwater on mortgages or have little home equity can be assisted in more creative ways. Lease options, subject-to structures, wrap-around mortgages, owner financing, and more can help reduce tax liability, while providing a fast and graceful exit to the seller, and making deals viable for investors.
It’s also difficult for sellers to know who to trust today, and in many cases they fear being taken advantage of. Instead of complaining about these “crazy” owners that won’t listen to reason, real estate investors should work on overcoming these objections by making sellers more confident in the process and their potential buyers. Show your strengths; whether that is great credit, plenty of cash, the ability to close quickly, or a great track record of helping others in similar situations. This can be done online in advanced via real estate websites, blogs, and social media, and cultivating testimonials.
Helping Today’s ‘Distressed Buyers’
While this may be new terminology for some, it really isn’t a new situation. As the U.S. housing market improves, more and more individuals are feeling the pressure to buy real estate. New grads are moving out on their own, Millennials are having families, parents are feeling the pressure to grow a nest egg, and no one wants to be left in the dust as their friends, coworkers, and family members reap all the rewards of property ownership. Those that don’t buy now face rising rents and housing expenses, while those that do are locking into ridiculously low rates and tiny house payments.
Still, despite the need and desire to buy and invest in real estate. these buyers are feeling distressed due to a variety of factors:
- Poor credit
- Lack of credit history
- Lack of down payment
- Difficulty saving due to high rents
- Nonexistent responses from real estate agents and sellers
Real estate investors can do a lot to help these individuals and bridge the gap. They can educate and turn individuals onto needed resources. They can respond, and do it quickly, and they can pair these buyers with the distressed inventory to create many win-win-win scenarios.