Before the mortgage meltdown, the same goal that was drilled in beginning real estate investors heads was to look for motivated seller leads. During that time motivated sellers were very elusive and if you found one then you struck gold. Those types of leads could have made you bundle back then when things were really good.
Now that the market has crashed in most cities across the country, you have more motivated sellers than there ever were. There are sellers right now that would give you their homes and pay you take them off of the hands. The problem now is, now one really wants majority of the motivated seller deals because they are worthless.
It’s plain and simple that the motivated seller leads now aren’t the same quality they were 5 years ago or even 3 years ago. The majority of those leads where the seller is begging someone to take their property is a pot of fools gold. Most of those deals have no equity, the payments are priced out of the market and they are behind on their mortgages.
If you are into short sales, then those deals could be a goldmine, but short sales are very time consuming and you have to tend to them like a toddler. You can’t just submit paperwork to a lender and expect them to follow up with you in a timely manner no matter how complete your package is set in order. A short sale requires attention and really too much attention based on the potential of striking the deal that is profitable for an investor. Then the lenders came up with all of the clauses that keep you from reselling the property for 30 days and so on while FHA requires you to do a ton of work only to profit 13% of the resell price. So unless you plan on holding a short sale deal for years then they are out of the question.
Pre-foreclosures used to be a good source of motivated sellers because there weren’t a lot of homeowners going through foreclosures. The fewer the foreclosures meant the more stable market values were and now that just isn’t the case.
So the lesson of this writing is to let you know, when you go out to bird dog or buy properties for your own personal use, don’t waste time on the old thought of finding deals. You should still look for motivated sellers, just make sure there is enough equity in the deal and that it is a good deal.
