Rich Dad Education Blog

In the past, the common advice you would hear from most real estate experts was to concentrate on finding “motivated sellers,” and success would follow. This is still wise advice. Without a motivated seller, there is no deal. However, today’s real estate market has changed dramatically in the past few years. In most parts of the country it is a “buyer’s market,” meaning that there are many more homes for sale than there are qualified buyers. With the collapse of the “easy money” sub-prime mortgage market, and the tightening of loan requirements, there are fewer and fewer buyers who can qualify for real estate loans resulting in many homes sitting on the market for months and months before being sold. And the problem is made even worse by the glut of bank-owned homes (REOs) flooding the market.

According to numerous real estate investors from around the country, the number one problem in today’s real estate market is not finding motivated sellers, but finding motivated (and qualified) buyers. A lot of investors are not taking advantage of the current buying opportunity because they are afraid they will be stuck with a property they can’t sell in a reasonable amount of time. Their fear is based on truth. No matter how good of a deal you get on a property you plan to sell, a long holding/selling period can eat away most or all of your profit.

You will hear some people say, “Well, if you can’t sell the property, just rent it.” This may work sometimes, but is definitely not a cure-all solution. Properties that can make a great profit from a resale, very well may be negative cash-flow rental properties. Unless you have pretty deep pockets, you should stay far away from negative cash flow rental properties; they can eat you alive!!!

However, there are many investors currently buying properties as fast as they can in today’s buyer’s market and they have little fear of not being able to sell. Why? Because they have taken time to develop a buyers list.

If you have a list of ready and willing buyers, you can make offers and contract to buy properties without the fear of not being able to sell the property. Many times, you may have the property “pre-sold” even before you finalize the purchase. Having a good buyers list gives you the power to take advantage of today’s fantastic buying market.

So how do you create a buyers list? In the long run you will create two different buyers lists: a wholesale buyers list (other investors and rehabbers) and a retail buyers list. The topic of this article is building a retail buyers list. A retail buyer is basically defined as someone who is going to live in the property.

There are many creative ways to build a buyers list, so network with other investors at your Wealth Intelligence Academy (WIA) training classes and your local real estate investment clubs. See what others are doing to build their list. Here are a few suggestions:

1. If you have a property for sale and people are calling on your ads or your signs, be sure to get their names and contact information, even if they are not interested in the home you are advertising. Let them know that you will have other homes in the near future and get a description of what type of home they are looking for. Find out as a minimum:

* What area(s) they are interested in
* Their desired price range
* Desired size of home, number of beds, baths, etc.
* How soon they are looking to buy
* Available down payment
* Are they pre-qualified with a lender
* Indication of their credit
* Do they have a contract with a real estate agent (buyer’s agent)

Create a database to store this information so you can retrieve it easily as you get homes under contract that match your potential buyer’s needs. Your coach can help you in setting up this database.

2. When the home you are advertising sells, don’t cancel the ad right away, but let the ad keep running for several more weeks and keep capturing the names and data of potential buyers. When they call on the ad, just explain that the home is sold, but that you will have more homes in the near future and ask them what they are looking for.

3. If you don’t have a property to sell yet, you could run a blind ad and still capture the names and data of people who call. Make it clear that you are not acting as an agent to help these people find a property, but that you will simply notify them when you have another property ready to sell.

4. You can network with other real estate investors through your local Real Estate Investment Association (REIA) and actually share other investor’s buyers lists. Let other investors know when you have a property for sale and even if they are not interested in buying it themselves, they may have someone on their list who would be interested in your property. You can return the favor when they have a property to sell by helping them find a buyer from your list.

5. In today’s real estate market, many banks are using auctions to sell their ever increasing number of REOs. The auction companies, hired by the banks, spend thousands of dollars attracting buyers to these auctions. You can use these auctions to build your buyers list. Your strategy is to find out when the next auction is being held in your area. Your coach can direct you to the websites of auction companies in your area. The night before the auction or the day of the auction, go to the area where the auction is being held and post your signs everywhere along the main roads leading to the auction site. These signs need to be made to attract attention and need to say something like “Desperate Seller” or “Handyman Special.” Your headline is critical. The signs will attract buyers because the language indicates you are motivated. Your signs should be up before the auction starts and should be up when it ends so you can get the traffic going to and from the auction. Again, when you get calls on these signs, capture the potential buyer’s information and build your buyers list.

Note – check with your local city for the signage regulations. In most cities, even with strict signage laws, signs put up and taken down the same day will cause no problem.

Note – you can hire someone to place and remove these signs for you. A wise investor, however, will drive the “sign route” before the event to make sure the signs were posted properly and on time.

6. You can also leverage local home shows and other events that attract potential home buyers. Strategically place your signs to take advantage of traffic that is generated from other people’s advertising dollars.

7. In today’s real estate market, more and more people are going to the Internet to find homes to buy. You can spend a lot of money setting up a website, and it will be money well spent in the long run. But many new investors don’t have a large advertising budget. A great alterative to a potentially expensive website is a blog. Property blogs are popping up all over the Internet. Blog sites can be a very effective way to build your buyers list and get people to view your properties. Two of the most popular blog sites are WordPress and Blogger. With both sites, you have choices of templates that will get your site up and running in no time, at no expense. Your visitors can post comments and if you provide solid, interactive content with regular postings, visitors will be more inclined to come back to your blog often. Your signs and advertising can direct people to your blog.

8. You can create a video or virtual tour of a property you have for sale and post it on your blog or website. This will attract more visitors and thus build your buyers list. Video tours give you the ability to not only sell the actual home, but also allow you to sell the city, the neighborhood, the schools, etc. It’s a 24/7 open house! Creating videos can be fun, but don’t forget to sell yourself. Remember, people do business with people they like and trust.

9. Another way to get lots of calls on your ads and add lots of names to your buyers list is to offer seller financing. There are many potential buyers in today’s market who have good income, have a substantial down payment, but who have less than perfect credit. The banks and lenders are getting more selective every day and are continually raising the loan-qualification bar. If you offer seller financing, you will open the door to hundreds of buyers who can’t get reasonable loans from the banks. Add these names to your buyers list.

10. Standard advertising, such as advertising on-air or in newspapers, costs a lot of money. But with more and more people going to the Internet to find properties, why not advertise your properties on the many free Internet posting sites. Free posting sites are all over the Internet and they are generating great results. Maybe there is such a thing as a free lunch after all. Some of the most popular sites are:

• CraigsList.org (can post descriptions and pictures).
• Postlets.com (allows you to submit an ad for free and then distributes the ad to numerous other free posting sites). Is that cool or what!
• Zillow.com (a site that has primarily been used to find comparable values, but is now expanding into other areas of real estate).
• Base.google.com (site is in beta version, but is very effective).

There are many other free sites and new ones are showing up everyday.

There are many buyers out there right now…you just need to put forth the effort to find them. Start to create your buyers list, today! Your buyers list will grow every week. You can then fearlessly buy homes in today’s buyer’s market, knowing you have many hungry buyers just waiting to gobble up your properties.