One of the most important first steps in making any money as a real estate entrepreneur is finding and pre-screening prospective sellers. Your entire business hinges on this key factor. Offers cannot be made until you locate those who need your services and are willing to listen. Just know you will have to talk to several sellers before you find those quality leads. It’s a numbers game.
SW-Some Will SW-Some Won’t
SW-So What! SW-Someone’s Waiting
Remember, your entire business will be built around locating prospects just like any other business. An insurance agent, real estate agent, car salesmen, hairdresser, doctor, lawyer or any other product or service-driven business cannot survive without first locating prospects. You must understand and internalize that real estate just like most businesses, is a numbers game. What I like to use in order to determine good from bad prospects is the “Funnel Theory”. Get the suspects in the top of the funnel, figure out quickly which are prospects and then narrow those down to the few that become deals. Follow up with those that don’t.
Most of your pre-screening should already be laid out if you followed the previous steps. However, there are a few things that we need to discuss to ensure you have a clear understanding of what constitutes a good prospect. A good prospect to purchase wholesale will have the following components.
-Probably vacant (not mandatory)
-Needs a lot of repairs (not mandatory but this alone is an important ingredient)
-Asking price is at least 20% below ARV (not mandatory)
-Has a lot of equity or is free and clear (mandatory)
Once you have compiled a list of good pre-screened prospects. The next step is to decrease the list to the best possible prospects. You don’t have time to chase dead ends. Your objective is to deal only with the prospects that have the best chance of success. The better you get at pre-screening, the easier your job will become. Remember, “Motivated Sellers only!” You will see an entire different attitude with a motivated seller. Many times they will ask if you can help them, not grill you on why they should allow you to buy their house. Keep in mind; you’re in control not them. You never beg, drag or plead with anyone.