Want to take a lot of listings rapidly?
The trick to do this is by targeting pre-foreclosure properties. There's 2.7 million homes in America today that are in a pre-foreclosure status. That number is so high because a lot of people have applied for a forbearance due to the COVID crisis, the struggling economy, and not being able to make their house payments.
A forbearance is where the lender gives the owner an opportunity to restructure their loan so they can either move or skip payments then make a balloon payment at the end.
But a lot of people are going into default because they're not able to get caught back up.
Here's the latest numbers we found from principal economist, Yanling Mayer from CoreLogic:
39.1% of all forborne loans are now 150 days behind payment. And 25% are 180 days past due.
Now, I don't say this to scare you that we're in 2009 again. The sky is not falling — and there are many differences between the market we were in then compared to the market we're in now.
Here's a few of those differences:
1. When we entered the Great Recession in 2009, we had 11 months of supply in the real estate market.
Today, many markets are sold out or under a month's supply across the country. But nationally, we're in the 2-3 month range of inventory — which is extremely low. A balanced market is about 6 months.
2. There's also credit available.
Credit evaporated during the Great Recession making it difficult to get a loan.
3. There's massive buyer demand.
Homes are being absorbed just as fast as they're coming to market and most of the time with multiple offers.
Why is that?
We now have the lowest interest rates we've seen in the last 60 years!
4. We have quickly rising prices.
During the Great Recession, we had quickly declining prices — the exact reverse of what we have now. And since we have quickly rising prices, even double digit rises in many markets, it means people can escape their house because they have equity in their house.
Here's an interesting stat:
Only 37% of Americans believe that they have significant equity in their home (more than 20%).
But actually, 83% of folks today have significant equity (more than 20%) in their home.
So this means you have to help people before they're taken advantage of by wholesalers who are trying to take advantage of people that had an economic downturn because of COVID or other circumstances within their lives.
But you can come in and help them recognize that they have equity left in their house. Not only can they get out from under their debt, but they can actually even walk away with some money in their pocket.
So how do you do this?
First, you have to get into the habit of building an N.O.D. List — a Notice of Default List. This Notice of Default List is people that have missed their payments in some form or fashion.
This comes from your local title company every month or every week depending on your relationship with them.
You can also mine Zillow for pre-foreclosure lists. But I'd rather you mine from the Notice of Default letters from you local title company, because they usually get the information before Zillow does.
And then you're going to incubate this farming database that you're targeting.
Remember, even if they don't list today, they may list tomorrow, six months from now, or a year from now. When people go into a financial downturn, often it's just a matter of time until they list.
So you want to create that relationship by incubating this client over time.
So if you're going to make that direct contact — whether an initial letter, call, or visit, you can use a script like this:
"Hey, good morning. Is this Mr. Jones? And do you own a home over 123 Johnson Street? Great, I got the right person. My name is Jim Remley. I'm with ABC Real Estate.
The reason for my call/mailing/visit is that I was doing some research on properties right here in your neighborhood. I got several buyers that are interested. I'm not sure if you're aware of this, but Zillow has put you into a pre-foreclosure status. And a lot of homeowners underestimate what their home will actually sell for in today's market.
And my question is, would you be open to selling your home for cash if we had a cash buyer for you? You might be surprised what you could get for your home. Would you be open to looking at that?"
So try that out and see if it's a strategy that will work for you in your market.
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