Lead generation is an eternal problem for real estate investors. We spend so much of our time seeking that next prospect and hoping to catch the attention of the seller. Lead lists are a popular way for investors to try to reach out to supposedly “low hanging fruit.” But, let’s be honest. How many of us have spun our tires making those dreadful cold calls or organizing email drip campaigns without any real results? Let’s take a look at why using lead lists to find motivated sellers is not effective—and what you could be doing with your time instead.

The Truth About Lead Lists for Finding Motivated Sellers

To put it bluntly, lead lists are generally not very good quality. You can’t guarantee the authenticity of the information you gain—even if you buy or rent it from a reputable source. Data on lead lists can become outdated very quickly. Perhaps a homeowner was in distress, but they’ve since worked their way out of the problem. Or, maybe the homeowner already sold the house.

Even if the homeowner actually needs to sell, you risk provoking the people whose trust you want to earn. Since you bought the list, you can imagine that many others did, too. The homeowners may feel deluged with cold calls from investors and react negatively to you.

The biggest consequence of using lead lists, however, is that it can negatively impact your business reputation. Contacting homeowners without their buy-in first can draw anger—and people in the neighborhoods you are targeting may talk. Even with email drip campaigns, you risk being identified as a spammer. You have no way of knowing how many times the email addresses on the list have been targeted by other investors like you or whether they’ve been scrubbed for hard bounces.

Alternatives Ways to Find Decent Leads

Despite the fact that lead lists tend to have a low conversion rate and can put your real estate investing business at risk of a negative reputation, they remain popular. Why? They’re simply one of the oldest—and best known—ways to find leads on distressed homeowners. And, as we all know, sometimes old habits die hard. 

But, there are other ways to get leads on motivated home sellers that work as good as, or even better than, lead lists. Here are five methods that can work:

Pound the Pavement

It’s a bit old-school, but pounding the pavement in neighborhoods where you’d like to invest isn’t a bad way to find distressed properties whose owners might want to sell. These homes are fairly easy to spot, too. Just look for things like overgrown lawns, ramshackled roofs, cracked driveways, and old or aging paint jobs—all signs that the homeowner can’t, or doesn’t want to, care for the home. If you come across boarded windows or mail spilling out of the mailbox, it’s possible the owner has abandoned the property altogether.

If you take this route, however, you will be faced with how to handle the situation delicately so as not to scare or anger the potentially distressed homeowner when you approach them about buying the house. Of course, this is assuming you can successfully connect with the owner to begin with since they may not live at the property, may be ill, or even deceased. With the amount of time it’ll take you to pound the pavement to find potentially good investment properties anyway, you’re probably better off looking for a way to drive the owners of these kinds of properties to you.

Strategic Networking

Another somewhat conventional strategy for drumming up a variety of leads is to go out and network with your peers. Though it may require stepping out of your comfort zone, networking can be a good source for referrals—and, therefore, worth your time. One of the best ways to get to know industry-affiliated professionals in your area is to join a real estate investing club or group. There, you’ll often find mortgage lenders, attorneys, landscape designers, and movers—all of whom are well-positioned to come across someone who wants to sell their home. 

The downside to this strategy is that networking can absorb more time—and, sometimes, money—than it’s worth. It simply takes a lot of networking events to build up trust with your peers. These events can cost you a pretty, too, especially if you also have to pay for membership in a club or group. Unfortunately, they also tend to be well-attended by mostly new investors who may not know themselves how to get qualified leads.

Zillow Instant Offers

Zillow has a feature that allows home sellers to request an instant offer on their property from investors or other registered buyers. After launching a pilot program in Las Vegas and Orlando, they’ve expanded into 22 cities. So, it’s possible that where you invest is an area they serve—and that, by joining, you can buy homes directly from their owners. 

The problem, however, is that Instant Offers has piqued industry-wide interest, which means joining the program is bound to get fiercely competitive. Just because you want to join doesn’t mean that you can, either, since private investors are hand-selected for participation. The investors on Zillow have a reputation for presenting low-ball offers as well and that can turn off distressed homeowners who deserve your compassion and respect.

Legal Notices on Government Websites

Most county government websites publish legal notices about homes that have fallen into pre-foreclosure status, although you can check with national agencies, like HUD, too. The benefit of this strategy is that, rather than trying to buy a foreclosure auction home after-the-fact, you can potentially get your hands on a house when a homeowner has first been notified that they’re behind on their payments. They’re likely going to be motivated to sell and you’re better positioned to buy a property at a good price without having to deal with an auction.

But, you’ll quickly realize that it takes a lot of time and patience to navigate most government websites and you won’t be the only investor trying to get the hang of it. The probability that the effort you put into your searches will pay off with enough deals to make it all worth it isn’t great, either. When you find a property you like, for example, you’ll have to track it through the foreclosure pipeline to see if it actually gets seized and goes up for sale. And, since there’s always the chance that a homeowner will get current on their loan or be granted a forbearance, you could get your hopes up about a house you’ve spent months tracking that, ultimately, gets to stay with its owner.

Market Your Business

It can be tough, and potentially expensive, to do when you’re trying to build your business with tight funds, but advertising is one of the more powerful ways to generate motivated home seller leads. If you can create a memorable name for your real estate investing business, build a reputable brand around it, and market to your target audience, you might find that motivated home sellers find you. Don’t forget to use social media, too. There are a multitude of ways to leverage Facebook, for example, from joining community groups to posting informational blogs and even targeted, paid advertising. 

But, you will pay for it in money and time—a lot, in fact. While DIY marketing strategies could save you a buck or two in the short run, they’ll still cost you a pretty penny in the long run since it can take a while to build a successful campaign from scratch. In the end, you might want those funds to help you buy a house to renovate and sell.

Each of these options will certainly connect you with motivated home sellers from time-to-time, but whether they will help you land enough deals to build a professional real estate investing business on is questionable. The fact is, you’ll likely have to implement most or all of them to better your chances of making a career out of real estate investing and keep it going strong for years to come. Even then, there is no guarantee you won’t be wasting most of your time. 

So, where does that leave you? Well, it actually leaves you with the most effective way to generate leads on motivated sellers.

The Most Effective Way to Connect With Motivated Sellers 

It took me some time to realize that I was going nowhere fast by using lead lists. Intuitively, I knew I needed a stronger strategy to find motivated sellers and I wanted something more effective than what my fellow investors were doing. But, the other choices out there didn’t seem that much better at improving my odds—even if I cobbled together multiple ways to find leads. 

So, I regrouped, joined HomeVestors®, and put together a real estate investing business plan that included the best marketing tools and resources that every independently owned and operated franchisee has access to. Now, thanks to the “We Buy Ugly Houses®” national ad campaign, which you’ve probably seen on billboards, online, and on TV, motivated home sellers find me. I no longer have to solely depend on the MLS, lead lists, or any other lead-generating tactics that only challenge my nerves and, often, just lead to dead ends. All I have to do is follow through on the calls that come my way and do my best to help distressed homeowners who’ve reached out to me.

Of course, even as a HomeVestors® franchisee, I still work hard at managing my business. But, I’m well on my way to achieving my investment goals. Are you ready to leave lead lists behind and get closer to reaching your investment goals, too?

Find motivated sellers now by joining the team that helps them find you. Franchise opportunities are limited, so call HomeVestors® about your local franchise options today!

Each franchise office is independently owned and operated.