Not too long ago, I was out to lunch with my nephew, who is getting into real estate investing in his 20s. We were talking about how the business has changed, and he asked me what I would have said 15 years ago if someone told me that I might one day use Zillow to find leads.
I replied that I’d probably say, “Well, that’s interesting, and I understand that the internet is changing my business, but: what is Zillow? That’s a made-up word and you’re spouting gibberish.” And, I would have been right to do so, at the time.
But times change—fast. Right now, Zillow is essentially a go-to tool for people looking to buy a house. People who aren’t experts in real estate can glean an enormous amount of information from it, and that can inform their decisions. That said, is it good for real estate investors? Can you find motivated sellers on Zillow?
The short answer is yes. The longer answer is yes—but there are some complications, and there are better ways. Zillow is a pretty good tool, and it can be used to augment your expertise, get paths to good leads, and move forward. But in the end, it is just a tool, and not a solution.
3 Tips for Finding Motivated Sellers on Zillow
There are a few good ways to narrow down leads in Zillow. A lot of them can be lumped under “find people before they sell.” But, we’ll start with some tips on honing in on the right area.
1. Find Up and Coming Neighborhoods
As a distressed property investor, you know the importance of finding the up and coming neighborhoods. These are places where you can find a home for a low price, do some work, and sell it to people who are willing to pay more to move into a refurbished place. It’s pretty much the dream.
Zillow can make that a lot easier. You can enter in any zip codes, and see historical data on home prices, through the Zillow Home Value Index. If they are rising more than inflation, that’s a good sign. But, it’s not that simple. So, here are a few tips to narrow your approach.
Go inside out. Hot new neighborhoods tend to start at downtown areas and move outward. So, if there is a hot neighborhood two away from downtown, start looking at the ones around that. As it gets full or played out, one of the neighborhoods next to it might be the right one.
Explore Walk Score data. Are there more restaurants than there were? More boutiques? More microbrews? Stores? Those are all good signs that the neighborhood is undergoing a revival.
Look up school ratings and reviews. Schools with higher scores attract families. If you see a neighborhood that has rising home prices AND rising school scores, you can bet other people will as well. So, that might be worth a look.
Of course, this doesn’t always work. Zillow’s data can be misleading or incomplete, and a lot of this might not really come into play until the neighborhood is already established. And, of course, a positive trend doesn’t mean an area is going to bloom no matter what. There are a thousand railroad towns that can testify to how quickly things change—and how today’s sure bet is tomorrow’s sad bust.
2. Look Up Homes That Have Been on the Market
Imagine that I’m an ice cream salesman whose cart has broken. It’s a hot summer day. I need to unload my goods before it’s a sticky mess. I’m willing to take a discounted price for my semi-soft ice cream before I lose everything. I’m what you might call a motivated seller. You offer me a quarter for a Choco Taco, and I’ll probably do it.
It’s the same way with houses. A great thing about Zillow is that you can figure out if someone is a motivated seller. By motivated, I mean, they’ve been trying to sell their house and haven’t been able to. Here are a few tells.
- It’s been on the market for a long time
- It’s been unlisted and relisted
- It’s had a significant price drop
Any one of these could represent someone who, for whatever reason, hasn’t been able to sell.
Now, that doesn’t mean you should scoop it up. There might be good reasons for their troubles. But, it’s a signal that you can at least look into it. After all, a lot of buyers won’t want to do repairs but, if you think it makes financial sense, you can make it work for you.
Of course, it might not always make sense. There might be way too much work that needs to be done or hidden factors that you don’t see right away like airplane noise or a weird smell from a nearby business. By the time you decide not to buy, you’ve already wasted time. Or worse, you’ve already bought it. A too-eager buyer might end up paying too much for some soupy ice cream.
3. Find—And Contact!—Owners Before They Go On the Market
One neat thing about Zillow is that you can actually contact a homeowner. Another cool thing is that homes can be listed before they are actually for sale. Why would people do that? For a bunch of reasons, including:
- They are facing foreclosure and will have to sell very soon.
- They are getting ready to sell and just want more information about the market.
- They are listed as “make me move.”
The last one is where a seller just wants to see what they can get for the house. They might be considering selling, or just testing the waters. But, they’re curious.
So, whether you have a curious potential seller or someone who wants to unload before they are foreclosed upon, you have a contact. You can click on the home and type a message directly to the seller.
Explain who you are, what you are looking for, and how you can help them. Don’t be pushy. Don’t pressure them. Just explain that you buy houses and would like to talk to them about theirs. They have your information, and they can then come to you.
But, remember that other investors can access the same information that you do. Homeowners may be getting hundreds of messages and there is really no good reason why they could pick you out as trustworthy. You might send out dozens and dozens of messages before getting a hit. That’s a lot of your time spent sending out junk mail.
So, overall, these are good ways to use Zillow. Find the neighborhoods, and then move closer and closer to the right house, before making contact. There are pitfalls, for sure. But it is certainly one way to fish for leads.
A Better Way To Get Motivated Leads
As I told my nephew, I didn’t come up in this business using Zillow, or even the internet. But even though it made things easier, it was a matter of degree—not type. Our business has always been about doing research in neighborhoods, spotting trends, and contacting a lot of people to see if they’d sell to you. Sites like Zillow make this easier. But, it’s not really different.
What made things different for me? Becoming an independently owned and operated HomeVestors® franchisee. From that day forward, qualified leads come directly to me. See, people who are ready to sell fast—preforeclosures, people who got transferred, divorced, or for other reasons— call the “We Buy Ugly Houses®” people. And, so I get a motivated seller already operating from a position of trust.
If you’re interested in getting more qualified leads on motivated sellers, request information about becoming a franchisee today. It’s a change that stands the test of time.
Each franchise office is independently owned and operated.