Every Deal Source: What You Pay in Money, Time, and Control

TLDR

I rank a deal source by price, steady supply, the work it takes, and how well it lets me buy the houses I actually want. Targeted outbound is my A. Other sources can work, but you need to understand what each one costs you.

Table of Contents

• A house isn’t a deal because of where you found it
• The four things I look at
• How I rank the deal sources
  • Indirect sources
  • Broad direct marketing and canvassing
  • Targeted outbound and direct response
• Why the open market is hard on price
• What a wholesaler is selling you
• FSBO and pay-per-lead aren’t shortcuts around sales
• Auctions need a different kind of preparation
• Short sales and back taxes: identify the actual problem
• Relationships, signs, and showing up everywhere
• Search, ads, and a business people can check
• Why targeted outbound gets my A

A house isn’t a deal because of where you found it

People will tell you they get deals from agents, wholesalers, auctions, Facebook, and a dozen other places. They’re probably right. You can find a deal through almost any of those channels.

That’s a different question from whether I’d build my business around that channel.

I’m looking for houses that fit the neighborhoods I’ve chosen. I want to buy them at prices that leave enough room for the work, the risk, and the profit. And I’d like a way to keep finding those houses without turning my whole life into a networking event.

Those are my priorities. Your situation may change the ranking. If you’ve spent years building great relationships with agents, that source may work better for you than it does for somebody starting from zero.

The four things I look at

• What price will I pay? Am I getting the owner’s price, or am I bidding against a room full of buyers? Has someone already added a fee or captured the discount?

• How steady is the supply? Can I do something that produces more opportunities, or am I waiting for somebody to remember me?

• How much of me does it take? Does this source require constant calls, driving, research, networking, or being ready at a moment’s notice?

• Can I target my buy box? Can I choose the neighborhoods and houses I want, or am I sorting through whatever somebody sends?

Don’t judge a source on one lucky purchase. Judge what it would take to repeat that purchase.

A channel can have plenty of houses and almost no houses at a price that works. Another can produce great prices but require work you won’t consistently do. Both facts matter.

How I rank the deal sources

These are my rankings for the business I want to run. They’re judgments, not measured industry scores.

Indirect sources

Broad direct marketing and canvassing

Targeted outbound and direct response

Why the open market is hard on price

If an owner wants the most money, the normal move is to put the property in front of as many buyers as possible. That makes sense for the owner.

Now you’re one of those buyers. So are people who want to live there, investors with lower return targets, and people who simply did the math wrong.

Zillow makes it easy to see houses. An agent can make it easier to get access and write an offer. Neither one creates a discount by itself.

Can you find an overlooked listing, a house with a problem you can solve, or an owner whose needs line up with your offer? Absolutely. But “it’s listed” isn’t a reason the numbers work. The market exposure is usually helping the seller get a higher price.

REO has a similar issue. People hear “bank-owned” and think “cheap.” If the bank lists the house and every investor sees it, you’ve still got competition. The label doesn’t change the math.

If you’re going to compete on the open market, you need an advantage:

• Speed: Be ready to assess the house and act when an opportunity appears.
• Volume: Look at enough houses and make enough offers that you don’t depend on one seller saying yes.
• Skills: Know how to do work another buyer can’t handle, or bring a real cost advantage.

Having cash and time helps you use those advantages. Each one also asks something of you. That’s why I don’t treat a public listing as a free source of discounted houses.

What a wholesaler is selling you

A wholesaler might get a house under contract for $100,000 and offer that contract to a buyer at $130,000. That spread pays for finding the owner, getting a conversation, negotiating, and controlling the opportunity.

You’re paying to skip some of that work. Sometimes that’s a good purchase.

The problem comes when a wholesaler has a huge buyer list and treats every deal like an auction. That list can push the price right up to market value, or beyond it. A deal doesn’t become safe because an investor sent it to you instead of a real estate agent.

The buyers who get the first look may have spent years proving they can make quick decisions and close. If you’re on the mass email list, you may be seeing what the inner circle passed on.

There’s also the buy-box issue. The wholesaler is finding houses for a broad set of buyers. You want a few specific neighborhoods and types of houses. Most of what comes through may be irrelevant to you.

I still give wholesalers a B. Just understand the relationship, the markup, and how ready you’ll have to be when the right house arrives.

A good wholesaler relationship can get you an earlier look. I call it the buddy system. Be ready to assess the house and make an offer. Wholesalers also have a clock on the contracts they’re trying to move. A price that didn’t work when it first hit the list may be worth another conversation as that deadline gets closer.

FSBO and pay-per-lead aren’t shortcuts around sales

A for-sale-by-owner house gives you a direct conversation. It doesn’t guarantee an owner who understands the property’s value or wants a cash-buyer price.

Sometimes the owner has a very personal number in mind. Sometimes they’re trying to save a commission while still getting the highest possible price. You’ll have to sort that out.

Pay-per-lead has a different tradeoff. Somebody else runs the ads or marketing and sells you the lead. You’re buying a starting point, not a signed contract.

You didn’t choose every word that brought the seller in. You may need to reset expectations before you can even find out whether the house fits. Then you’ve still got the phone call, appointment, offer, and follow-up.

Include that work when you compare costs. A cheap lead that never turns into an appointment isn’t cheap just because the invoice is small.

Auctions need a different kind of preparation

Foreclosure auctions and tax sales can produce opportunities. They can also put the research ahead of the normal inspection and contract process.

You need to know the actual sale terms, what money is due and when, what you’re buying, what access you have, and what title issues or other rights affect that property. Don’t assume two kinds of auctions work the same way because both happen at a courthouse.

We talked about redemption in the Q&A. In some tax-sale situations, an owner’s right to redeem can change what you thought you bought. The one-year period discussed was an example, not a nationwide rule.

If you’re planning a renovation or an exit while another party still has rights that can affect ownership, that belongs in the deal analysis before you bid. A low auction price isn’t a substitute for knowing what the purchase actually gives you.

Short sales and back taxes: identify the actual problem

A short sale generally involves an owner who owes more than the property can sell for and a lender that would have to agree to accept less than the debt owed. Think of a $150,000 mortgage against a house worth $140,000.

That doesn’t mean every short sale is a bargain. It means there is an extra problem to resolve. Other investors can see the same label you see.

Back taxes are another cost to understand. If a house has $10,000 in unpaid taxes, find out how that gets resolved in the transaction and who is paying it.

Don’t count the same $10,000 twice. If it’s paid from the seller’s proceeds within the agreed purchase price, that’s different from agreeing to pay the purchase price plus the taxes. The settlement details determine your actual cost.

Relationships, signs, and showing up everywhere

Banks, lenders, property managers, agents with pocket listings, and attorneys who encounter property problems can all become sources. That doesn’t mean all those people owe you referrals or that building those relationships is free.

You’re paying with time, attention, and a reputation for doing what you say you’ll do.

I know an ordinary guy who does well knocking on doors. That’s useful evidence that the method can work. It doesn’t mean I want to spend my days doing it.

The same goes for signs, billboards, and becoming the person everybody knows as the local house buyer. You can choose that business. I want you to choose it with your eyes open instead of buying the method because someone showed you one impressive deal.

Search, ads, and a business people can check

A good local presence has value. When someone looks you up, a real website, consistent information, and evidence that you actually do the work can help.

SEO and a Google business presence may get better with time. Paid search can reach people who are actively looking for a solution. Paid social can put your message in front of people before they search.

Those are different jobs. Don’t lump them all into “online marketing” and assume the economics are the same.

I can use a website to support direct mail without requiring that website to become my main source of leads. That’s a much smaller job for the site, and it’s often the job I need done first.

Why targeted outbound gets my A

I want to start with the houses I want to own.

Then I want to find the owners most likely to have a reason to talk. Then I want to reach them with a message that fits their situation.

That gives me control over the neighborhood, the property, and the first conversation. I don’t have to accept whatever inventory somebody else happens to bring me.

I call it getting closer to a market of one. That doesn’t mean the owner is forbidden from calling another buyer. It means I’m trying to begin the conversation before the property becomes a public bidding contest.

The price of that control is doing the marketing and sales work. The list, message, and sales process all have to point toward the houses I actually want.