If you read my blog frequently, I've shown my disappointment in not getting a single call from my foreclosure marketing this year. I'm was getting to the point of wondering if there are any distressed sellers out there! Of course there is , however, are there fewer than years past? The foreclosure numbers are increasing, that means that there should be more distressed sellers, right? Actually, the answer is yes and no.
Last week I've been questioning the approach on my marketing plan. Two years ago, I was getting reliable responses. So what's going on right now? I initiated some research and this is what I'm finding out.
My marketing is based on established successes from previous investors. My letters should be fine, the sellers are reading them , but they are not calling. This is the reason why. In 2005 , Tucson's real estate market has appreciated a solid 32%. This is huge. For a seller that has bought two or even one year ago, there is instant equity in these properties.
In an article from the Arizona Republic, the attorney general states that " Right now, there are bad loans out there, which have not gone to foreclosure because the value of the underlying property has gone up so when people have gotten in trouble they could sell it and pay off their loan. When this problem is going to become most acute is if our market levels out or dips. . ."
The perfect example of the this is the house I currently have a bid on. It was bought several years ago for the low 200's. Now they have it listed for 300k! I have found others as well. Last year, I had several sellers contact me to explore their options. They ended up listing the property or selling as FSBO. It seems that sellers don't even feel the urge to contact a investor right now.
Its still too early to drop the marketing strategy. But I am smart enough to know that if this is my only marketing, I am going to starve. There needs to be other motivation.. Out of state buyers, divorces, probate, evictions, undesirable loans, etc..
Competition is higher as well, I know of a big real estate agent that is going to start marketing to foreclosures because of the estimated higher foreclosure rate. They actually give these lists out to investors as a benefit to work w/ them. I know several mortgage companies that are doing this. So competition is factor. I wouldn't be surprised to have owners receive over 10 letters from investors. This actually may be a small number.
In times like this, door knocking looks more attractive. If I'm still looking for houses, I will probably cherry pick properties to knock on some doors.