There are three things on investors’ and agents’ minds right now: high interest rates, elevated home prices, and low inventory.
With mortgage rates approaching 8% and the median price for a home in the United States over $410,000 (up around 46% from $280,000 in 2020) as of June, fewer people are buying and selling real estate. This trend doesn’t seem to be ending soon, leaving agents and investors wondering when they’ll get relief from this turbulent market.
But what if you don’t need to wait for the market to change to find great leads and continue scaling your business?
The reality is that you don’t—it’s entirely possible to find real estate leads in any market; you just need to adapt your lead generation method to focus on hidden opportunities that competitors aren’t aware of. One way to uncover these hidden opportunities is to “niche down” or target a specific demographic within the real estate industry.
We’ll take a look at why choosing a niche can lead to success and explore six methods that offer great potential. We will also explore how to use real estate data to find leads once you’ve selected your niche.
Related: EVERYTHING You Need to Get Your First Real Estate Deal Done in 2023
Why Choose a Niche?
One of the most notable benefits of choosing a real estate niche is the ability to create leads in any market.
Regardless of what’s happening with home prices, interest rates, and inventory, people will always be going through specific life changes or financial hardships, leaving them with no choice but to sell their homes.
In addition to creating more lead opportunities, you can become an expert in a specific demographic when you specialize in a niche. When you have more experience working with a particular situation, you gain a competitive advantage that can give you an edge if other real estate professionals with broader experience are also reaching out to these potential clients.
While specializing in a niche is an excellent lead-generation tactic, it also offers the added benefit of helping those in need, depending on your demographic choice.
Six Niches for Real Estate Agents and Investors
You know why you should niche down, but which niches should you target for the best outcome? Here are six ideas to get you started:
1. Pre-foreclosures
Pre-foreclosure status means the owner of a residential property has fallen behind on their mortgage payments, putting them at risk of foreclosure.
While pre-foreclosure is one of the first steps of the foreclosure process, at this stage, the owner can still pay the overdue mortgage payments or sell the property to avoid foreclosure. Since the homeowner is motivated to sell if they can’t make up the payments, pre-foreclosures are a strong lead for investors looking for their next property or agents pursuing listings.
2. Other investors (flippers and buy-and-hold investors)
As a real estate agent, other investors like flippers or rental owners can be a great niche to target because they frequently buy and sell real estate, providing you with a steady stream of repeat business.
Also, when you target flippers specifically, they typically buy and sell several properties yearly with faster closings, allowing you to be involved with more transactions and increase your annual earnings.
If you’re looking for a property lead as an investor, you may find it helpful to target investors who have held a property for several years and are looking to sell it and upgrade, AKA tired landlords.
Pro tip: If you’re looking for a creative funding source for your next investment, consider looking to cash buyers. Cash buyers often have a fair amount of wealth and may be interested in lending on the right deal.
3. Senior owners
As homeowners age, the needs they have for their homes often shift. For example, if a person buys a house with stairs and stays in it for 30 years, they may need to relocate to a home that is more accessible as they age. Or a senior owner may want to relocate to a retirement community, be closer to family, or downsize after children move out.
Senior owners may be motivated to sell for several reasons, making them an excellent niche for investors and agents.
4. Failed listings
Failed listings are one of the most sought-after niches among agents because these homeowners have already demonstrated interest in selling their property.
Listings can fail for several reasons, including overpricing, ineffective marketing from the listing agent, inadequate listings (photos or descriptions may not do the property justice), etc. After the listing has failed, the homeowner will likely want to try again with another agent.
For an investor interested in a failed listing, the right offer may encourage the homeowner to skip the listing process entirely and sell to you.
5. Divorces
While divorce rates have decreased since 2000, married couples still divorce at a staggering rate. Around 50% of first marriages end in divorce, while second and third marriages experience a divorce rate of approximately 67% to 73%.
One factor divorcees must consider is what to do with their property if they will no longer be sharing it. Many divorced people choose to sell if neither party can afford the mortgage alone or if the space exceeds their needs once they live separately.
Since divorce rates are still very high and divorce filings indicate potential selling motivation, this can be a promising niche to target as a real estate agent or investor. In addition to securing new business, targeting divorcees allows you to help those struggling with a significant life change navigate their next chapter.
6. Pre-probate
Probate is the legal process for administering and validating a deceased person’s will. Real estate is typically included as an asset within the will.
When a property is in pre-probate status, one of the owners has been identified as deceased, but the probate process has not yet begun.
Pre-probate can indicate selling motivation because the new owner may not be able to maintain their newly inherited property (either physically or financially). They may live too far from the property or cannot pay a second mortgage. Or, if the homeowners were elderly, the surviving homeowner may need to move in with family, move into assisted living, etc.
While pre-probate properties can benefit your real estate business, they offer the added benefit of personal fulfillment since you can potentially help eliminate work for a homeowner experiencing a difficult loss.
How Can You Find Leads in These Niches?
Once you’ve decided on a niche to pursue, it is important to be able to find leads within it consistently.
This is where real estate data comes in. With detailed and accurate real estate data, you can uncover everything you need to know about a property to identify lead potential. From homeowner situations (like those discussed here) to mortgage details, pricing history, and more, real estate data is your number one resource for creating leads in any market.
Significant life changes will always occur that require homeowners to sell. As an agent or investor, you must anticipate when, where, and how these changes are happening to maintain steady business.
PropStream offers 19 Quick Lists (all homeowner situations mentioned here are available in the platform as Quick Lists) and 120-plus additional search filters to help you uncover the most qualified leads in minutes. Perform property research, save marketing lists, and reach out in one convenient location.
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.
