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Understanding and Finding Free and Clear Real Estate

Gavin Finch
Written by Gavin Finch 

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As a real estate investor, your job is to make money buying and selling property. There are several ways to do this, but they all rely on one factor: buying property at low prices. 

Every market has homeowners who are willing to sell at a discount in exchange for an easy sales process. But most of them are still making mortgage payments, which means they have a minimum price they need to sell at in order to pay off their mortgage. 

Unfortunately, this minimum price often limits how much an investor can make on a property. For investors looking to maximize their profits, they need a different kind of lead that doesn’t carry a large debt. What they’re looking for are called free and clear homeowners, and many investors view them as a rare and golden opportunity.

What is a free and clear real estate lead?

In real estate, the term free and clear refers to a property with no outstanding debts tied to it. This means that the mortgage is paid off and it doesn’t have any liens attached. In essence, the homeowner can sell it for any price because they own the property outright. 

Of course, just because someone owns a house free and clear doesn’t mean they’ll sell for less than it’s worth. Some homeowners pay cash for their houses. Others have paid off their mortgages and kept their houses in good condition. When they sell, they’ll do it at full price.

However, some free and clear owners are experiencing financial hardship that’s forcing them to sell. For instance, some elderly homeowners need to sell to pay for long-term care or medical bills. Other homeowners have paid off their houses, but they haven’t kept them in good repair. These individuals can’t sell at market value.

Another common free and clear situation involves long-term landlords who have watched their rental properties appreciate over the years. Investors who’ve used a rental property for cash flow don’t always need to sell for top dollar. For them, profiting off their initial investment may be worth more than holding onto the house until they can maximize its current value.

Whatever situation free and clear motivated sellers are facing, they’ll often accept a lower price offer on their home in exchange for a convenient sale. Sometimes, listing with a real estate agent, making repairs, and waiting for a lengthy closing process isn’t an option. In other cases, it’s more trouble than it’s worth. If selling to you for below market value means they can avoid these steps, you may be their best choice. 

Generating free and clear real estate leads

Unlike other kinds of real estate leads, there aren’t many efficient ways to identify free and clear real estate leads. One option is to conduct a title search with your county’s public records office, but this method usually requires you to search on a property-by-property basis.

If you already suspect a property of being free and clear, this is a great way to confirm your hunch and gather more data. But if you’re trying to generate leads, you need a more efficient strategy.

Consulting local real estate professionals won’t help much either. The state of a person’s mortgage rarely comes up in conversation unless the person is looking to list. If they’ve already talked to a real estate agent, they probably aren’t going to sell at the price you’re looking for.

If you want to find free and clear houses, real estate lead generation software is the best option. With the right platform, you can easily pull a list of high-equity or free and clear properties in a specific zip code or neighborhood. You can even narrow your search further by filtering for properties that are experiencing financial distress factors. With this capability, you can focus your efforts on the properties that are most likely to sell at a discount.

Key takeaways

Free and clear real estate often presents a golden opportunity for investors. If you find the right property, you can buy a valuable asset at a low price. Whether you’re building a rental portfolio, fix and flipping, or wholesaling, you’ll be poised to make a sizable profit. 
However, you can only do this by offering convenience to people who have external motivations to sell. That’s why real estate lead generation software is a must if you plan to invest in high-equity properties. Without a way to identify free and clear leads that also have financial distress factors, you’ll end up spending your time talking to homeowners who have no interest in selling.

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