Have you ever seen a distressed property that had the potential to be a good flip? Unfortunately, how do you get in contact with the owner when they’ve already abandoned it. Let me introduce to you skip tracing!
Finding a great deal is essential to being a successful real estate investor. Investors make their money when they buy right!
Therefore, getting in contact with the owner is one step closer to getting a fantastic deal.
What is Skip Tracing?
Skip tracing is a method used to locate (or trace) people overdue on their debt and have “skip town” (or left) without notice. Hence, the name “skip tracing.”
Skip tracers use is for locating a person’s whereabouts after they have repeatedly not been able to be reached, such as through mail or phone. Even though they may have a physical mailing address on file for that person, they may not necessarily be there.
Skip tracing work doesn’t always have to produce a physical address. Sometimes valid contact information, such as an email address or phone number, is sufficient. Remember, the primary goal of skip tracing is to get in contact with the person.
When I relocated to another state for a job, I forgot to return a modem I leased from the local cable provider. I closed my account with them, but I never gave them my new address.
After a year of living in my new state and two different properties, I received a letter from the cable provider kindly reminding me to return the modem. Any guesses how they were able to locate me?
People or companies that commonly use the skip tracing process or hire skip tracer are private investigators, bounty hunters, debt collectors or collection agencies, law enforcement, and real estate investors.
Skip tracing is usually identified with bounty hunters. However, the two terms are not the same.
Instead, bounty hunters use skip tracing services to look up much information on their bounty. In contrast, skip tracing is liken to a private investigation.
Why is Skip Tracing Important in Real Estate?
Real estate investors are always out on the lookout for a good deal. However, not all properties guarantee a great return on investment.
Therefore, an investor that can purchase a property below its real estate market value and increase it’s after repair value (ARV) has a greater chance of making a profit!
For example, an investor purchases a distressed property for $80,000 and makes improvements. The ARV for the house flip is $200,000, which is a sizable profit after closing costs and taxes.
Buying an undervalued property also benefits Buy & Hold investors. With the BRRRR method, an investor can create a cash-flowing rental property and recoup their initial investment to go towards another investment.
However, finding motivated sellers is one of the hardest parts of real estate. For this reason, investors rely on wholesalers to bring them awesome deals. Wholesalers receive a finders fee depending on the difference between the purchase price of the seller and the purchase price of the end buyer.
Some motivated owners may be absentee owners that may have acquired their property through a will or are out-of-state real estate investors. Unfortunately, absentee owners are not readily available to contact.
This situation is where investors need skip tracing can help investors find these absentee owners, leading to extraordinary real estate deals!
How Does Skip Tracer Collect Information?
With the advancement of technology and the use of social media, we are all more connected than ever. Skip tracer can quickly query a person’s name in a private search engine and find helpful results.
Try querying in a search engine “[person’s name] + [address or city or zip code]” to see if it yields anyone results.
I initially met my wife on social media by accident, trying to “skip trace,” a person with a similar name. However, I didn’t do a complete skip trace; Either I’m the worst skip tracer or the luckiest one! Check out our story here.
If social media or search engines don’t return anything useful, a skip tracer can collect information on a person by searching public records databases, such as the following:
- Credit Card Applications
- Credit Reports
- Criminal Background Checks
- Courthouse Records
- Driver’s License/Vehicle Registration
- Job Applications
- Loan Applications
- Utility Bills
- Phone Number Databases
- Public Tax Information
If the above skip tracing tools didn’t produce any fruitful results, then it’s time to go old school! These methods entail interviewing the said person’s known associates, including family, friends, and co-workers.
Is Skip Tracing Illegal?
The practice of skip tracing may sound illegal, but it’s not! The majority of the information collected is open to the public.
For example, tax information for a property is public information, and anyone can easily attain it by requesting it from the tax assessor’s office.
However, anyone obtaining information without permission is illegal. Therefore, before you hire a skip tracer and also use skip tracing software, be sure everything has been well vetted and has an established brand.
Other Methods of Skip Tracing
If you’re willing to shell out some extra money to find someone in particular, here are some of the best skip tracing sites that might be able to help along with their “about” information.
According to Spokeo, “Spokeo is a people intelligence service that helps you search, connect, and know who you are dealing with. You can use it to find old friends, identify unknown callers, or research your date. Professionals use it to find new customers or to prevent fraud. Knowledge is a quick search away.”
According to WhitePages, “Each month, more than 35 million people use Whitepages identity data to get in touch with extended friends and family, confirm identities and research backgrounds. Small businesses use Whitepages to prevent fraud, contact customers, and evaluate business opportunities.“
According to FindTheSeller, “We’ll help you make money. If you’re in the business of buying and selling properties, knowing finding the seller is critical if you want to do the best deals. When you find the seller you’ll run circles around your competition. And when it’s time to put people in your houses, a Criminal Background Report on each applicant is mandatory for the professional.”
Using skip tracing is a creative way to locate someone who wants to be off the grid. It’s not necessarily just for bounty hunting or a debt collection agency trying to find those who skip out on bail or who amass a bunch of credit card debt.
The practice of skip training isn’t illegal. The information provided is in public records and only requires a simple request to get access to this information.
You just need to be wary of the skip tracers you hire or third party software you can download on your computer.
Real estate investors and wholesalers can take advantage of skip tracing services to find motivated sellers and negotiate a deal.
However, I do offer a caution to real estate investors, primarily wholesalers, searching for absentee owners. If you can find a genuinely motivated seller and relieve them of the stress of managing a property, that’s great!
But, if the deal requires you to pressure a person or become predatory in your negotiation tactics, I advise you to rethink your approach.
Real estate is about people and relationships. Become a problem solver and come up with a deal that makes financial sense for all parties.