Finding Distressed Seller Leads in Colorado Springs Real Estate

**Justin Critchfield** (00:00)

I just think it’s you know, i I mean the transparency matters and treating people, you know, you know, with honest and integrity matters. So and I think even the sellers here who are going through a rough time in their life, you know, really you can you have an opportunity to go and show and build trust and you know, really help somebody, you know, because that’s really what you’re doing. You’re taking somebody who’s in a really bad spot and you’re giving them a big bulk of money so they can go restart their life.

And that is and noise also I’m from Colorado Springs. So my investor is coming in, he’s making a profit for his family. And then also he’s rejuvenating the neighborhood I grew up in.

**Dylan Silver** (02:14)

Hey folks, welcome back to the show. Today we’re joined by Justin Critchfield, realtor, locator, and investor friendly agent with Coldwell Banker Realty in the Colorado Springs area. Justin, thanks for joining us here today.

**Justin Critchfield** (02:28)

Thank you.

**Dylan Silver** (02:29)

Now, when we talk about the mindset of traditional brokerage versus working with investors, how do those two different buyers change the way you approach the process?

**Justin Critchfield** (02:43)

~ great question. I I mean, really the difference there is strictly kind of a financial decision, ~ you know, from an investor who is, you know, typically looking only at the financials and your normal everyday buyer who is looking to live there and make memories there is more of an emotional buyer. Now, of course they look at the financial side too, but it’s more about, you know, kind of how does the place make them feel versus how much money this place could produce over time, you know, whether it be a short or long period of time. So it’s really basically more of a strictly financial decision, only about the numbers. Can it produce? What does the actual expenses look like to produce, you know, this net profit versus, you know, very rarely is that, you know, buyer very concerned with what the value’s gonna do in six months or what it’s going to do, you know, in a year. I mean, sometimes they are.

But more or less not not that often.

**Dylan Silver** (03:43)

Now working with investors can be tricky because it’s a totally different lingo and there’s a different skill set, right? Being able to understand potential rehab costs, ARV, different than helping someone find their forever home. How did you get into that space working with investors?

**Justin Critchfield** (04:02)

~ I just actually happened to run into one. I mean, I was helping, you know, a regular residential client. He happened to be my little brother at the time. He was purchasing a home, you know, who was purchased from a builder and he was a flip investor as well. So he had ~ you know, built, you know, basically three new homes on vacant lots, purchased the lots and then built three beautiful homes on them.

And he was, you know, basically having issues here with his realtor. So after the deal had closed, we, you know, had met at the property here for a final walkthrough and you know, and some warranty stuff here after the fact. And that’s how I kind of really got in touch with my first investor. And it was a yeah, I mean it was a great experience too, because this you know, this investor happened to be doing, you know, anywhere from seven to ten flips a year, ~ and also building, acquiring land, you know, doing all kinds of different things in short term real estate investing. So it was it was, you know, kind of a lot. I actually learned a lot from him at the same time, as well as, you know, kind of learned exactly what he needed from me in a successful, you know, deal or project.

**Dylan Silver** (05:11)

Now you’re also a locator, and I’m a locator as well in Texas. This is a a specific niche of real estate that I think is underspoken to, but there’s a huge need for it because if you’re not able to, you know, buy a home, then the next step is renting. How did you get involved in the locator side?

**Justin Critchfield** (06:20)

just really out of necessity, you know, my I mean my investors would be calling consistently asking, hey, another project. I mean, I’ve gotten three texts today just from investors. Hey, do you have anything? You have anything, have anything? So ~ the need is extremely strong for the opportunity. And I think, you know, the locating these homes and these type of sellers, you know, isn’t the easiest thing in the world because they’re not ~ you know, necessarily coming forward. You have to kind of go out and get them.

You know, I mean in some cases they do come forward or a family member comes forward, but they’re usually in a pretty tough situation. And it’s understandable that they don’t want to share it to the public and they don’t want to go around and tell everybody about it. So it’s more of a kind of find me and I’ll talk to you about it type deal. You know, and that’s kind of how how it’s worked, you know. And thankfully I got I’ve got lots of websites and leads and stuff that are out there and I tend to run into through basic referrals, through my general course of just trying to find other clients, but I also find them through, you know, doing social media ads and kind of in a way, kind of copying the larger vendors where they do cash for home ads, you know, and trying to put a spin on that that is ~ a little bit more personal, you know, and more of a fair offer or mayor ~ basically presenting a benefit to the seller where, you know, it’s you know, you could I could appeal to them more than your regular everyday cash buyer.

**Dylan Silver** (07:53)

So in this instance, locating refers to the acquisitions portion of finding these properties or maybe distressed sellers that are looking for a cash offer.

**Justin Critchfield** (08:03)

Yeah, yeah. Locating the I mean, which is tends to be the biggest you know, biggest challenge. I mean and I I mean ’cause i I mean, all good investors, you know, obviously the numbers are the numbers. You can you know, you know what the projects are, you know what the expenses are up front, and just as long as you’re meet reading the market right, it’s pretty pretty easy to set up a transaction from start to finish. But finding that house at that price under those conditions is the toughest part by far.

**Dylan Silver** (08:31)

Now how do you estimate or or do you not the renovation and rehab costs and what does that look like when it’s being relayed to your investors?

**Justin Critchfield** (08:42)

I mean, that’s a good question. So really what I do is I go through and I do a walkthrough of essentially what I think the condition of the home would need to be in to meet a certain price point. And really what I’m looking at potentially is the gap, you know, the ARV purchase list price versus what we can get the home for. So and that gap needs to be a certain size based on square footage, you know, and based on a certain amount of expenses. So It all kind of depends on the investors. I mean, many investors, you know, sometimes they’ll want on a f you know, ARV of four hundred, they’ll only pick up a house. I mean, they need to get it for fifty percent or less. Some are more in the sixty-five percent range, you know, and then s every house needs a certain amount of work to get it up to speed, right? ‘Cause I mean most investors I work with will always do, you know, paint, baseboards, appliances, certain am certain amount of things. So but most of the time it’s essentially locating these properties, sending them to the investor at a s at a price that I think that we can get it at, which is often different than the price it’s listed at. And then of course putting putting a number into it, which is a broad estimate of me working with contractors over ten years, you know, of knowing what I can get a house painted for, what I can get this fixed for, get a furnace in for. You know, so I d do that estimate and basically send that proposal to my clients and say, hey, this is what I think we can get the house for, this is what I think our expenses are, this is what I think ARB is, and this is what I think potential profit is. And it’s a pretty time-consuming process. So really, you know, I’ll I’ll pick my investors and say, Hey, you know, these guys are serious investors, they’re capable, they’re willing, you know, so I’ll go through and do consistent evaluations on all of these properties. And send and sometimes they don’t even you know, sometimes they’ll reject all ten of you know. So and that’s just how it goes. But they’ll, you know, usually pick up one every couple of months or so. So

**Dylan Silver** (10:42)

Now, for fellow realtors who are interested in doing this type of transaction, one of the tricky components is actually getting paid, right? Because an investor, an unscrupulous investor, could say, Okay, you found me the property, I’m gonna go direct to the seller and cut you out of this, because if you don’t have it on paper, if it’s not under contract, then I’m gonna go around you. And there’s a more than a handful of investors who will do that. I think that’s an understatement. So how do you ensure that your fee is maintained as part of the transaction and that an investor isn’t going around you.

**Justin Critchfield** (11:49)

I just get the contract signed before it ever gets presented. You know, so investors will never hear about the transaction until it’s done. You know, it did it depends it obviously depends on where the property is located and what my relationship is to the seller. If if I’m basically looking for general properties in an off-market setting or an on-market setting and I’m representing that agent or that buy or that investor as a buyer’s agent, you know, it’s a little bit different because I’m going in and saying, You know, I have to cancel out actually a lot of opportunities because a lot of those investors aren’t aren’t offering commission there. So and if I know my investor’s not going to pay it on the buy side, then that’s just not an opportunity that I’m that he’s ever gonna see. You know, so so really it only has to be opportunities that I can get paid on from that perspective. From a seller perspective, and I have the relationship with the seller. I have a pretty good idea of what the house is going to sell for and what an investor is going to offer on it. So I can give them a basis up front and say, hey, you know, I know you said you wanted 260. I don’t think an investor will pay a dime over 220. And that’s usually, I mean, I’m usually on within about five or ten K, you know. So, and they’ll accept that, you know, and they’ll or or they’ll say, Hey, we’ll try to get it for 260. But either way, if I have an established relationship with the seller. The contract gets signed before an investor ever hears about it, so

**Dylan Silver** (13:13)

Now what are those conversations like with the seller when you’re going to get this under contract? Cause that’s a different conversation than you saying, hey, I’m buying this directly, right?

**Justin Critchfield** (13:24)

Yeah. Yeah. And that’s you never want to mislead the seller and in it and you kind of feel like that happens sometimes in cash for home and you know, different type of real estate transactions. I’m not telling the seller that I’m purchasing the property. I’m saying that I work with a network of investors that will purchase your property. And we don’t and if any and if any one of those investors didn’t want to purchase your property, it’s either because we’re asking too much, Or we’re asking too much. I mean, that’s really about it, because that’s the b bottom line, you know. So and and we also do have, you know, as a realtor, you have that option to take it to market, you know, and I can definitely sell it on market really easy, just as long as once again the price is right, you know. So, you know, so and that’s really what that conversation looks like. It’s more or less just just making sure you under kind of understand what they need out of the deal. And then making sure that you can you have investors to bring to the table. And and usually you want to set it up, you know, and say, hey, you know, Mrs. Seller, Mr. Seller, this is a very time-consuming thing. I I don’t have agents bringing the offers to me. I’m actually presenting this in a case-by-case scenario to each investor. So usually it’ll take a week or so. I’ll come back in a week and I’ll say, hey, all right, investor one has offer here, investor two has offer here, investor three has offer here, you know, and here’s are their close timelines. Here’s which ones are using hard money. Here’s other ones using cash. You know, so you basically set up, you know, and then they get to choose those, you know, and kind of pick the one that works best for them. So and it usually works, I mean it works really well.

**Dylan Silver** (15:01)

You know, this and I’m not I’m not just saying this. This is one of the best examples of A traditional realtor being able to bridge the gap between distressed sellers and investors. Because there’s a lot of people who are doing some variation of this, but with less transparency and then also not setting the right expectations, right? And there’s so much of this, even that people sometimes avoid Getting involved in this space entirely? I mean, how many realtors do we both know where they’ll just say, I won’t work with, you know, super distressed properties or with investors? Cause that’s just out of their wheelhouse. But you’ve been able to really bridge the gap there. I’m imagining that there was either some mentorship there or a lot of lessons learned through, you know, the school of hard knocks. How did you bridge that gap? How were you able to school yourself up in this space?

**Justin Critchfield** (16:23)

Yeah. Well, I just I just was looking for more of a niche in real estate, you know. They always say niche down, you know, you can’t be a expert at everything. So, you know, and that’s kind of what I wanted to do. And I you know, I have you know, a few friends and you know, couple of really good friends that are in construction and they have roofing businesses. So I’m kind of familiar with, you know, what the margins are in their business and kind of what it looks like to you know, just, you know, create a it’s kind of amazing thing. Real estate’s an amazing thing. How a house is worth, you know, this amount in poor condition and this amount in good condition. And then the number to make it good condition is a lot less than the gap, you know. So and that creates a r a great opportunity for people. And I think really I just created this opportunity by, you know kind of seeing a a gap in the market. A lot of people I where I would work with sellers that say, yeah, I have somebody who’s purchasing my house, you know, and then you go and, you know, you find out more about it and they don’t have anybody who’s purchasing their house. They’ve got a contract for somebody to go out and find somebody who’s purchasing their house. And that’s a that’s a lot different than, you know, saying somebody’s gonna purchase your house for a certain amount and then going out to go find somebody to find that amount. I mean I I just think it’s you know, i I mean the transparency matters and treating people, you know, you know, with honest and integrity matters. So and I think even the sellers here who are going through a rough time in their life, you know, really you can you have an opportunity to go and show and build trust and you know, really help somebody, you know, because that’s really what you’re doing. You’re taking somebody who’s in a really bad spot and you’re giving them a big bulk of money so they can go restart their life.

And that is and noise also I’m from Colorado Springs. So my investor is coming in, he’s making a profit for his family. And then also he’s rejuvenating the neighborhood I grew up in. You know, so you know, so it’s a it’s a win, win, win, win all the way around. So it’s an easy thing to get into, I think. You know, so but yeah, it’s hard work, you know, investors are By the numbers, you know, and they they only do things by the numbers, good ones, you know. So and sellers, you know, you gotta work with a lot of emotions and stuff like that. So it’s a it’s not an easy role, but it’s a rewarding one for sure.

**Dylan Silver** (19:06)

I’ve often said that folks that are doing what you’re doing have to be somewhat of a family triage coordinator, if you will. Cause in many cases you’re bringing like, you know, cousins together or, you know, who people who think that they own the home but they don’t own the home and someone else is living in it, and you know, people haven’t spoken in years, and you’re bringing all these people together. Once you’ve done that, now you’ve got to go find the investor, or you already have cultivated the buyer’s list, which of course is A job in and of itself to have these buyers ready. so you know, kudos to you for for really doing something that I think it needs to be done more. And I think more realtors specifically need to be less afraid of getting involved in this space. We are coming up on time here, Justin. Any new projects that you’re working on? And then also anything you’d like to mention directly to our audience.

**Justin Critchfield** (19:55)

Well, I would just say, you know, yeah, I mean, if you’re interested in Colorado real estate, my name’s Justin Critchfield. I’m located here in Colorado Springs and I, you know, branch all the way out about an hour and a half, two hours around Colorado Springs. So it covers Denver and pretty much anywhere, you know, in the populated areas of Colorado. new projects, you know, just really kind of focusing on marketing, you know. I need to I want to put out some new social media social media pieces that really attract that distressed seller and kinda welcome them in and you know just really trying to kind of streamline that process to get more leads in there and help more investors and further rejuvenate the place where I grew up. So that’s the plan.