What Is Skip Tracing in Real Estate?
This article will break down the ins and outs of skip tracing in real estate, and how to get the most benefits of it.
We will show you how to incorporate skip tracing into your overall prospecting plan so that you get the maximum yield from your marketing lists.
Good skip tracing can double the return on your marketing budget. Keep reading to learn how to get the most out of every marketing dollar you spend.
What Is Real Estate Skip Tracing?
Skip Tracing in Real Estate Definition
Skip tracing for real estate is a process of finding contacts of a property owner sought by an investor who wants to buy their property.
Now, let’s look at the meaning of the term in more detail.
Skip Tracing in Real Estate Meaning
So what does skip trace mean in real estate? The definition of the expression has somewhat shady origins. The term comes from the world of law enforcement.
When a person of interest would skip town, bounty hunters were tasked with tracing their whereabouts.
The person being sought came to be known as the “skip”. And the term “skip tracing” became shorthand for the tactics used to track them down.
In real estate, the meaning of skip tracing is somewhat similar. Investors use similar tactics to find people who are hard to find through normal means.
In the past a private investigator might tackle the job of skip tracing a homeowner on behalf of lenders, creditors, or the law. They would search anything from hospital records to court filings.
Fortunately, when it comes to skip tracing in real estate, the main thing being sought is good contact information: phone numbers, email addresses, and current mailing address.
And with advances in technology and the rise of social media, real estate agents, property wholesalers, and investors can quickly find out everything they need to know about a homeowner and their property.
With that information in hand, an investor can locate and contact them to potentially secure an investment deal.
Is Skip Tracing Legal?
Short answer: Yes! As noted above, skip tracing has its origins in the world of law enforcement.
And even today, most practitioners utilize the practice to bring a target to justice or help settle outstanding obligations. It is perfectly legitimate for investors to use these techniques as well.
That said, investors should take care to stay on the right side of privacy laws. What you do before and after initiating a skip trace could land you in hot water if you’re not careful.
Here are some best practices to consider.
The data you’re looking for when skip tracing is sometimes held by companies that store sensitive consumer information, like credit bureaus.
They do sell it. But only to law enforcement and collection agencies. It is not supposed to be used for marketing.
If you misrepresent your plans for how you will use the data in order to get access, you are violating their terms of service and potentially breaking the law. Don’t do it.
Many of these companies have a lower tier of data that can be sold to marketers. It is more than satisfactory for your purposes as an investor. So be honest, and only collect data you’re entitled to.
No matter where you source data for your skip traces, you are required to securely store any personally identifiable information or “PII”.
Be sure to keep any such lists on secure computers, ideally encrypted. Hard copies should be kept under lock and key.
Lastly, when it’s time to contact the people whose info you’ve retrieved, it is critically important that you abide by TCPA and other regulations regarding phone solicitation.
How Does Skip Tracing Work?
To get started, an investor will typically pull a number of leads from real estate investor lead generation software companies.
Some of these leads may include addresses of homes and owners’ names but lack up-to-date contact information.
Alternatively, while driving around a neighborhood as their routine for finding homes to flip, an investor saved in their driving for dollars app or a CRM for wholesale real estate addresses of properties that look abandoned, and now they need the owners’ names and contact details.
Let’s say they now have a list that has 100 names or property addresses on it.
An investor will put the list through a digital real estate skip trace service like REISkip and get phone numbers and email addresses for each of those names.
Within minutes, the software will append the various contact points to each record on your list. You have options for what to do next, including:
- Sending a letter for motivated sellers
- Calling the owner
- Sending a text message
- Adding the prospect to a real estate investor CRM
In a highly competitive market like today, you may need to do more. REISkip provides you another avenue to reach your prospect in addition to phone numbers and email addresses.
Their system provides social media handles (FB, Instagram, LinkedIn). This extra layer of intel can prove valuable for multiple reasons:
- Cold calling or text message marketing for real estate investors are policed by federal regulators under TCPA. If you send too many messages too quickly or use your real estate investor phone system to call the wrong people, you can be subject to stiff fines.
- Social media DM’s aren’t subject to TCPA. There are no restrictions on direct messaging on social media platforms. You can DM anyone.
- Lastly, social media provides high level recon. A prospect’s Facebook page often has their most cherished memories and hobbies on display for all to see. You can learn a great deal in a short amount of time.
You can learn about this tool in more detail from the in-depth REISkip review.
This level of research is in line with the skip tracing’s historical roots. This is one of the wholesale real estate software tools that may provide you with the type of intel that puts you in a better position to build rapport with your prospect once you do make contact.
What Are Common Uses of Skip Tracing?
A fairly common use of skip tracing for real estate investors is finding the owner of a badly damaged house who skips town and leaves the property abandoned.
Sometimes they’re trying to avoid upkeep. Sometimes, they simply can’t be bothered to list it for sale. And sometimes, property owners skip town to evade creditors or even the law.
Maybe the property has tax liens or judgements. Houses left behind like this are prime real estate investment (REI) opportunities.
Here are the most common situations where investors use skip tracing tools to find property owners in order to turn them into motivated sellers:
- Abandoned properties or homes with temporarily absentee owners.
- Probate homes — properties left as inheritance to heirs. Many of them would rather get rid of the home by selling it fast. Being in probate (a procedure of transferring a property from the deceased to the heir) is a public record. The investor who found such a home in their county records may need to clarify the contact information of the executor of the will or administrator of the estate — the persons responsible for estate property distribution to heirs.
- Finding tax delinquent property owners or finding distressed sellers in a mortgage pre-foreclosure. Similarly to probate homes, a notice of foreclosure and tax lien are public records.
- Rental properties. Sometimes you can get the owner’s contact information from their tenants. But sometimes renters aren’t willing to give it to you so you use skip tracing software to identify the landlord.
In short, skip tracing software can be used in any situation where an investor is interested in buying a property or finding houses to wholesale but can’t identify the owner.
How Much Does Skip Tracing Cost?
Skip tracing costs vary wildly. The key determinant of price is whether you are looking for an actual skip tracer, i.e., a dedicated researcher to perform a deep dive on your target, or whether you are simply looking to append phone numbers to a lead list.
If you need the kind of data that might be found in a background check, professionals who provide that level of sleuthing will charge anywhere from $25 to $50 per name. Possibly more.
If all you need is phone numbers and/or email addresses, skip tracing software for real estate investors can typically provide that information for a fraction of the cost — 10 to 25 cents per record, depending on search volume.
From time to time, we hear reports of people claiming to offer skip tracing services for just a few pennies.
Invariably, people offering such rates are procuring the data illegally or simply providing low quality data.
In the end, you get what you pay for. Better to go with a reputable company and avoid the frustration of dealing with a rogue outfit making unrealistic promises.
How Accurate Is Real Estate Skip Tracing Data?
If you rely heavily on cold calling services for real estate investors, real estate investor direct mail services, or text message marketing, then accurate skip tracing data is critical to running successful campaigns.
But all skip tracers are not created equal.
Consider this. After finding foreclosures or other distressed properties, it can take up to eight touches to even start a sales conversation with the owner. Imagine following up on a lead half a dozen times only to realize it’s the wrong number…
That’s why it’s important to make sure you’re reaching out to the right people in the first place.
To be clear, the most accurate form of skip tracing is the old school private eye variety discussed above.
This is where, rather than using real estate investor tools, you hire an investigator to comb through many different types of records on your behalf.
They may even interview acquaintances to build out a full picture of what is happening in the skip’s life.
These professionals have extremely high rates of success tracking their target, 90%+. But the cost of employing these pros at scale can get out of hand quickly.
In addition to price, their manual process can take several days compared to the minutes-long process of digital platforms. You’ll need to weigh the full cost of the additional level of accuracy.
The modern day version of skip tracing for real estate is powered by technology and big data.
You won’t get acquaintance interviews, but the best digital platforms can accurately identify the target’s current contact info 75%- 85% of the time.
That is enough correct numbers to generate a tremendous amount of business if you are consistent about buying or building new lead lists.
Real estate investing is a numbers game. For every deal that actually makes it to the closing table, you’ll contact lots of people who tell you ‘no’. Possibly hundreds.
Given that fact, you are probably best off utilizing digital platforms for the bulk of your skip tracing needs.
I suggest that you reserve hiring professional individual skip tracers for specialty situations.
By following the best practices outlined above, you’ll source higher quality leads for real estate wholesalers or investors with more reliable contact info.
Simply doing that ensures that the data you pour into the top of your funnel has the best shot at dropping to the bottom line in the form of more closed deals.
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About the Author
Max Maxwell is a prolific real estate investor and entrepreneur. He rose to national acclaim when he documented his rise from $300 in the bank and living in his mother’s house to earning $2M in 2 years from his wholesaling business. Fans watched him climb that mountain step by step, deal by deal through his youtube channel and other social media outlets. Today, Max manages the largest Facebook community for wholesalers (Wholesaling Houses Elite) and is co-founder of multiple leading proptech companies that serve the real estate industry such as REISkip, a skip tracing tool for real estate investors. He has introduced real estate investing to millions of aspiring investors and taught hundreds of thousands to create their own success in the REI game.