Plain-English definitions of the terms that matter in house flipping, wholesaling, and motivated seller marketing.
This glossary defines real estate investing terms in four areas: motivated seller situations (pre-foreclosure, probate, inherited property), deal analysis (ARV, the 70% rule, MAO), exit strategies (fix and flip, wholesaling, BRRRR), and lead generation (speed to lead, exclusive leads, cost per deal). Each definition is written to stand alone - link to any term directly with its anchor.
The life events and property problems that lead homeowners to trade top-dollar pricing for a fast, certain, as-is sale.
A motivated seller is a homeowner who values speed and certainty of sale over maximizing price - usually because of a life event like inheritance, divorce, relocation, financial distress, or a property they can't afford to repair. Motivated sellers are the core of off-market real estate investing because they're open to cash offers and as-is sales.
A distressed property is a home under financial or physical strain - facing foreclosure, carrying tax liens, or in disrepair beyond what a typical retail buyer will take on. Distressed properties often sell below market value because they can't qualify for conventional financing or attract traditional buyers.
Pre-foreclosure is the window between a homeowner's first missed-payment notice (notice of default) and the foreclosure auction. Owners in pre-foreclosure can still sell the home, pay off the loan, and protect their credit - which makes them some of the most time-sensitive motivated sellers an investor can work with.
Foreclosure is the legal process where a lender repossesses a home after the borrower stops making mortgage payments. Once a property completes foreclosure it becomes bank-owned (REO); before that point, the homeowner can often avoid the credit damage by selling - frequently to an investor who can close fast.
A short sale is when a lender agrees to let a homeowner sell for less than the remaining mortgage balance, typically to avoid the cost of foreclosure. Short sales take longer than standard purchases because the lender must approve the price, but they can help underwater owners exit without foreclosure on their record.
A probate sale is the court-supervised sale of a home owned by someone who passed away. Heirs frequently live out of state, don't want the property, and prefer a fast as-is cash sale over months of repairs, listing, and showings - making probate one of the most consistent motivated seller situations.
An inherited property is a home passed to heirs after the owner's death. Inherited homes are often dated, filled with belongings, or co-owned by multiple family members who simply want to split proceeds quickly - a classic profile for an off-market cash sale.
An absentee owner is someone who owns a property but doesn't live in it - out-of-state landlords, heirs, or owners who moved and never sold. Distance makes managing, maintaining, or listing the property harder, which is why absentee owners are a frequent source of motivated seller deals.
A tired landlord is a rental property owner worn down by tenants, turnovers, repairs, and regulations who decides the income is no longer worth the headache. Tired landlords often sell with tenants in place or with deferred maintenance - situations investors are equipped to handle and retail buyers usually aren't.
A tax-delinquent property is one whose owner has fallen behind on property taxes, putting the home at risk of a tax lien sale or tax foreclosure. Because the clock is running and penalties compound, tax-delinquent owners often need to sell quickly to protect whatever equity remains.
A code violation is a citation from a city or county for a property condition that breaks local ordinances - unsafe structures, overgrown lots, unpermitted work, and similar issues. Mounting fines and required repairs push many owners to sell as-is to an investor rather than bring the property up to code themselves.
A vacant property is a home sitting empty - often after an inheritance, an out-of-state move, or a failed rental. Vacant homes cost money every month, attract vandalism and code complaints, and are usually uninsurable at normal rates, so owners are frequently motivated to sell fast.
A hoarder house is a property so filled with belongings or debris that it can't be shown or listed conventionally. These homes almost never sell retail without massive cleanout and repair, so owners and families typically turn to investors who buy as-is and handle the cleanout themselves.
An underwater mortgage (negative equity) means the homeowner owes more on the loan than the home is currently worth. Underwater owners can't sell traditionally without bringing cash to closing, which makes short sales or creative deal structures their most realistic exits.
A divorce sale is the sale of a marital home as part of a divorce settlement. Courts and attorneys often impose deadlines, neither spouse wants to manage repairs or showings, and both want a clean split of proceeds - which is why divorce situations consistently produce motivated sellers.
A relocation sale happens when a job change, military orders, or family situation forces an owner to move on a deadline. When the move date arrives before the home sells, owners face paying two mortgages - and a fast, certain cash close becomes worth more than top dollar.
The numbers investors run on every potential deal - what a property is worth fixed up, what it costs to get there, and what they can afford to pay.
After repair value (ARV) is what a property will be worth after renovations are complete, based on comparable sales of fixed-up homes nearby. ARV is the anchor number in flip analysis: purchase price, rehab budget, and profit all get worked backward from it.
Comps are recently sold properties similar to a subject property in location, size, age, and condition, used to estimate market value. Good comps are recent (90-180 days), within roughly a mile, and adjusted for differences - they're how investors ground an ARV estimate in real data instead of guesswork.
The 70% rule says an investor should pay no more than 70% of a property's after repair value minus repair costs (MAO = ARV x 0.70 - repairs). The 30% spread covers holding costs, closing costs, financing, and profit. It's a screening shortcut, not a substitute for a full deal analysis.
Maximum allowable offer (MAO) is the highest price an investor can pay for a property and still hit their required profit after rehab, holding, and selling costs. Disciplined investors calculate MAO before making an offer and walk away rather than exceed it.
A rehab budget is the itemized estimate of everything it will cost to bring a property to its after repair value - materials, labor, permits, and a contingency for surprises. Blown rehab budgets are the most common reason flips lose money, so experienced flippers scope conservatively and pad for the unknown.
Holding costs are the monthly expenses an investor pays while owning a property - loan interest, property taxes, insurance, utilities, and maintenance. Every extra month a flip takes erodes profit, which is why speed of renovation and resale matters as much as purchase price.
Equity is the difference between a home's market value and what's owed against it. Sellers with high equity have room to accept a discounted cash offer and still walk away with money - which is why equity is one of the first things investors (and lead qualification systems) check.
An as-is sale means the buyer takes the property in its current condition with no repairs, cleanouts, or credits from the seller. As-is terms are a core part of the investor value proposition to motivated sellers: no contractors, no inspections to negotiate, no surprises before closing.
A cash offer is a purchase offer that doesn't depend on mortgage financing, allowing a close in days instead of weeks with no appraisal or loan-approval risk. For motivated sellers, the certainty of a cash offer is often worth more than a higher financed price that might fall through.
How REI Leads connects you with cash-offer sellersAn off-market property is one for sale (or available to buy) without being listed on the MLS. Off-market deals come from direct marketing, referrals, and lead generation - and because there's no public listing competition, they're where investors find the margins that flips and wholesale deals require.
Clear title means a property's ownership is free of liens, judgments, unresolved heirship, and other claims that would block a sale. A title search before closing surfaces problems early; many motivated seller situations (probate, tax delinquency, divorce) involve title issues an experienced investor knows how to resolve.
An earnest money deposit is the good-faith money a buyer puts down when a purchase contract is signed, held in escrow and credited at closing. In off-market investing, a meaningful deposit signals to the seller that the buyer is serious and won't tie up the property and walk.
The 1% rule is a screening guideline for rental properties: monthly rent should equal at least 1% of the total purchase price (price plus repairs) for the deal to have a realistic shot at positive cash flow. Like the 70% rule for flips, it's a quick filter, not a full analysis - high-tax or high-insurance markets need a deeper look at the actual numbers.
Cap rate (capitalization rate) is a rental property's net operating income divided by its purchase price, expressed as a percentage - a $200,000 property producing $16,000 of NOI has an 8% cap rate. It lets investors compare income properties apples-to-apples, independent of how each deal is financed.
Net operating income is a rental property's annual income minus operating expenses - taxes, insurance, maintenance, management, and vacancy - before any mortgage payments or income taxes. NOI is the foundation of income-property valuation and the numerator in the cap rate formula.
Depreciation is the tax deduction that lets rental property owners write off the cost of the building (not the land) over 27.5 years, sheltering rental income from taxes. It's one of the biggest advantages of buy-and-hold investing: a property can show a paper loss while it cash flows and appreciates.
An opportunity zone is a census tract designated for tax-advantaged investment, where investors who roll capital gains into qualifying property can defer - and partially reduce - those gains. For investors, opportunity zones often overlap with neighborhoods rich in distressed properties and motivated sellers, stacking tax benefits on top of discounted acquisitions.
The ways investors monetize a deal once they have it under contract - flip it, wholesale it, hold it, or structure something creative.
House flipping is buying a property below market value, improving it, and reselling it for a profit - usually within months. Successful flipping depends on buying right: the profit is made at purchase, which is why flippers compete hardest for off-market motivated seller deals.
Fix and flip is the specific flipping model of buying a distressed home, renovating it to retail condition, and selling it on the open market. The math: purchase price + rehab + holding and selling costs must come in comfortably under the after repair value to leave a profit.
Wholesaling is putting a property under contract at a discount and then selling that contract to another investor for a fee, without renovating or usually even closing on the home. Wholesalers live and die by deal flow - a consistent pipeline of motivated seller leads is the entire business.
An assignment of contract transfers a buyer's rights in a purchase agreement to another buyer - the standard wholesaling exit. The wholesaler signs a contract with the seller, assigns it to an end buyer for an assignment fee, and the end buyer closes directly with the seller.
A double closing is two back-to-back transactions: the wholesaler buys from the seller, then immediately resells to the end buyer - sometimes the same day. It costs more than an assignment (two sets of closing costs) but keeps the wholesaler's fee private and works where assignments are restricted.
A cash buyer is an investor who can purchase property without mortgage financing - with actual cash, hard money, or private funds. Wholesalers maintain cash buyer lists to move contracts quickly, and sellers prefer cash buyers for speed and certainty.
A hard money loan is short-term, asset-based financing from private lenders, underwritten on the property (usually its ARV) rather than the borrower's income. Higher rates and points buy speed and flexibility - funding in days, which is what off-market deals on tight timelines demand.
BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat - a strategy where an investor buys a distressed property at a discount, renovates it, rents it out, then refinances at the new value to pull capital back out for the next deal. Like flipping, BRRRR only works when the purchase is well below ARV.
Buy and hold is acquiring property to keep as a rental for cash flow and long-term appreciation rather than reselling. Buy-and-hold investors compete for the same off-market discounted deals as flippers - the discount becomes instant equity instead of resale profit.
Subject-to is buying a property while leaving the seller's existing mortgage in place - the investor takes title and makes the payments, but the loan stays in the seller's name. It's a creative exit for sellers with little equity or below-market interest rates who need out without a short sale.
Creative financing covers deal structures beyond a standard cash or mortgage purchase - seller financing, subject-to, lease options, and wraps. Investors use creative structures to make deals work for sellers whose situations (low equity, tax concerns, timing) don't fit a simple cash offer.
How investors find motivated sellers before the competition does - and the metrics that separate profitable lead channels from expensive ones.
A motivated seller lead is the contact information and property details of a homeowner who wants to sell quickly - ideally one who reached out themselves asking for a cash offer. Inbound, high-intent leads convert at a fraction of the cost and effort of cold outreach lists.
How REI Leads generates motivated seller leadsAn exclusive lead is sold to exactly one buyer - no other investor receives the same seller's information. Exclusivity removes the race-to-the-phone dynamic of shared leads and dramatically raises contact and conversion rates, which is why exclusive leads command higher prices and deliver lower cost per deal.
Why REI Leads only sells 100% exclusive leadsA shared lead is sold to multiple investors at once - sometimes five or more competing for the same seller within minutes. Shared leads look cheap per unit, but split contact rates and bidding wars on the same property usually make the true cost per closed deal far higher than exclusive alternatives.
Pay per lead is a pricing model where investors pay a fixed price for each seller lead delivered, rather than paying for ad spend, impressions, or clicks. PPL shifts the marketing risk to the lead provider: the investor only pays when an actual seller raises their hand.
See REI Leads pay-per-lead pricingSpeed to lead is the time between a seller submitting an inquiry and an investor making contact. Conversion rates fall off a cliff within minutes - a seller still on the website is dramatically more likely to answer than one contacted an hour later, which is why elite operators respond in seconds, not minutes.
Lead qualification is filtering raw inquiries to remove bots, duplicates, MLS-listed properties, non-owners, and low-intent sellers before a lead reaches an investor. Strong qualification - REI Leads validates across 37 data points with AI in real time - is the difference between buying leads and buying conversations with actual sellers.
A high-intent lead is a seller who initiated contact themselves - called, filled out a cash-offer form, or responded to advertising asking for help selling. High-intent inbound leads convert at multiples of the rate of cold-sourced contacts because the seller has already decided they want a solution.
Cost per lead is total marketing spend divided by the number of leads generated. CPL is easy to compare but easy to misread: a cheap shared lead with a 20% contact rate is more expensive per deal than a pricier exclusive lead you actually reach and close.
Cost per deal (or cost per acquisition) is total marketing spend divided by the number of closed transactions it produced. It's the metric that actually matters in lead generation - channels with higher cost per lead frequently win on cost per deal because of better quality, exclusivity, and contact rates.
Contact rate is the percentage of leads an investor actually reaches by phone. It's driven by lead quality (real phone numbers, real sellers) and response speed - calling within seconds while the seller is still engaged can double or triple contact rates versus calling back hours later.
Skip tracing is looking up contact information - phone numbers, emails, mailing addresses - for property owners on a list, typically for cold outreach campaigns. It's a staple of outbound marketing; inbound lead generation skips the step entirely because the seller provides their own contact information.
Driving for dollars is physically driving neighborhoods to spot distressed properties - overgrown yards, boarded windows, full mailboxes - then skip tracing the owners for outreach. It's low-cost, high-effort prospecting that surfaces off-market opportunities other marketing misses.
ROAS (return on ad spend) is the revenue a marketing channel generates divided by what it cost - a 5x ROAS means $5 back for every $1 spent. For investors, the honest version measures assignment fees and flip profits against total channel cost, making ROAS the cleanest way to compare lead sources against each other.
Cost per contract is total marketing spend divided by the number of signed purchase agreements it produced - the step between cost per lead and cost per deal. Tracking it reveals whether a channel's leads actually turn into contracts or just conversations, and where deals are falling out of the funnel.
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