In order to invest profitably we have to get great deals. Great deals mean purchasing real estate for very low prices or on great terms. Frankly, most sellers are not interested in the type of offers we make and that’s okay because our offers are very low. Sellers who are truly motivated are the only people who will give us the price and/or terms we need to make good deals.
So who are these motivated sellers and where do I find them? How do I know if a seller is motivated? Look for some of the following signs as indications that the seller is ready to deal.
Find out the seller’s “Why.” Why is the seller selling their property? Why does the seller need to sell right now? Is there a sense of urgency? Really try to understand their situation. Here are some of the “whys” often mentioned.
– Can no longer afford property
– Behind on payments
– Loss of job or income
– Need money
– Significant repairs needed and seller can’t afford to pay for them
– Owner died and family needs to sell house (estate sale)
– Owner needs to relocate
– Real Estate agent couldn’t sell the property
– Investor can’t find tenant for the property
– Last tenant left the property in disrepair
– Investor is tired of being a landlord
– The seller just wants to get rid of the property
– Been trying to sell for a long time for a higher price and is ready to move on
The list goes on. We need to know the “why.” This is the greatest indicator of motivation. Most sellers are not going to be 100% upfront in the beginning. Ask the question three times. The more you ask the more they will expose their true reason and position. Listen for their need. Is there desperation in their voice?
The Bad “Why’s”
Here are some “why’s” and other statements you don’t want to hear:
– Seller just wants to see how much they can get for the property
– Seller is firm on price and not flexible
– No particular reason to sell
– Will not answer your questions
– Will only sell if the price is right
– Stubborn and unyielding personality
If you get any of these indications you should get off the phone immediately. That seller is a waste of your time. You will ONLY get good deals when the Seller is truly motivated.
The Sad Truth
The majority of the offers you make will be rejected. It’s part of the business. Acknowledging that this is normal should make it easier to deal with.
Realistically, you will probably need to make 25 offers to get one ratified contract, if dealing directly with the seller. If you are making offers on REO properties on the MLS you will need to make closer to 50 offers (or more) to get a ratified contract due to increased competition and the banks’ willingness to hold out for a better price.
I know. The numbers are not pretty but you can do something about it. Only offer to buy properties from motivated sellers.
One Thing to Always Remember
Get one thing straight in your head. You are looking for motivated sellers, not properties. Look for the signs of motivation. If you don’t see any signs of motivation, don’t make an offer. It will be a waste of time. This includes REO properties.
Your mission should be to generate as many motivated leads as possible. The more leads you have, the more deals you can make. You also won’t be tempted to try to make a “skinny” deal work. We only want good, desirable deals that we know will wholesale quickly, have high rehab profit potential, or will cash flow nicely. For sure, if your deals possess all of there traits, you will be making deposits at the bank frequently.
The key is to only deal with motivated sellers. If the seller is not motivated you should move on quickly. If they are, make sure you understand their issue and offer solutions. There is an opportunity to hit a home run. Always think win-win. Being able to sense motivation and take advantage of it will get you paid.
by Kevin Toston