Every real estate investor dreams of closing a deal fast, no question about it. But have you ever wondered why some people seem to close out deals with more frequency than you do?
There could be several reasons as to why, but assuming you are doing everything right (well, almost everything), it often boils down to one thing in particular: a motivated seller.
Finding motivated sellers and the ability to close deals fast are two defining aspects of any real estate investor worth her salt; unique abilities that require one to keep their ‘ear on the street’. Because this is what makes it easier to find, identify and seek out motivated real estate sellers.
It’s not a Sunday picnic for sure, but this is a key cog in the real estate wheel of investment. Reason being an investor’s success is a sum of more than just finding motivated sellers: it also involves effective negotiation with the sellers, never mind finding that coveted property in the first place and closing the deal fast.
In this two-part mini-series, we look at the four types of motivated sellers to target, and the benefits that come with working with these types of sellers.
Beginning with the latter.
Why you need to Work with Motivated Sellers
It may sound redundant to call them ‘motivated sellers’, considering the general view is that all sellers are always motivated to sell. Looking at it from an investor point of view, however, a ‘motivated seller’ is a different entity altogether.
See, the typical homeowner is someone looking to turn a good dime from their home. A real estate motivated seller, on the other hand, is someone actively looking to get rid of their property, and often times, they are left grasping the short end of the straw. In other words, they often sell at a loss, or a figure below the property value.
There is no static set of circumstances in which to find a motivated seller – their ‘motivation’ could come from just about anything. In the majority of cases though, most tend to be experiencing some form of misfortune or major life change that puts them in this pressing need to vacate their property or cut their losses. Or they could have purchased another home and are desperately looking to cash in on their former.
As a real estate investor, this type of seller is holy grail; a splendid opportunity to close deals fast while at the same time doing so at a bargain.
And here are the two primary benefits of working with them.
Real estate investors who have been in the game for a while will tell you that since the recession days, motivated sellers are the prime candidates for investing opportunities and the ability to close deals fast.
Working with these sellers means you can get a property below its market value – in many cases. However, abstain from going in without understanding what the seller’s motivation for selling is. If it is money, you, the investor, can make an all-cash offer to potentially woo the seller.
Regardless of the reason though (money, time or what-not), understanding the seller’s motivation will allow you to make the best offer possible.
Ability to Close Deals Fast
Working with motivated sellers presents the right set of circumstances to purchase discounted properties. But when approaching the seller, it’s good to make peace with the thought that not all of them can afford to sell their property at a throw-away price (hence why you need to understand their motivation?).
A good deal of motivated sellers are not in a rosy position, financially-speaking, but the fact remains they need to get rid of the house. But don’t think you are the only shark in the sea: the seller will always be more attracted to the suitor who can quote a price (or arrangement) that borders on the seller’s timeline.
To cap it off, it’s nice to point out a large part of your success will occur at the ‘due diligence phase’. That period when you have to do your homework to understand what the seller’s motivations are. That period when you invest your time to cultivate a rapport with the seller. For it is only then that truly great deals are unearthed.
Until Part 2.