How Do You Determine If a Seller Is Motivated in Real Estate Investing?

Determining if a seller is motivated in real estate investing is a major problem for most investors but especially for new or inexperienced investors. When a seller is not motivated, he is looking to receive Full Market Value (FMV) for his property. This is a major issue if the investor is trying to buy the property to wholesale it to another investor.

Essentially there is no monetary differential between the FMV of the property and what the investor will have to pay the seller so it is not a deal. The investor must determine if the seller is motivated before he takes the time to go and see the property, otherwise he will be wasting the seller’s and his own time.

To best determine if the seller is motivated or not, the simple thing to do is ask him, “Why are you selling?” Usually, the seller will try and get you empathetic with his problem and will tell you the truth about his situation. His hope is that you will then help him solve his problem by paying what he thinks is FMV.

Sometimes however, the seller will just say he is “Testing the market” and it is time to move on to the next prospect. Every un-motivated seller becomes a motivated seller in time but sometimes this can take years. Some sellers actually die in their homes and the property goes to a probate sale where the price that is received can be ½ or less than the deceased seller’s asking price. Practically speaking, waiting for the seller to pass is too long to wait for a good deal.

If the seller tells you a reason that justifies making an offer that you can make money by reselling or rehabbing and retailing the property, what becomes important now is how much the seller is willing to take below FMV. Your offer price can be arrived at by taking a percentage (60% – 70%) of FMV and subtracting all repairs and closing costs.

The true test of a motivated seller is whether his concern is more for the price he will be receiving or for a solution to the problem he is facing with the property. Money is not the determining criteria if the seller is truly motivated – the solution is the most important issue. This doesn’t mean that a seller will take ten cents on the dollar, but he might take fifty cents on the dollar – even after he had originally said he wouldn’t take a dime less than FMV.

Most of the money made dealing with semi- or non-motivated sellers is actually made in the months following your original offer. These deals are consummated by being persistent in following up week after week and month after month until the seller chases you away or he sells to you.

With motivated sellers, your original offer could be accepted in a matter of hours or days – so be ready. Always have the ability to write a contract when you are with a seller, or at least be able to bring one back the following day. Hesitation in getting a contract signed has resulted in tons of lost deals as the motivated seller couldn’t wait for you and took another investor’s offer. Always seize the moment and get a contract signed as quickly as possible.

Next Post

Network Marketing Home Based Business Fire Your Boss

Mon Dec 5 , 2022
Have you decided to “Fire Your Boss” and start your Network Marketing Home Based Business? There is nothing in the world like having the peace of being your own boss, having your own home-based business, working when you choose, and spending more time with your family. Some people are making […]

You May Like