Are You Wasting Time with Unmotivated Sellers? : Real Estate Investment Tips and Strategies

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What is a motivated seller?

It’s not someone who wants to sell. It’s not someone that wishes they could sell. A motivated seller is someone who MUST SELL! From their point of view, they don’t have a choice. They’ve got to get rid of their house as soon as possible.

More time is wasted talking to, conducting due diligence on, and meeting with unmotivated sellers than any other part of the business. It’s your job as an intelligent real estate investor to disqualify leads that don’t work for your business model as quickly as you possibly can.

If you have ever thought to yourself, “Why would a someone ever sell me their property for pennies on the dollar?” Here’s why.

13 Reasons Why Sellers Become Motivated

• Job Loss
• Divorce
• Burnt Out Landlord
• Facing Foreclosure
• Military Move
• Job Transfer
• Death in the Family
• Financial Distress
• Vacant House
• Expired Listing
• Bad Tenants
• Estate Sale
• And Many More…

3 Sure Signs that You’re Wasting Time with Unmotivated Sellers

1. You get stood up for the appointment.

If it’s that important to a seller to get rid of their property, they’ll make the appointment . . . period! Now, if you’re thinking that emergencies do happen from time to time, you’re right. But, they only happen about 1% of the time so don’t kid yourself.

2. The seller is hesitant to answer all of your questions.

Any seller that won’t answer your questions that you need answered to make an educated offer (i.e. What do you owe on the property?), isn’t as motivated as we want them to be. If someone doesn’t answer one of my questions when I talk to them on the phone, I simply say, “I cannot even submit your property info through our system without all of these questions answered. It doesn’t really sound like it’s that important to you to sell your home. Thanks though.” And then I shut up. They typically will immediately answer your question and if not, you just saved yourself some time.

3. You get a million questions from the seller.

Reverse the situation and imagine getting grilled by a seller about who you are, what you do, how long you’ve been doing it, and a million other questions. I wasted plenty of time with these types over the years. Remember that as long as you’re talking, you’re not learning anything, and you’re not in control of the conversation. Just because someone asks you a question, it doesn’t mean you have to answer it or that the person even cares about the answer in the first place. You should be the one asking the questions. Find out their situation, figure out if they’re motivated, and most importantly, if you can offer a win-win solution.

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Motivated sellers will call you back quickly, listen intently, answer your questions, and agree to any reasonable offer that gets them out of their problem property. They’re out there. All you have to do is find them.

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Caution: Another Real Estate Investing Mistake That Could Cost You Big Bucks

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Whether you’re a seasoned real estate investing pro or brand new to the game, this mistake can jump up and bite you.

Here are a couple scenarios where caution should be taken:

Let’s say you contract a vacant property and negotiate a long closing period. You know that it’ s a good deal, you’ve done your due diligence, and the closing is set for two weeks out. The stage has been set. You’ve got your renovation plan together, and your contractors are ready to get started. Have you ever bought the materials for a job, got a dumpster delivered to a property, and started working on a property prior to closing? If not, have you ever considered it?

Prior to joining our coaching program, one of our students negotiated a long closing period on a property to allow him to rehab it prior to closing. He planned to finance it in a way where the appraised value could be used for the loan instead of his low purchase price (typically with traditional bank financing, a loan is written for the purchase price or the appraised value, whichever is lower). The only problem, what if the seller changes his mind in the interim. You may be saying to yourself, “But the seller signed a contract. They are contractually obligated to sell the property.” If so, let this be your warning. You may be positioning yourself for a big fat headache that could cost you dearly.

Never spend money in a property prior to closing on it!

First let me give a small disclaimer. This does not include any costs spent marketing the property prior to closing. Some investor’s entire strategy is to contract properties and market them to other investors. They may spend money on signs, newspaper ads, or much more depending on their business plan.

When I say never spend money, I mean never start rehabbing a property prior to closing. That’s the mistake you want to avoid. Everything could work out fine, but you don’t ever want to end up in front of a judge as a real estateinvestor. Sellers can paint the “poor little me, big bad investor” picture. Not where you want to be.

This game is about making big money as a real estate investor and protecting yourself in the process. To do so, save yourself some trouble by taking these words of wisdom.

Posted in Tips and Tricks | 2 Comments »

How to Turn a Good Deal into a Great Deal: Creative Real Estate Investing

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Good deals just don’t cut it for me anymore. To do a deal in today’s market, it has to be great! I would suggest that you prescribe to the same philosophy. If you’ve been reading the blog lately, you know that we’ve talked a lot about minimizing risk and maximizing returns. By turning a good deal into a great deal, you are accomplishing both.

7 Simple Ways to Turn a Good Deal into a Great Deal

1. Get “The Stuff” Thrown In

Let your imagine run wild. The appliances, the furniture, TVs, really anything in or around the property that could be thrown in to sweeten the deal are fair game. If the seller seems to be stuck on a certain price or terms that don’t quite do it for you, a 64″ plasma and leather sofa could do the trick. There is nothing wrong with asking.

2. Negotiate Seller Financing

Every bit of seller financing that you can negotiate adds value to the deal (assuming the terms aren’t outrageous). As long as you are working with a motivated seller, this should be your reality in every deal you do. You are the boss here. Give a little on price when it makes sense to get the terms you want. Most investors spend all their time on the price side when the terms side of the negotiation can explode your wealth.

3. Put Less Cash Down

Typically, if you are putting less cash down, you would be compensating a seller with a higher sales price, higher interest rate or shorter time frame. BUT, less cash in the deal can definitely turn a good deal into a great deal.

4. Get Paid to Buy It

Go ahead and decide now if this will be a possibility for you. The naysayers will tell you that this is impossible, but all that they are saying is that it is impossible for them.

I know that it’s possible because I’ve done it. I bought a house a year ago last May, and the seller sends me a check every month, without fail. They owed far too much on the house for me to buy it for what was owed. I offered $17K less than what was mortgaged and bought the house without coming out of pocket. Now, I get a check for right under $200/mo. every month. I have the house lease optioned with about a break even cash flow with $25K in profit on the back end.

5. Rezone the Property

I do not have a lot of personal experience rezoning property, but it can be extremely profitable. There are investors whose entire livelihood comes from contracting properties, getting them rezoned, and flipping them for hundreds of thousands of dollars.

How about that for a way to minimize risk and maximize returns?

6. Use OPM

Always a good way to turn a good deal into a great deal, using other people’s money. Just remember, the point would be to maximize your return on cash. If it makes sense to use some of your own money, by all means do it. But, if you can employ your funds to work harder for you than the price at which you can borrow, use OPM.

7. Sell or Fill the Property Before you Close

I love this strategy to turn a good deal into a great deal. When you have a buyer or tenant lined up for a property before you even close on it, you are positioned to do very well.

Make sure that your purchase and sale contract includes the right to market the property during the contracted period. You should have it built right in.

Posted in Marketing, Negotiating, Real Estate Investment Financing Strategies | 1 Comment »