Finding it difficult to acquire your first property or grow your portfolio? Tired of competing with retail buyers and investors in this hot real estate market?
I Have The Secret To Building Your Portfolio—And Building It Fast! Learn not to compete.
In fact? Yes!
Instead, learn to be one problem solver,
In the Midwest regions of the US, off-market real estate represented 24 percent of all transactions, according to 2016 Atom data, and that number is growing every year. What does it mean? There are lots of motivated sellers out there and deals to be had.
Your job is to understand the different types of motivation, figure out how to reach people who are motivated, and figure out how to solve the salesperson’s problem.
3 Types of Salesperson Motivation
Seller motivation generally falls into three buckets:
- Financial Crisis
- emotional distress
- property crisis
When you’re able to find a salesperson whose motivation reaches more than one bucket, you’re more apt to find a great deal. Remember though, it’s not all about finding the deal that screams for you. When you can solve someone’s problem and you become famous for it, deals will find you!
Connected: Creating Your REI Story: How to Be “The One” That Motivated Sellers Choose
Financial Crisis
A salesperson who is going through a financial crisis may experience one of the following events in his life:
- Death
- Divorce
- job loss
- bankruptcy
- rehab gone wrong
And while this is not an exhaustive list, these types of sellers are typically looking to get out of a property to solve a financial problem related to a life event.
Maybe they can’t make the payments on the property. Or the tax bills are piling up and someone is about to buy a house. Or maybe they can no longer afford the repairs and want to move.
This type of seller is likely to be looking for top dollar on the property. They are more likely to seek someone to solve the financial pain caused by the property.
emotional distress
A salesperson who is in emotional distress may have experienced any of the following life events:
- Death
- Divorce
- job transfer
- Seniors Who Need to Downsize
- Investors who ended up with rentals (due to evictions, bad tenants, deferred maintenance, rehab gone wrong, etc.)
Note that life events can happen just as someone is going through a financial crisis. However, the motivation to sell is different,
This means that your approach should be different. This seller may not have to sell for financial reasons, but the property is starting to cause them serious emotional distress.
Last year, I bought a property that another investor was rehabbing. He himself was completing rehab and quickly realized he was in over his head. It is understood; There was a new baby in his house. It was a great thing. We picked it up and used our system to quickly complete the rehab. This way, the investor could move on to another project that was more in his comfort zone and spend time with his new family.
property crisis
A seller who is suffering from asset distress is likely experiencing one of the following problems:
- deferred maintenance
- Property repair (i.e., fire, natural disaster, accident)
- death on property
- property tax is not paid
- property is dated
When a property is in distress, it is generally a safe assumption that the seller is also driven by financial and/or emotional distress. A combo of solutions can help resolve the issues.
Where to Find a Motivated Seller
While you can scour the MLS to find deals, motivated sellers often become so overwhelmed by the life event that put them in their predicament that they don’t know where to begin. So, you have to find them.
You can find motivated sellers in a myriad of places (with the last two being my favorites!):
- Tributes
- Court filings (i.e., divorce, bankruptcy, probate, tax lien, foreclosure)
- lawyers
- property manager
- Senior Manager (yes, it’s a real profession!)
How To Solve The Problems Of Motivated Sellers
Once you find a motivated seller, strike up a conversation with them. find out how they think and feel, and find out how you can solve their needs, see book Finding and Funding Great Deals By anson young For great scripts and hacks.
Here are some of the ways I’ve been successful in solving the needs of the motivated seller:
- highest offer
- cash offer
- large earnest money deposit
- early termination
- long finish
- flexible closing
- say no to repair
- Allow the seller to take back the rent for a period of time
- pay their closing costs
- take care of what they leave behind
- hire a mover for them
Study the matter
Last year, I found myself in a nightmare, Working on my mom’s property 1,000 miles away. I was a motivated salesperson!
In working out my strategy, I had several investors tour the home, and I was very clear on my needs and the property I was offloading:
- Asset Distress: The house was old, poorly maintained, and we found out it had just gone into foreclosure. (Wonder!)
- Financial Crisis: I had to pay upfront costs to manage the property, maintain the property, and sell it (obviously not something I planned for!).
- emotional distress: Other than my mother’s death, all of my parents’ belongings (including my childhood stuff) were packed into the house. I didn’t want anyone to throw everything in the dustbin. Instead I wanted the time to organize an online auction to give the stuff a new home.
After meeting 10 investors in three days, I had seven offers. Out of those seven investors, five lost due to the simple fact that they were not willing to help me resolve my emotional crisis regarding conducting the auction. Of the two remaining proposals, here one wins. (Revisit my “crisis list” above to see how many boxes this offer checks!)
- all cash offer
- Flexible Closing (I had to negotiate the probate system)
- told not to repair
- paid my closing costs
- Allowed for two online auctions and all other items not sold removed and donated
Connected: Game Changer: How to Identify Motivated Customers
conclusion
What I learned from that process was invaluable to my investment strategy.
First, there are myriad places outside of the MLS to find motivated sellers. In this case study, it was the senior move manager who connected me to the investor who brought me the winning proposal. Second, the investor took the time to really understand my motivation for selling and how to really solve my problems.
Third, because she understood my motivation, she could create a win-win for both of us, which made it a no-brainer for her to sell. She was a problem solver, and I guarantee her business is booming because of this skill.
So, I’ll leave you with this: Whose problem are you going to help solve? What do you think about the above advice?
Weigh in with a comment below.
Note by BiggerPockets: These are the views expressed by the author and do not necessarily represent the views of BigPockets.
