Motivated Sellers: How to Find and Talk with Them
In 2019, 31 million people moved according to the U.S. Census. While not all are homeowners, at least one in three of those individuals were buying and selling their homes. With the number of people moving is consistently rising, finding a property is the easy part. Determining properties with motivated sellers is where you should focus your efforts as a real estate investor in order to find amazing deals.
What Is A "Motivated Seller"?
A motivated seller is a property owner who needs to sell their home, rental property, or other real estate fast with minimal hassle. Usually, their motivation occurs due to certain circumstances like financial issues or sudden life events.
Certain circumstances often require homeowners to sell their homes fast without spending the necessary time and money needed to prepare the house for sale. Motivated sellers are not usually in a position to make repairs, stage a home or get top dollar on their property. The seller might be willing to sell the property below market value in exchange for the convenience and speed they need.
What Makes A Seller Motivated
A seller is motivated likely to sell due to one or more of the following reasons:
Foreclosure
Divorce
Vacant Houses
Code Violations
Financial Distress
Inheritance of Real Estate
Job Relocation
Job Termination
Distressed Property
There could be other personal reasons why a person is motivated to sell. It is important to build rapport, get to know them and find out why they are selling. Never assume you know why they are selling!
Motivated Seller Leads
Motivated Seller leads is a compilation of data about property owners who are more likely to sell due to one or more circumstances. Real estate investors seek out these seller leads to focus their marketing efforts on, instead of contacting every property owner in their market.
Motivated seller leads can come in the form of:
A list of property owner first and last name
Tax mailing address of the property owner
Phone numbers
Email addresses
Addresses of distressed properties
Loan numbers
There are ways of finding seller leads on your own without having to spend any money and there are companies that generate lead lists for investors to purchase.
How To Get Motivated Seller Leads in 4 Steps
There are four steps to getting motivated seller leads. The following guide will help you find these leads in no time.
1. Choose A Location
The first thing you should do when looking for motivated sellers is decide which zip codes you would like to purchase properties in. The kind of factors you will want to consider when picking an area are:
Employment Opportunities Nearby
Crime Statistics
School Ratings
Proximity to Stores and Freeways
2. Find Distressed Properties
After you have decided you buying location, you need to find distressed properties. You have probably heard the term "driving for dollars", but you can also look up pre-foreclosures, notice of defaults, or go to a courthouse and find tax delinquent lists and probate leads.
3. Use Online Tools
To get more motivated seller leads, you can use the internet. There are many methods that are completely free! Some of them are MLS, Facebook, and Craigslist.
4. Skip Trace
Next, you will want to skip trace the leads to find the owners' contact information. If you bought a list of motivated seller leads, you can run them through a skip tracing service to append the data.
If you don't have the owners' contact information to start a skip trace, you can find it in public records which provide first and last name and usually phone numbers and email addresses. Compile a list of these sellers and then take them to a skip tracing company. With this information, you could use the following tactics to communicate with sellers:
Cold Calling
Email
Postcards
Door Knocking
Text Messaging
Direct Messaging
Direct Mail
The response rate depends on how much effort you put in to get in contact with them, the method in which you choose, and the amount of times you reach out.
How To Talk With Motivated Sellers
After you spent the time looking for properties and contacting them, the most important part of the process is how to talk to the motivated sellers. Here are some tips:
1. Ask Questions
2. Try To Understand What They Want
3. Know Your Options
Ask Questions
In order to get the conversation flowing, you need to be able to ask the right questions. Ask the seller questions like:
When do you need to sell by?
When did you buy the home?
Why are you selling?
What do you owe on the property?
What would you take if I paid all cash for the property?
If I were to give you an offer today, what would you take for the property?
As real estate investors, understanding what the seller want is key to landing the deal. If you know why they are motivated, then you can figure out what their plans and goals are.
Try To Understand What They Want
It might sound obvious, but listen to what they are saying and be respectful. These simple action items can help the seller trust you and it will build rapport. The way you carry yourself is going to help them decide whether or not they would like to work with you. Be sure to have a positive attitude and show that you are willing to everything according to their desires will make a seller be more inclined to offer favorable terms.
Take the time to put yourself in the seller's shoes and make a deal that is beneficial to both sides. How long does the seller need to close? Do they need rentback or leaseback after closing?
You can also mention to sellers that they do not have to pay real estate commissions when selling directly to an investor off-market. These commissions can add up to 5-7% on top of the final sale price!
Know Your Options
When it comes to making the seller an offer, you have to familiarize yourself with all the components of a real estate purchase agreement. These can include:
Purchase Price
Earnest Money Deposit
Down Payment
Closing Costs
Close of Escrow Date
Title Company
Based on your assessment, you will be able to provide an acceptable solution for the seller and take the property off their hands. Remember, if you can't come to an agreeable price, stick to your numbers and provide all of the terms favorable to the seller. If they do not budge, don't be afraid to walk away.
Conclusion
Motivated sellers should always be a focus when looking for real estate leads. The chances of landing a deal that is beneficial to all parties are high when compared to non-motivated sellers. Take advantage of what the market has to offer for you and don't miss an opportunity that can help accelerate your path to investment success.
Motivated sellers are easy to attract because they already have a need of selling their property fast. All you need to do is learn the skills to diagnose the situation and present them with an offer they can't refuse.