When most people sell their home, they put it on the market and wait to find the right
buyer. They spend about a month looking for the buyer, then another month to close.
That’s the normal pace of business, and most sellers aren’t in a rush.
But there are situations where people are desperate to get their property off their hands.
They need to close, and they need to close NOW. Those are what we call “motivated
sellers”. When it comes to getting the best deals on the market, it boils down to finding
and working with one of those sellers.
For example, I bought a house for $1,000 from a motivated seller. Nobody had lived in
his property for years, it was in pretty bad shape, and the city was going to tear it down –
charging him $23,000 for the honor. He was desperate to get the property off of his
hands, so I ended up getting an INSANE deal.
It takes a bit of work to find them, but motivated sellers are out there. They are the
people you want to work with if you want the best deals.
Why Is It Important to Find Motivated Sellers? Why Can’t I Use the MLS?
When most people are starting out in real estate investment, their first instinct is to look
for properties on the MLS. But if you’re looking for the best deal, it’s not the way to go.
Deals are rare, and I can guarantee you that you’ll NEVER be able to buy a house for
$1,000 on the MLS.
We all want to live in Class A houses, and when you’re first starting out, you probably
don’t have the money for those. If you want to make the money you need to be able to
afford Class A houses, you shouldn’t be investing in them, anyway. The real money is in
Class C and D houses.
With Class C and D homes, you will find that sellers are much more motivated to sell
than sellers at a higher price point. You can easily get a $100,000 house for $40,000 or
$50,000. But getting a million-dollar home at $750,000? Not so easy. You’re just not
going to get those 40 or 50% discounts on Class A homes.
Let’s imagine that we were talking about stocks. Would you rather buy Apple stock at
$400 and hope it would go up? Or buy the stock at a 50% discount? Saving that 50% up
front and taking the discount is always the better choice.
Not only are C and D houses more affordable and do they offer better deals, because
they’re in working-class neighborhoods, they’re MUCH easier to rent. It will be
significantly easier to have 13 small homes in working-class neighborhoods you rent out
for $1,000 a month than it would be to have a one-million dollar home you’re trying to
rent out for $13,000.
The 4 Types of Motivated Sellers
So now that you know why you should look for a motivated seller to get the best deal,
what kind of sellers should you be looking for?
It’s sad to say, but people who are going through a divorce are usually VERY motivated
to sell quickly. When you divorce in the state of Tennessee, you either need to liquidate
your assets, or one person has to buy the other out. Most people don’t have that kind of
cash lying around, so they’re forced to liquidate, which usually means they’re willing to
make a deal to get the property off their hands.
When someone gets an inheritance in the form of property, typically they don’t want to
deal with the upkeep of the property or taking the reigns of the family business. They just
want to walk away with a nice check.
If someone’s dealing with a huge debt, like a tax bill or a bond, they need cash FAST.
They’ll be willing to negotiate and give you a deal on the property, so they can settle
their debt and move on with their lives.
Recent Job Loss
When someone loses their job and their main source of income, they often find
themselves drowning in bills. Since they can’t afford to keep their home, they’re willing to
give a good deal so they can get the cash they need to keep their head above water.
If you want to score the best deal, you need to work with sellers who are motivated to
get their property off their hands as quickly as possible. Seeking out motivated sellers is
the key to getting amazing deals and turning huge profits on your real estate buys.