According to the U.S. Census, nearly 31 million people moved in 2019. While not all are homeowners, at least one-third of those individuals were buying and selling their homes.
Additionally, the National Association of Realtors states that the main motivation for the people who sold their homes was due to proximity to friends and family (16%), small spacing (13%), and job relocation (11%).
With the number of people constantly moving around, finding a property for sale is the easy part. Identifying properties with motivated sellers is where you want to focus your efforts as a real estate investor in order to find incredible deals.
You're in luck because we are here to help you find truly life-changing real estate opportunities with this guide, Motivated Sellers: How To Find and Negotiate With Them. (Use this menu to jump to your section of choice:)
A motivated seller is a property owner that needs to sell their primary residence, rental property, or another real estate asset quickly with minimal hassle. Typically, motivation arises due to certain circumstances that are linked to financial distress or sudden life events.
Extenuating circumstances often require homeowners to sell their houses fast without spending any time or money preparing the house for sale. Motivated sellers are not usually in a position, financially or otherwise, to make repairs or stage the home in order to obtain top dollar for their property.
The seller may be willing to sell the property below market value in exchange for the speed and convenience that they require. This is where the word “motivated” in “motivated seller” comes from.
Tip: Another way to say “motivated seller” is distressed seller or fire seller!
A seller is likely motivated to sell due to any of the following reasons:
Remember that there could be other personal reasons as to why a seller is motivated, so build rapport, get to know them, and find out why they are selling.
Don't assume you know why an owner is selling!
Motivated sellers have a strong desire to sell their property because they have a dilemma they’d like to resolve. As a real estate investor, the action of purchasing the property is what many motivated sellers need to help them out of their difficult situations.
A savvy home buyer will need to figure out the exact motivation in order to craft the perfect offer. An offer that a motivated seller cannot resist is one that would help relieve them of their problems.
Providing the motivated property owner with a creative solution to their dilemma while also providing the investor with a profitable real estate investment opportunity, will result in a win-win scenario.
Unlike traditional buyers and sellers, real estate investors are able to help motivated sellers by offering to purchase the property quickly, in as-is condition, without any repairs, in an all-cash deal.
These investors hope to make a return on their investment by either flipping the house, wholesaling the property, or leasing it out for rental income. The possibilities are endless, but it boils down to the creativity and skills of the investor to engineer the best solution.
Experienced real estate investors are able to structure creative deals that align with sellers' goals. This is something that the majority of retail buyers are not willing or able to do.
Consider the following terms to offer a motivated seller:
Motivated seller leads are data about property owners who are more likely to sell due to one or more factors. Real estate investors seek out motivated seller leads to focus their marketing efforts on, instead of contacting every property owner in their desired location.
Motivated seller leads can come in the form of:
There are ways of finding motivated seller leads on your own without having to spend any money and there are companies that generate lead lists for investors to purchase.
There is a very simple explanation as to why real estate investors like motivated seller leads.
When sellers have a high level of motivation, they don't have the luxury of time to find and negotiate the best deal for themselves. The process to liquidate the property will be faster than most, and thus, the selling price of the house may be lower than what they could get by spending more time and money selling it.
Unmotivated sellers are not in a rush to sell their property fast. With those kinds of sellers, real estate investors will have a harder time agreeing to a deal, although it's still possible.
Time is an important factor in real estate investing when it comes to buying and selling. Motivated sellers would like to solve their problems in the shortest amount of time possible, and real estate investors are uniquely positioned to work on the seller's timeline.
While most buyers in the real estate market are looking for move-in ready homes, real estate investors specifically look for homes that need work in order to sell to a traditional buyer.
Thus, the competition for houses that must sell quickly is thinned out due to a smaller percentage of capable and willing buyers.
The less time a seller has, the more likely it is for a professional real estate investor to close the real estate deal and move on to another.
There are two types of strategies to find leads:
An inbound lead generation strategy is where you use marketing tactics to attract sellers and have the leads come to you.
Below are the different inbound lead generation strategies to attract motivated sellers:
An outbound lead generation strategy is where you are the one trying to find and actively seek sellers out. This is often referred to as prospecting. Examples of outbound lead strategies include:
There are only four steps to getting motivated seller leads. Follow this step by step guide closely to obtain motivated seller leads in no time.
The first thing to do when looking for motivated seller leads is deciding on which zip codes you would like to purchase properties in. The kind of factors you'll want to consider when picking a targeted area are:
After pinpointing a targeted neighborhood, the next thing to do is find distressed properties.
There are numerous ways to go about this so decide which strategies work best for you.
To obtain more motivated seller leads, use the internet. There are many online methods that we will discuss later on and the best thing about them is they are mostly free to use. Some of them are ListSource, MLS, Zillow, Facebook, and Craigslist to name a few.
Skip trace the leads to find the owners' contact information. If you bought a list of motivated seller leads, the information might be already provided to you.
There are many free skip tracing services available for you to track down motivated sellers. You could use:
Read Also: Skip Tracing: The (ULTIMATE) Guide For Investors!
After spending a lot of time helping distressed property owners over the years, you'll learn a thing or two about negotiating with them. Here are 3 tips on how to negotiate with motivated sellers:
To get the conversation flowing and your understanding of the situation dialed in, asking the right questions is crucial to your success.
Ask the homeowner questions like:
As real estate investors, understanding what motivated sellers want is key to landing the deal. If you know the reason as to why they are motivated, then you can figure out what their goals and plans are for the future.
Provide a deal that will help the motivated seller be relieved of their problems as well as one that would help them get closer towards reaching their goals.
Listen when they are speaking and be respectful. These simple manners can make a motivated seller gain trust in you and this will help build rapport. The way you carry yourself around sellers is going to help them determine whether or not they would like to give you an easy or hard time in purchasing their property.
Having positive personal qualities and showing that you are willing to do everything according to their desires can make a motivated seller be more inclined to offer favorable terms.
Take the time to step in the seller's shoes and craft a deal that is beneficial to all sides. How long does the seller need to close? Do they need a rentback or a leaseback after closing?
Is your seller in financial distress and need the cash now? Offer them an all-cash deal.
What you have done is provided speed and a sense of certainty for the seller in exchange for a lower price. This is one of the many ways investors negotiate great deals -- by omitting traditional contract contingencies, such as appraisal, financing, and property inspections.
Another bonus you can mention to sellers is they do not have to pay real estate commissions when selling directly to an investor off-market. These commissions usually add up to 5-7% of the final sales price!
Remind the seller that they won't need to list the property, show the house to strangers, hold open houses, advertise their home to the public, pay for home staging, or do any repairs.
When it comes to making the seller an irresistible offer, you must familiarize yourself with all the components of a real estate purchase agreement. These include:
Based on your assessment of the facts at hand, you'll be able to provide an acceptable solution for the seller and take the property off their hands.
Remember, if you can't agree with the seller on price, stick to your numbers but provide all of the terms favorable to the seller. If the seller does not budge, don't be afraid to walk away.
There are always more deals to be pursued!
Real Estate Skills Tip: Sometimes the best deal you can do is the one you walk away from.
In today’s day in age, you can find almost any information needed with just a few taps on a smart device. Compared to about twenty years ago, finding real estate leads has never been made easier due to the technological advancements of today.
Even the National Association of Realtors (NAR) states that “Social media was the tool cited as the best source for generating high-quality leads among REALTORS®, followed by Multiple listing service (MLS) websites.”
Below are different ways you can find motivated sellers through online platforms:
We will be going more in-depth in the next section on finding motivated sellers through Zillow, Craigslist, and Facebook as many have found success using these methods.
Related: Interested in learning more about the MLS? Register to Attend our Free Training To Learn How To Wholesale and Flip Houses From the MLS, Step-By-Step!
Zillow is a great real estate marketplace to help identify how long a house has been on the market. The more days a property has been on the market, the more motivated the seller would be in offering to sell the property.
To find properties that have been on the market for some time, use the filter search bar labeled “More”, scroll to the bottom where it says “Days On Zillow”, and then click “36 Months”.
After you have updated the filter search bar, skip the first page and go to the second.
The first page of your search results will show houses that have recently been put on the market, which is not always what you’re looking for.
The top left corner of each property will show how many days it has been on Zillow. From there, you can take an educated guess and determine if the seller is motivated or not.
Remember, the longer it has been on the market, the more likely the seller is motivated.
Also, look at property listings that have recently reduced the price. Price reductions often indicate that the seller is motivated to make a deal.
There are three primary ways to find motivated sellers through Facebook:
If you’re willing to spend money to attract motivated sellers, you can create an ad on Facebook. Facebook advertising works as long as you choose the right audience to market towards.
Online advertising on Facebook can be highly effective because you get to manage which demographics would see the ad. Know what kind of people live within the targeted neighborhood you choose and start creating an ad that is geared specifically towards them.
Think of posting an ad like handing out business cards. Have your contact info on there and make the ad look aesthetically pleasing.
The truth is, Facebook ads can be an expensive and difficult endeavor if you have no prior experience or coaching. Many businesses fail or shy away from running ads simply because it's a skill to master on its own.
For an in-depth breakdown of how to create effective Facebook ads, check out this video:
Joining Facebook groups is another way to get in contact with motivated sellers. You can post in the group and let people know, for example, that you are a real estate investor looking to buy houses for cash.
There are hundreds of home buying/selling Facebook groups you can join and best of all, it’s free!
Finally, Facebook Marketplace is a free listing service that anyone with a Facebook account can participate in. Although it's not the most sophisticated place to buy and sell real estate, motivated sellers list their homes for sale by owner on Facebook Marketplace. It's free to browse listings in your area and it never hurts to make an offer!
Some homeowners prefer to put up their property on Craigslist because it’s an affordable way to market their homes. They may prefer not to have real estate agents involved in the process of selling their homes.
One way to use Craigslist is by posting ads that let motivated sellers know you are a cash buyer. Placing an ad on Craigslist with your contact information would allow property owners to reach out to you instead of you having to reach out to them.
The other way to use Craigslist is by going through posts that homeowners place themselves. A good tip when looking at for sale listings on Craigslist is to confirm who the owner is and who has the right to sell the property. There may be multiple people involved in the decision to sell, such as when a property is inherited by multiple heirs.
Since Craigslist is an online platform available for anyone to use, some real estate wholesalers also post ads to sell properties.
Sometimes it’s hard to figure out if the post was placed by a motivated seller or a wholesaler due to the limited amount of information in the description of the post. What you will have to do is reach out to the original poster to learn more.
Make sure to look for property owners who have listed their property for rent as well. Since the property is vacant, the owner might become a motivated seller to avoid the hassle of turnovers since that process can be a headache.
Check out this short video with more tips on how to find free motivated seller leads on Craigslist:
The platform you use to find your list of motivated sellers will determine how you will get in contact with them.
For example, if you found your list of motivated sellers through Facebook, you can easily message the homeowner and start a conversation with them there. On Zillow and Craigslist, there is a button within the listing that allows you to contact the seller.
Without the owner's contact information, you can start by skip tracing the information you do have to find public records of motivated sellers’ phone numbers or current place of residence.
With that information, you could use the following strategies to communicate with motivated sellers:
The response rate ultimately depends on how much effort you put in to get in contact with them and how many times you reach out.
The best way to prepare before calling motivated sellers is to have a script ready. A script will give the motivated seller a better first impression during the phone call because it shows that you are confident and experienced in your line of work. This will help build trust with the seller.
Every conversation with a motivated seller will be different, but here is a template you can use to start your motivated seller script:
“Hello, my name is [name] and I am a real estate investor. How has your day been?”
[Wait for response]
“I am currently looking to buy properties for cash and I found through [platform] that you would like to sell your property, [address]. Is this correct?”
[Continue if the response is “yes”]
“That’s wonderful to hear! Could I ask you a couple of questions regarding the property and potentially make you an offer?”
[Continue if the response is “yes”]
Once you get in contact with a motivated seller, there are critical questions you need to ask to determine whether or not the property is a good investment for you. The following are questions you should ask when speaking with the motivated seller:
There are many advantages to finding motivated seller leads. Looking for motivated sellers costs little to no money and real estate investors can obtain great deals that other buyers don't have access to.
Additionally, since motivated sellers would like to sell their property as soon as possible, they don’t have the time to consult with a real estate agent who could convince them to list the property. This means there is low competition for investors because they can often be the first ones to the punch.
Investors can close a deal in less than 30 days and offer cash immediately to the seller. When it comes to real estate investors, an appraisal or property inspection does not have to occur making it an attractive proposition for the seller.
To a motivated seller, selling the property is equivalent to getting rid of their problems. With that in mind, they are more willing to entertain lowball offers that benefit you as a real estate investor. This results in a deal for the buyer and a timely solution for the seller
Motivated sellers should always be a focus when looking for real estate leads. The chances of striking a deal that benefits both the real estate investor and seller are very high when compared to non-motivated sellers.
The methods to find motivated sellers are endless and there will always be homeowners looking for cash buyers to purchase their properties. Investors can be the "knight in shining armor" because they have a solution to a problem that the seller would like to be relieved from.
Take advantage of what the real estate market has to offer for you and never miss out on 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 properly diagnose the situation and present them with an offer they can't refuse.
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