Motivated Seller or Waste of Your TIME? Tips on how to qualify a seller…

All investors need practice talking to people and negotiating when we first start out in this business. Time is money in business so don’t waste your time on the phone, in person or making offers to sellers who aren’t motivated. Save time by learning how to read sellers quickly and if it isn’t going to work, move on to the next potential deal.

When talking to sellers take it slow and don’t be over eager. It is important that you ask specific questions to learn if they are motivated or if this is a waste of time for you.

To qualify sellers find out quickly if you are dealing with a motivated seller who is open to a creative offer. Motivated sellers are few and far between and making a creative offer to someone that isn’t motivated will frustrate and waste both yours and the seller’s time.

There are two major ways to make money as an investor-get a good price or good terms. Buying a house at a low price allows you to sell a house quickly for profit. Good terms means that you get to control the property without putting much money up front and you make your profit after the property value goes up. It can be difficult to get a good price. It is typically easier to find a motivated seller that is open to terms. The seller is happy because they get what they want even if they have to wait a few years for their money. Every job is easier if you feel like you are helping others and allowing them to be happy.

Back to the beginning-when talking to a seller the first question to ask is: Do you need all of the equity out of your home in order to purchase another home? If so, they need to sell to a traditional buyer and this deal would be a waste of your time. Thank them for their time, wish them luck and move on to the next potential deal.

If the seller answers no, then continue with your phone call. The next question to be answered is are they willing to look at a creative offer. One way of doing this is to inform the seller that you invest in a number of ways and you are trying to decipher which is best for their situation. Let them know that sometimes you lease a home for a year or two then cash the seller out at the end. Ask them point blank-will this work for you? If they answer yes, it’s probably worth a visit. If the seller says no, move on to the next deal.

Once you’ve established that this is a motivated seller the next step is reaching a deal. It’s a good idea to start your negotiations on the phone. In order to get a good deal you need to get a rough idea what the seller is thinking. For example, I’m not sure that I could offer you this exact deal; obviously I’ll need to see the house. But if I were to offer you rent of (__) and a price of (__) in 2 years. Would that work for you? If not, what did you have in mind?

Hopefully you can negotiate in person with the seller and be able to get your price down a bit from the numbers mentioned on the phone. Of course if the seller seems unwilling to budge or negotiate move on to the next deal.