The Mindsets of Property Sellers and Their Motivation.
Understanding Sellers And Their Motivation In The Home Buying Process.
Are you a real estate investor or just a buyer looking for home to purchase?
Whether you are a beginner or an experienced investor you know that finding property to purchase and make a profit on can be difficult. It requires skill and knowledge dealing with a variety of sellers and reasons as to what may motivate them to accept your offer or to even negotiate with you. There is no magic formula that fits all sellers, properties, or situations. It is also the same with investors trying to determine what sellers are worth spending time to pursue.
While this article was written towards investors the information is just as valuable for those wishing to purchase an owner occupied property.
We all know that their are a variety of ways to make a profit in real estate depending on our objectives, abilities, resources, and time table.
During my years of trying to locate property I have noticed that the reasons or position a seller may take are varied but fall principally in one of the following scenarios. If you can structure an offer to deal with each one of these scenarios you have an improved chance of purchasing property and making an eventual profit.
I personally think you should make an offer on most property regardless of what sellers tell you as I have learned that most investors do not make offers on property until they believe they are in control or feel they can dominate a seller. This is wrong. In addition sellers often do not really know the price or value of their home. You may get an acceptance.
Here are the most often heard and seen scenarios from sellers that I have observed in my quest to find an investment opportunity.
1. The seller does not really want to sell but the property can be purchased. This seller often says everything is for sale at a certain price but won't mention his price.
2. The seller advertises his property to sell but won't mention price or answer any questions with any substance. The seller does not remember what he paid or know anything about any underlying loans. He could be a professional investor.
3. The dream seller. This seller wants to buy something else and has based his property price based on the price of his dream. This can be good or bad.
4. Sellers want to move and will start looking for a new home as soon as they sell their house. They just started advertising and if it does not sell soon they plan to list the property with a realtor.
5. Sellers have found a new home and made a deposit which they will lose if they do not sell in a short time. The deposit is important to them and most likely will make sacrifices to make a deal. They can not afford two houses and may not qualify for purchase with two mortgages.
6. Seller has a pressing physical problem. They are commuting long distances, have in law problems, house size problems, health problems, divorce, and other similar physical problems. They tell you they will survive but really want to get on with the rest of their lives.
7. Sellers are moving whether or not they sell, they can't afford two payments, and are nervous about managing a property long distance.
8. Sellers have a financial obligation they can't meet. They admit to having a problem, but are or remain hopeful their situation will change. They are willing to make a discount but are not willing to give much of a discount. These sellers are often in foreclosure.
9. Sellers recognize their problem and are willing to give buyers the lion share of the profit to solve their problem(s). They will give deep discounts in their equity to salvage whatever possible and get on with life.
10. Sellers are up against the wall and admit it. They will buy their way out, or turn over any equity for your efforts to make their payments with no promises or guarantees on your part.
If you have read this far you may have noticed that the motivation level generally increases with seller who fall with in the later situations. This is not always true but regardless of the sellers situation looking and listening to the sellers and their situation will be key to providing a solution for them. You will have to determine what is the strongest emotion motivating the seller in their decision making process and make an offer accordingly.
Do not over educate them but leave with specifics of what you will do and when. The sellers tone of voice and facial impressions are important to observe if possible in gaining insight in to what the seller is really thinking.
I hope the above has been of interest and benefit to you the reader. Thanks for reading.