If you want to learn How To Purchase Real Estate, make sure you know the 10 most common types of motivated sellers.
While buying a property can happen quick, it is also perhaps the most important part of the house flipping process. If you wish to make a profit at the end of your project, you need to buy the right house.
What most real estate investing experts will tell you is to find a motivated seller. Easy enough, right?
But what is a motivated seller?
In essence, a motivated seller is a person who wants to sell his or her home as quickly as possible, and is less concerned on getting the full value of the property. For this reason, you as a buyer might be able to get a great deal on a property through these people.
The 10 Most Common Motivated Sellers
To put this strategy into action, you need to know the types of people you should be looking for.
Sometimes, a landlord might not be making as much money as he wants to on a particular property and wants to sell. He might do this because the house is continuously depreciating in value, or because maintenance is exceeding the amount of money he is making each month from rent.
Unlike standard personal-owned properties, lease agreements allow the landlord to evict the tenant at the end of their term, making for a much quicker process. This fact is even more of a factor when the lease agreement is monthly or at-will.
If youâ€™re thinking of purchasing a cheap property, this might be the right route.
After an individual dies, the personâ€™s assets can be passed down to his or her heirs through the will. One of the main assets is usually the home of the deceased.
The heir or heirs often do not want the property and choose to sell it. Since no one will be living in the home, they are only losing money on it the longer they hold on because of insurance and taxes, and they will want to sell it as soon as possible.
If done through probate court, and the heir does not want to property, the court will assign a representative to sell the home. The representative will usually be willing to negotiate down considerably on the price of the property.
3. Homeowners Under Threat Of Foreclosure
You might find the deal you are looking for in a pre-foreclosure, or short sale. A short sale is when a homeowner cannot pay their mortgage and is very close to being foreclosed on by the bank.
In order to save their credit, the homeowner will sell the home if the bank agrees to forgive the remaining mortgage owed.
The homeowner will be extremely eager to sell the property to avoid foreclosure. Because of this, short sales can be one of the best ways to get a great deal on a property.
4. Banks In Possession Of REOs
When a house is foreclosed upon, it typically becomes eligible for sale at a foreclosure auction. However, if it does not sell at the auction, the lender (usually a bank) keeps possession of the property.
While holding onto the home, the lender is losing money fast. Additionally, the property is always under threat of vandalism, since no one will be responsible for watching it. The lender wants the property off of their hands as quickly as possible and is usually willing to negotiate down past the starting price at the auction considerably.
5. People Who Are Transferring Jobs
With the economy as bad as it is, jobs can be hard to come by. Sometimes, if a person is offered a job in another town or state, he or she will have to quickly sell their house so they can move to a new area before their job begins.
The homeowner wonâ€™t have time to haggle or sit on the house until he finds the right buyer. Instead, heâ€™ll want to get the sale over and done with so he can move on to his new life.
Additionally, if the person has already moved, it might be harder for him to meet in person and to be available in any way during the sale.
While these people might be hard to come by, if you do find one, make sure you take advantage of the opportunity.
6. A Person With A Recent Job Loss
When people lose their jobs unexpectedly, there are two things that usually can happen: they can pick up a lower income job as a temporary substitute, or they can wait until they find a comparable job to their old one.
In both cases, the person obviously wonâ€™t be making as much money as they previously did. Because of this, they might not be able to afford the mortgage or property taxes on the home they are living in.
Often times, what happens is the person must sell their house and purchase a less expensive one. Theyâ€™ll want to sell the home fast, and are probably willing to negotiate down considerably.
7. A Couple Facing Divorce Or Separation
Divorce can be an ugly, nasty process. Much of the time youâ€™ll find one partner and their lawyer battling against the other partner and their lawyer over dividing the different assets. The biggest of these assets is almost always the house.
Often times, the person who is rewarded the house will try to sell the house quickly before their significant other tries to renegotiate the assets.
In other instances, they will sell the house together and each party will receive half of the profit. When this happens, the couple might be disorganized and have little communication with one another.
In both cases, they will want to sell the house and get the process over with, and theyâ€™ll take whatever amount of money they can get.
8. A Family That Is Expecting A Baby
A pregnancy in a family can often mean one thing: time to move out of our little home and upgrade to something bigger. The clock is ticking, too. No more than nine months until a new member is added to the family and the parents need to find a house to raise him or her in before the time runs out.
During this time, the parents will be busy reading baby books, going to doctorâ€™s appointments, and trying not to have a heart attack. Because of all this commotion, selling their old house often becomes peripheral. It just simply isnâ€™t as important in the grand scheme of things.
If you find a situation like this, make sure you take advantage of the opportunity and try to buy the property for well under market value.
9. Seller Of A Differed Maintenance Property
Sometimes, when strapped for cash, homeowners will neglect their home maintenance in order to save money so that they can pay their mortgage, or other financial obligations.
When they do this, they essentially make their home into an unappealing property for future buyers. When they decide they want to sell, theyâ€™ll find that most personal buyers wonâ€™t want to buy the home, especially for the price it is listed at.
As a house flipper, however, it is your job to renovate and improve. And since you are probably one of a few, or even the sole person interested in the property, you can force the seller to cater to your demands.
10. Seller Of An Old Property That Needs Updating
Similar to differed maintenance is and old property. Both are particularly undesirable to most home buyers, leaving the seller with a problem. Make the seller feel as if you are his or her only way out, and give them an offer.
If you find an old property like this with good bones, you might think of purchasing it. Just be careful to make sure theyâ€™re arenâ€™t any permanent structural damages. Always have an inspector check out homes like these before purchasing, or else you might be stuck with some major problems.
How can we help you find motivated sellers in your area? Let us know by posting in the forum.