Real Estate Investing with Brian Evans Jr.
"Determining a Motivated Seller"
I have often mentioned that many people want to sell, but you need to find the people that need to sell. There’s a huge difference. You will know a motivated seller when you find one. Here are my bolded items for what/who a prospect is:
- Someone who expresses a high level of motivation to sell his/her house.I have explained this in further detail in some of my previous articles, so take a look if you haven’t already!
- Someone who is flexible in how he/she will sell their house. Do they want all cash? Are they willing to accept payments, terms, or anything like that?
- Someone whose asking price is at least $20,000 or 20% less than what the house would appraise for in good condition. So if you're looking for a formulaic approach to this, I would say $20,000 or 20% less than what they think the house would appraise for if we had it appraised.
- Someone who is behind in mortgage payments or about to be would always be a prospect,whether there’s equity in the property or not, because whenever you see behind in payments, a light bulb is going to flash in your head and you're going to be thinking short sale, because that's the only thing you can do on that property 95% of the time. The other 5%, don’t even worry about.
- Someone who has no debt on the property and is willing to let you make payments to them.
All these prospects are someone who is flexible, and who is not going to be a pain in the neck person to work with, etc.
Only do business with people that want to do business with you. You will never be able to make an unmotivated seller motivated, so don’t even try. Don’t try to convince them that you're this big, bad investor and they should sell to you. They don’t want to. They’re not going to change. Gather the facts from the information they’ve told you, and you will determine if it’s a prospect. Your job is to gather the facts and make decisions based on the facts.
What is a Suspect?
A suspect is someone who wants to sell but doesn’t need to sell, or someone who won’t share their mortgage information with you. Again, if you ask for loan information and they won’t tell you, well I would say right then and there they’re most likely a suspect, most likely.
Someone who won’t return phone calls is a suspect. If you call them three times and they’re still not returning phone calls, forget them, move on. You want to get your pipeline with lots of leads coming in. Eventually, you're going to be dealing with a lot of suspects, getting rid of those suspects as quickly as possible by following these ideas and work with the prospects only.
Someone who is uncooperative and over-demanding: “Well, you make me an offer. Why don’t you come look at a house?” “Well, I'll be happy to look at the house, but I need to get some information from you first.” You're going to get some very pushy sellers as well that are going to try to play hardball with you, whether you say you're an investor or not, so you need to gain control. And listen, I don’t have time to put with this, so I'm going to say point blank, “I'll be happy to come look at your house but I need to get some information right now. I need to know some facts. I need to understand the numbers before I do anything with your house. The last thing I want to do is spend an hour out of my day going to look at it, and wasting your time and mine and turns out it’s not going to work.”
Lastly, is someone who makes you feel uncomfortable when working with him/her. If somebody makes you feel uncomfortable, then just pass. It’s no big deal. It’s okay. You'll know when it’s time to walk away.