One of the most challenging aspects of working in real estate is making the most of your time. Regardless if you are a veteran or a rookie working on your first deal, your goal should be to focus only on tasks that will lead to deals. Many investors don’t make it past the first year in the business because of the high frustration level in working with sellers who never close. Instead of working on deals that will make money, they are bogged down for months on deals that end up going nowhere. The best way to avoid this is to concentrate only on sellers that are truly motivated. To do this you need to ask the right questions.
It can be easy to fool yourself into thinking you hit the jackpot on a deal or a specific property. You can move the process along without talking about numbers or specifics all the way to the closing, but eventually they will come up. When they do, you will be left wondering what happened. Instead of getting to that point, take the extra time at the beginning of the deal to find out exactly why someone wants to sell. This sounds easy enough, but it is rarely done.
If you start by asking your seller why they want to sell, their answer will be the basis for the rest of the process. The why will lead you to come up with an offer price which will lead to the when. It is important that you don’t just ask the question but you really listen to the answer as well. The more you know about your seller, their motivations and their goals for selling it will give you greater insight if they really want to sell. If they are just kicking the tires on the market they may not be truly ready to sell when the time comes. If they are six months late and can no longer afford the property you have your motivation, but you may not have their expectations for the transaction.
Many investors make the mistake in thinking that just because someone has to sell and possibly needs to sell that they will follow through with the transaction. The most difficult part for many sellers is not the separation with their current property but transitioning to a new one. If they have kids they probably want to finish out the school year. Regardless of their situation they will need to find a new place to live that they can afford. This will impact their time-frame and subsequently the bottom line. All of this information should be derived in the first few meetings you have with the seller. If you feel that the seller really doesn’t want to sell or will not sell for several months you should adjust accordingly. This may mean not putting as big a focus on the property or not dedicating your time and possibly money in the property. The quicker you know this information the better equipped you will be in making this decision.
Asking the right questions from the start of the process will save you time and allow you to allocate your workload better. If you are not listening to your seller, you will end up frustrated and wondering where all your time went.