As investors, we are constantly reminded of the importance of finding motivated sellers in real estate to work with. While true, it is only half of the battle. It is not enough to simply find motivated sellers; you need to know how to work with them. For many investors, there is a difference between an interested seller and a motivated one. A motivated seller is one whose clock is ticking, and they are forced to act in a relatively short time-frame. An interested seller will sell if the situation is right, but doesn’t illicit the same sense of urgency. If you have a truly motivated seller, you have to be able to convert. Here are some tips for working with motivated sellers and closing more deals:
1. Find motivation: Your primary goal when meeting with any homeowner is to discover their motivation. By the time your leaving their property, you should have a good idea of whether or not they are really serious about selling. Not only will this help you close the deal, but it will save you weeks, and hours of work. Dealing with a homeowner who constantly goes back and forth with what they want to do is frustrating and time consuming. If you don’t know what their motivation is, you will make trips to the house and spend time on the phone without getting anywhere. Everything you do in your initial meeting should be geared at gauging how serious they are about moving forward. Motivation will mean different things to different sellers, but once you discover what it is, use it throughout the rest of the process.
2. Build a relationship: Motivated sellers have many more options than you may consider. If you think you are the only game in town, you will end up losing the deal. Instead of jumping right into business, you need to take some time to build a relationship. Regardless of motivation, sellers are much more apt to working with people they feel comfortable with. Build comfort by making a genuine attempt to get to know them and what they want out of the transaction. Don’t be afraid to talk about topics not related to real estate. If you see a chance to make a joke or use your sense of humor, do so as long as it is appropriate. The more comfortable the seller is and the more they like your personality, the better chance they will want to work with you. There are many other investors in your local area. Don’t give them the chance to look elsewhere.
3. Ask questions and listen: Whenever you sit down with a potential seller, you need to ask plenty of questions. Nobody wants to hear how much business you closed or how experienced you are. Every seller has their own agenda for what they want out of the deal. They will often tell you if you ask questions and actually listen to the answers. When you are sitting down with the homeowner, you have their attention and interest. Don’t be afraid to ask direct questions. What do they think their house is worth? How much would they be willing to sell for if you made an offer in two days? How quickly do you want to be out of the house? There are dozens of questions that you can ask a seller. The key is to do this without sounding like you are reading from a script. You should have a list of items you want answered, but spread them out and listen to the answers. You can and should take notes with every answer that is given. These responses will directly tell you what kind of deal you have.
4. Make the right offer: After you have compiled the data, seen the property and run the numbers, the next step is to make an offer. This is an area where most deals are gained, or lost. There are many different approaches to take when making an offer, but the rule of thumb is to make an offer you are comfortable with. Your initial offer may not be the starting point of negotiation if it is too low. Whatever the number is, you need to be able to support it. You can do this not only from comparable sales and recent listings, but by supplying work estimates and costs of repairs. You need to show the seller that you are offering a fair price and taking a risk on the property. The more data you have, the stronger your offer is. They may not like the numbers and try to fight them, but they will have no argument if the support is on your side.
5. Follow up: Very few, if any, offers will be accepted as soon as they are submitted. In most cases, you will need to follow up for days, if not weeks. It is important not to get frustrated if they don’t respond to you right away. They are often going through a difficult period and need some time to weigh their options. Forcing to get the deal signed doesn’t do you much good if they don’t close. Give them time to think about things, but also try to get answers from the dates you impose. Keep the deal moving forward and insist they get back to you in a short period of time.
There is no such thing as an easy deal. Even motivated sellers need to go through a process. By following these steps, you are more likely to convert leads into actual deals.