As a real estate wholesaler, finding motivated seller leads will provide a constant flow of great real estate deals for you. Identifying real estate motivated sellers who have have great deals is one of the most important parts of real estate investing.
This involves pre-screening them.
Pre-screening a real estate motivated seller involves identifying sellers with good real estate deals and weeding out deals that cannot make you money. You do this by asking pointed questions that establish the potential profit you can make if you buy their property.
To negotiate with motivated sellers, you must establish:
- What’s the after repair market value of the house in its perfect condition? Talk to the seller, run your own comps, but do establish the true value.
- What’s the mortgage balance including any junior mortgages and liens?
- Is the property in foreclosure? In Texas, there is usually not enough time to stop foreclosure. As a result, it’s impossible to wholesale such properties.
- What will it cost to do all the repairs needed?
- How much are they asking for it? What is the lowest they can go?
- Is the property vacant?
Once you have this information, you can tell if it’s a good deal or not. A good deal must leave enough room for you to make a profit.
Also, some motivated sellers have houses with no room to make a profit. Pre-screening weeds out time wasters without turning away good deals.
When talking to motivated sellers, follow the following 5 rules:
1) Don’t Waste Your Time
When talking to real estate motivated sellers, lead the conversations to answer the 6 questions above. This way, they won’t talk for hours about their beautiful house, updates they have done, nice neighborhood, and so on.
None of this information is of any value to you unless you can buy their house at a price that makes you a profit.
2) Follow A Script When Talking To Motivated Sellers
Follow a script with your pre-screening questions in a normal conversation – instead of a question and answer session.
You can get a super effective script from the free Ebook on how to find motivated sellers.
3) Delegate, Delegate
Include your website URL when you advertise – since some motivated sellers will be pre-screened by your real estate investor website. Here’s how to identify a good REI website.
However some will still prefer to call – I let them leave a voice message.
Then my virtual assistant pre-screens them and enters all the information on my website. So by the time I to talk to them, I have all the numbers and I know if it’s a deal or not.
This way, I avoid wasting my time or the seller’s time with houses I might never buy.
4) Build Rapport With Real Estate Motivated Sellers
Don’t represent yourself as Mr. Big Corporate House Buying Company.
You’re just a regular guy that wants to buy their house as an investment property. And their house seems to meet your needs.
Build rapport with them as you talk. Don’t try to be Mr. Big Stuff.
It never works….
5) Listen, Listen, and Listen
Listen – and since you are leading the conversation without sounding like you are “reading a script”, learn how they got into the predicament, what repairs are needed, etc.
They’ll tell you all you need to know to determine their level of motivation, asking price, equity and repairs.
How To Negotiate With Motivated Sellers
Always negotiate lower even though the asking price looks good. As a result, you’ll be surprised how much more you can get by simply asking, “Is that the best you can do?”
You can negotiate on the price, appliances, closing costs or even furniture.
A simple way to negotiate is showing them your costs in the deal. When doing so, I tell them I have to fix it, hold it for a few months as I try to sell, and eventually sell it at a discount. And if the market is low, I’ll probably be unable to sell it at all!
This makes the relax when they understand these facts. Even though they need to sell, motivated sellers don’t like to feel like they are being taken advantage of.
Example:
Let’s say a motivated seller wants $65,000 on a $100,000 house that needs repairs. I’ll then ask:
“If I can buy your house all cash and close quickly, what is the least you can take for it?”
“$65,000 dollars?? Hmm”
Then I can pause for as long as 1 minute. This works like magic.
And they will probably talk their way down.
Then I’ll ask “is that the best you can do?”
Again, I will then listen as they talk their way down.
Then I’ll go see the house, then make my offer. If their asking price is still too high for me, I’ll make a lower offer, while still looking out for the needs of the seller.
Most of these offers will get accepted.
As long as treat them nice, with respect and sensitivity, they’ll sell you their house!
How To Handle Listed Houses
Sometimes motivated sellers try to sell their houses with a real estate agent, and the listings expire.
As a wholesale real estate investor, don’t make your offers through a Realtor. You can never wholesale such properties.
Explain to the seller that you can buy their house, but due to real estate commissions, your offer cannot work for them.
Ask them to call you when the listing expires. Usually they’ll ask their Realtor to cancel the listing.
Then you can make your offer as a wholesaler.
How To Handle Objections From Motivated Sellers
Sometimes you find a motivated seller who just needs reassurance that you are genuine.
For example, they may feel uncomfortable discussing the mortgage balance and how many payments they are behind on.
First of all, I only get to talk with motivated sellers who have already been pre-screened (by my website, or virtual assistant), and the numbers make sense to me.
Secondly, some motivated need re-assurance that you’re not playing them. They can ask you “why do you need to know my mortgage balance?”.
Your reply should be something like:
“In order for me to able to evaluate the deal and make a fair offer that makes sense both to you and me and pay off the outstanding mortgage when I buy it, I must know everything that is owed on it.”
Then shut up… say nothing!
They’ll provide the information.
How To Establish Repairs
Don’t be surprised that their repair estimate is always on the lower side.
At the very least, always assume you will need to do paint, carpet, bathrooms and kitchen.
Your conversation should go something like this:
- “How long have you lived in the house?”
- “Have you done any remodeling on it?”
- “So what repairs does the house need?”
When you take your conversation like this, you are likely to get more accurate answers that you can rely on.
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