How do you know you’ve got a motivated seller lead? Let’s take a look at the steps you should take to qualify your motivated seller leads to quickly reach a contract.
Okay. So you’ve found a potential off-market property seller and now you need to know if they are a motivated seller. In this article we will break down what a motivated seller is, what types of motivations they might have to sell, and why hearing “No” is actually a good thing!
What Is A Motivated Seller?
A motivated seller is someone who is ready and willing to sell their property as soon as today, even if it means they must take less than market value. A seller could be motivated for a multitude of reasons such as:
- They need to move for a job opportunity
- There is a family emergency such as divorce, or a death
- They can no longer afford to live there
- The home was inherited and they don’t want to deal with it
- They bought it as an investment but ran out of money fixing it up
- The home needs a significant renovation
The list goes on. Your job is to find their level of motivation, and the reason for selling. Once you understand why they need to sell, you can appeal to that need.
Step 1. Getting to NO
First, I’d like to talk about why hearing NO is actually a good thing. This step is important to keep in mind as you’re going through the rest of the steps. Real estate is a numbers game, and often we spend a lot of time analyzing deals and trying to get them to work – trying to shove the square peg in a round hole, so to speak. For example: You may have a seller that you’re speaking with. This seller may have a wildly different idea of a reasonable price for their house than you do. They may want to sell it, but they don’t need to sell it. The quicker you can disqualify them the quicker you can move on to the next motivated seller lead. After all, we don’t want to waste their time, or our own, while we could be spending it in better ways. Learning to recognize and accept when a deal is a NO is just as important as the inverse.
Step 2. Build A Rapport With The Seller
Once you have a motivated seller lead, it will be important to build rapport and a good relationship with them. It’s also important to have empathy here, and remember that while the experience for you may be transactional, they are likely to be having an emotional experience. Get to know them on a personal level, hear their story, and connect on a human-level. We’re all just trying to solve our problems, and chances are they are stressed out and in need of someone to treat them with respect and transparency. This will go a long way and stand out for the seller – and truth be told – it’s just good business.
Step 3. Identify Their Motivation
As we talked about above, there are many reasons why a seller could be motivated. Getting to the root motivation will help you identify the right approach to meet their needs. Do they need to move right away or are at risk of losing the house? They will likely need to sell the property quickly. Are they an investor that ran out of money on the rehab? Maybe you could offer to partner with them to finish it saving both of you money in the process.
Talking with the seller, understanding their needs, and finding a solution to them will help you formulate a strategy for the next steps.
Step 4. Qualify The Property
You’ll want to understand a bit about the property itself to see if it makes sense to set up a viewing appointment. This will involve getting an idea on the condition, mortgage information, occupancy, and if possible a ballpark asking price. You may want to ask the following questions to determine if you’ll want to move on to the next step:
- What is the property address and layout? (Beds/Baths, Square Footage, Basement, special features, etc)
- How long have they owned it, what did they purchase it for, and what is their current mortgage balance?
- What is the condition of the property? Have they made any recent improvements?
- How soon are they looking to sell?
- Do they have a figure in mind that they are looking for?
Getting the answers to these questions will help you when deciding to make an appointment to see the property. For example: Now that you know what type of property they are looking to sell, you can determine the market value of that house by looking at similar sold properties on Zillow, Redfin, or the MLS. If they owe close to that amount or more, it’s probably not going to work. You may consider working with someone experienced in Short Sales in this case, since they likely will have to sell for less than they owe.
If they have equity in the property, it needs to be fixed up, they need to sell it immediately, or any combination of the three – you should move on to the next step.
Step 5. Make An Appointment To See The Property
Finally, if you have identified a seller with a need to sell, and a property that can be purchased at a discount, you’ll want to set up an appointment to see it. This will accomplish two things:
One – you can get inside the house to make a rough estimate on the work it will need. If you’ve never done this before, there are plenty of books on the topic, or we recommend taking someone along with you who is experienced in this.
Two – you can get face to face with the seller and start the negotiations. It’s much easier to start negotiations in person because you can present a written offer right then and there. If the seller is looking at a contract on their kitchen table, they are much more likely to take your offer now. It’s too easy for them to say they will “think about it and get back to you” if you’re on the phone and not standing in their kitchen waving a real contract around.
The process for qualifying a motivated seller lead can take some time. It will take practice, follow up systems like a good CRM, and good negotiation skills. You’ll need to consider how to structure your contracts, how to finance the deal, or if you’re going to wholesale it, how to find the right buyer.
Be sure to leave a comment below and share your experience with qualifying motivated sellers.