BiggerPockets

Motivated Sellers: Who Are They?

A motivated seller is simply someone who has something to sell for some unknown reason. This unknown reason is their motivation for selling. This idea refers to real estate, but works for any type of transaction involving a seller and a buyer.

A personal example I can share with you involves my very first car. It was a 1995 Saturn SW1- a gold station wagon. It really wasn't the kind of car for a guy like me; 6"2', 250lbs, but it was a first car. It got me where I needed to go and it was reasonably priced. The car worked just fine, but there came a time when I wanted more space and quality. Plain and simple, I just didn't like it anymore so I went to an auction and bought a new car. I drove the new car home and left the Saturn parked on a residential street. I cleared all my personal items out of it and I left it there for like two weeks with every full intention of going back for it.

Before I got the chance to get back to it, I got a letter from our local county saying that they had towed my car. I was shocked and couldn't believe it, but the neighbors got sick of my car that they deemed abandoned. I really had every intention of going back for the Saturn, but life began to go by and it just wasn't a priority. When I called to ask about getting the car back they told me it had already been in the impound lot for 7 days at a cost of $100 a day. $100 a day? Were they joking? On top of this, they told me there were other fees and my total came to a staggering $800. It was crazy. At the time, that Saturn was worth about $2,000 because it was in decent condition.

My Saturn was a perfectly fine car. In fact, somebody else would have driven it with no problem so when they told me I would have to pay $800 for a car I didn't like and wouldn't use I told them to keep it. It just didn't make sense. At that instant, I became a motivated seller. I had a car that I didn't want and was willing to let it go for far less than it was worth just so I could move on with my life.

From a real estate standpoint, the car was worth $2,000. I only had to pay $800 to get it back so I had $1,200 in equity. To compare to real estate, I was ahead 50% LTV on a property and you know what? I decided that it just wasn't worth the time, effort, and money. I couldn't care less for the property (or Saturn); I had other things going on with my life and I was just ready to move on.

In a nutshell, that's all we are looking for in real estate investing. We are looking for motivated sellers who feel about their property they way I felt about my Saturn. We want to find homeowners who want or need to sell their property for any given reason, but are so inspired to do so they are willing to give up some of their profit in order to gain peace of mind and freedom (or whatever they are seeking by selling).

Comments

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  Joshua Dorkin — over 1 year ago

  Great article, Steven. The car example is a perfect analogy - nicely done.