{"id":115409,"date":"2019-09-08T14:30:01","date_gmt":"2019-09-08T20:30:01","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=115409"},"modified":"2024-01-15T13:59:50","modified_gmt":"2024-01-15T20:59:50","slug":"real-estate-motivated-sellers-investors-solving-problems","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/real-estate-motivated-sellers-investors-solving-problems","title":{"rendered":"3 Types of Motivated Sellers (&#038; How to Win Deals By Solving Their Problems!)"},"content":{"rendered":"<p><iframe loading=\"lazy\" src=\"https:\/\/playlist.megaphone.fm?e=BIGPOC6177935403&amp;light=true\" width=\"100%\" height=\"200\" frameborder=\"0\" scrolling=\"no\"><\/iframe><br \/>\n<span style=\"font-weight: 400;\">Finding it hard to get your first property or to scale your portfolio? Sick of competing with retail buyers and investors in this hot real estate market?\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">I have a secret to building your portfolio\u2014and building it quickly! <\/span><span style=\"font-weight: 400;\">Learn to NOT compete.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Really? YES!\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Instead, learn to be a <\/span><i>problem solver<\/i><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">According to 2016 Attom Data, in midwestern areas of the U.S., off-market real estate represented 24 percent of all transactions, and that number is growing each year. What&#8217;s this mean? There are plenty of motivated sellers out there and deals to be had.\u00a0 <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Your job is to understand the different types of motivation, find out how to reach those who are motivated, and understand how to solve the problem that seller has.<\/span><\/p>\n<h2>3 Types of Seller Motivation<\/h2>\n<p><span style=\"font-weight: 400;\">Seller motivation generally falls into three buckets:\u00a0\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Financial distress<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Emotional distress<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Property distress<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">When you are able to find a seller whose motivation hits more than one bucket, you are more apt to find a great deal. Remember though, this isn\u2019t all about finding a screaming deal for you. <\/span><em>When you can solve someone\u2019s problem and you become known for that, deals will find you!<\/em><\/p>\n<p><strong><em>Related:<\/em><\/strong><em> <a href=\"https:\/\/www.biggerpockets.com\/blog\/2014-04-01-creating-you-story-rei\" target=\"_blank\" rel=\"noopener noreferrer\">Creating Your REI Story: How to Be \u201cThe One\u201d the Motivated Seller Chooses<\/a><\/em><\/p>\n<h3>Financial Distress<\/h3>\n<p><span style=\"font-weight: 400;\">A seller who is under financial distress might have experienced one of the following life events:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Death\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Divorce<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Job loss<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Bankruptcy<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Rehabs gone wrong<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">And while this isn\u2019t an exhaustive list, this type of seller is generally looking to exit the property to solve a financial issue related to a life event. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Perhaps they can\u2019t afford the payment on the property. Or the tax bills have been piling up and someone is about to take the house. Or maybe they can no longer afford repairs and want to move on.\u00a0 <\/span><\/p>\n<p><span style=\"font-weight: 400;\">This type of seller is likely to be looking for top dollar on the property. They&#8217;re even more likely to be looking for someone to solve the financial pain the property is causing them.<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-108949\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/03\/couple-drowning-in-bills.jpg\" alt=\"young sad couple at home living room couch calculating monthly expenses worried\" width=\"702\" height=\"336\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/03\/couple-drowning-in-bills.jpg 702w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/03\/couple-drowning-in-bills-300x144.jpg 300w\" sizes=\"auto, (max-width: 702px) 100vw, 702px\" \/><\/p>\n<h3>Emotional Distress<\/h3>\n<p><span style=\"font-weight: 400;\">A seller who is under emotional distress might have experienced one of the life events below:\u00a0\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Death<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Divorce<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Job relocation<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Seniors who need to downsize<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Investors who are done with <a href=\"\/renewsblog\/2013\/01\/04\/how-to-rent-your-house\/\" target=\"_blank\" rel=\"noopener noreferrer\">rentals<\/a> (due to evictions, bad renters, deferred maintenance, rehabs gone wrong, etc.)<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Notice the life events may be the same as someone under financial distress. <\/span><i>However, the motivation to sell is different<\/i><span style=\"font-weight: 400;\">.\u00a0 <\/span><\/p>\n<p><span style=\"font-weight: 400;\">This means your approach needs to be different. This seller may not have to sell for financial reasons, but the property is starting to cause serious emotional distress for them.\u00a0 <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Last year, I picked up a property that another investor was rehabbing. He was completing the rehab himself and quickly realized he was in over his head. It made sense; he had a new kiddo at home. It was a great deal. <\/span><span style=\"font-weight: 400;\">We picked it up and used our systems to complete the rehab quickly. That way, the investor could move on to another project that was more in his comfort zone and spend time with his new family.<\/span><\/p>\n<h3>Property Distress<\/h3>\n<p><span style=\"font-weight: 400;\">A seller who is suffering from property distress is probably experiencing one of the following issues:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Deferred maintenance<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Property repair (i.e., fire, natural disaster, accident)<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Death on the property\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Property taxes aren\u2019t paid<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Property is dated<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">When a property is in distress, it is generally a safe assumption that the seller is also motivated by financial and\/or emotional distress. A combo of solutions can help address the issues.<\/span><\/p>\n<h2>Where to Find a Motivated Seller<\/h2>\n<p><span style=\"font-weight: 400;\">While you could scour the MLS to find deals, motivated sellers oftentimes are so overwhelmed by the life event that put them in their predicament that they don&#8217;t know where to begin. So, you will have to find them. <\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>You can find motivated sellers in myriad places<\/strong> (with the last two being my favorites!):<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Obituaries<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Court filings (i.e., divorce, bankruptcy, probate, tax liens, foreclosure)<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Lawyers<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Property managers<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Senior move managers (Yes, this is a real profession!)<\/span><\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-108283\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/03\/rental-gone-wrong.jpg\" alt=\"Sad businessman leaning on glass\" width=\"702\" height=\"336\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/03\/rental-gone-wrong.jpg 702w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/03\/rental-gone-wrong-300x144.jpg 300w\" sizes=\"auto, (max-width: 702px) 100vw, 702px\" \/><\/p>\n<h2>How to Solve Motivated Sellers&#8217; Problems<\/h2>\n<p><span style=\"font-weight: 400;\">Once you find a motivated seller, have a conversation with them. Find out how they think and feel, and figure out how <\/span><i>you can solve their needs<\/i><span style=\"font-weight: 400;\">. <\/span><span style=\"font-weight: 400;\">Check out the book <\/span><em><a href=\"https:\/\/www.biggerpockets.com\/store\/finding-and-funding-great-deals-ultimate\" target=\"_blank\" rel=\"noopener noreferrer\"><span style=\"font-weight: 400;\">Finding and Funding Great Deals<\/span><\/a><\/em><span style=\"font-weight: 400;\"> by <\/span><a href=\"https:\/\/www.biggerpockets.com\/users\/Anson\" target=\"_blank\" rel=\"noopener noreferrer\"><span style=\"font-weight: 400;\">Anson Young<\/span><\/a><span style=\"font-weight: 400;\"> for great scripts and hacks. <\/span><\/p>\n<p><strong>Here are a few ways I\u2019ve been successful at solving a motivated seller\u2019s needs:<\/strong><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Highest offer<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Cash offer<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Large earnest deposit<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Quick closing<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Long closing<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Flexible closing<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Ask for no repairs<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Allow the seller to rent back for a period of time<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Pay their closing costs<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Take care of anything they leave behind<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Hire a mover for them<\/span><\/li>\n<\/ul>\n<h2>Case Study<\/h2>\n<p><span style=\"font-weight: 400;\">Last year, I found myself <\/span><a href=\"https:\/\/www.biggerpockets.com\/blog\/worst-real-estatenightmares-true-and-heres-it\" target=\"_blank\" rel=\"noopener noreferrer\"><span style=\"font-weight: 400;\">in a nightmare situation<\/span><\/a>, <span style=\"font-weight: 400;\">working on my mother\u2019s property from over 1,000 miles away. I was a motivated seller!\u00a0 <\/span><\/p>\n<p><span style=\"font-weight: 400;\">In working out my strategy, I had several investors tour the home, and I was very clear on my needs and the reason I was offloading the property:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"><em>Property distress:<\/em> The home was dated, largely unmaintained, and we found out it had just gone into <a href=\"\/renewsblog\/2013\/03\/22\/how-to-buy-a-foreclosure\/\" target=\"_blank\" rel=\"noopener noreferrer\">foreclosure<\/a>. (Surprise!)<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"><em>Financial distress:<\/em> I had to pay for upfront costs to manage the estate, keep up the property, and sell it (obviously not something that I planned for!).<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"><em>Emotional distress:<\/em> Aside from my mother\u2019s death, all of my parents&#8217; belongings (including my childhood belongings) were packed in the house. I didn\u2019t want someone tossing everything into dumpsters. Instead I wanted time to hold an online auction to give the belongings a new home.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">After meeting with 10 investors over three days, I had seven offers in hand. Five of those seven investors lost out due to the simple fact they weren\u2019t willing to help me solve my emotional distress with regard to wanting to hold an auction. Of the two offers left, here is the one that won. (Revisit my &#8220;distress list&#8221; above to see how many boxes this offer checks!)<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">All cash offer<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Flexible closing (I had to negotiate the probate system)<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Asked for no repairs<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Paid my closing costs<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Allowed for two online auctions AND removed and donated all other items not sold<\/span><\/li>\n<\/ul>\n<p><strong><em>Related:<\/em><\/strong><em> <a href=\"https:\/\/www.biggerpockets.com\/blog\/2014-04-21-game-changer-identify-motivated-customers\" target=\"_blank\" rel=\"noopener noreferrer\">Game Changer: How to Identify Motivated Customers<\/a><\/em><\/p>\n<h2>Conclusion<\/h2>\n<p><span style=\"font-weight: 400;\">What I learned going through that process was priceless to my investing strategy. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">First, there are myriad places outside of the MLS to find motivated sellers. In this case study, it was the senior move manager who connected me to the investor who brought the winning offer. <\/span><span style=\"font-weight: 400;\">Second, the investor took the time to truly understand my motivation to sell and how to really solve my problems. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Third, because she understood my motivation, she could create a win-win for both of us that made it a no-brainer to sell to her. She was a problem solver, and I guarantee her business is booming because of this skill.<\/span><\/p>\n<p><a href=\"https:\/\/www.biggerpockets.com\/store\" target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-114267\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/08\/5.2.jpg\" alt=\"ad-bookstore\" width=\"706\" height=\"125\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/08\/5.2.jpg 706w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/08\/5.2-300x53.jpg 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/08\/5.2-702x125.jpg 702w\" sizes=\"auto, (max-width: 706px) 100vw, 706px\" \/><\/a><\/p>\n<p><em><span style=\"font-weight: 400;\">So, I&#8217;ll leave you with this: Whose problem are you going to help solve? What do you think of the above advice?<\/span><\/em><\/p>\n<p><strong>Weigh in with a comment below.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Finding it hard to get your first property or to scale your real estate portfolio? Sick of competing with retail buyers and investors in this hot real estate market?\u00a0I have a secret to building your portfolio\u2014and building it quickly! Learn to NOT compete.\u00a0Instead, learn to be a problem solver.<\/p>\n","protected":false},"author":214306,"featured_media":115394,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7390,7119],"tags":[],"class_list":["post-115409","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-acquiring-property","category-biggerpockets-daily"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/115409","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/214306"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=115409"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/115409\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/115394"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=115409"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=115409"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=115409"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}