How do I know if a motivated seller has equity?

Question

In the world of wholesaling, two things to consider are motivated sellers and equity. If I found a seller that had a lot of equity but no motivation to sell, then it would be hard to get the property under contract and close. If I found a motivated seller but had little to no equity, then getting the property under contract and close would also be difficult (especially since cash buyers wouldn't be interested). How does a wholesaler figure out whether or not a motivated seller has equity? What does little to no equity look like? What is considered a good amount of equity? What should the wholesaler suggest to the motivated seller that had little to no equity?

Nate Narcisse · Answer

Thank you Account Closed for the explanations.

Jonathan Greene · Answer

There are plenty of apps that can tell you the general equity on a property and if it's pending foreclosure, you can usually see the upset value on the city website. Also, as Account Closed said, ask them. The only way you can make an appropriate offer is to know how much they owe. If you are running lists for high equity, to me that's usually 80% and up.

Account Closed · Answer

Sellers will usually know how much they still owe. You ask them.

Then you compare that to your comps.

Figure 7% to 10% of the ARV is what they would pay for closing costs. The difference is what they would end up with after selling at ARV on the MLS.