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Posted over 2 years ago

The Power of Motivation in the Terms Niche

These 3 questions will allow you to discover the motivation of any seller.

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We often tell our Associates that motivation is the key to getting deals done, because it allows you to solve the seller's problem. Once you understand why they need to sell their property, you can begin to formulate a plan that will help them get out of the situation they're in while accomplishing their goals. We solve real estate problems—sometimes challenging or stressful ones, and sometimes just the sellers’ goal to net more or do some estate planning.

There's an old subject to (subject to simply means that we purchase the property but the loan stays in the seller's name) deal from when we first started out that is a perfect example of this. This was the fourth subject to deal we ever did, and it was about a two hour drive to get there.

Looking back, there are a lot of things we would now do differently. But let's take a look at how I was able to find the seller's motivation, and why that ultimately ended up benign the deciding factor in this deal.

A year and a half in the making

This deal started as an expired listing. I reached out to the seller about a year and a half before the deal actually started, and the seller was very clear on what he wanted to do.

When I called him, he told me (almost verbatim): "I couldn't sell on the market so I have it as a FSBO [For Sale by Owner]. The only reason I've done that is because I'm in a custody battle for my grandson in court. The second I get it, I'm leaving and going west."

Without even asking, this seller answered the three questions we now tell all of our Associates to ask when working with sellers:

  • Where are you going?
  • By when?
  • Why?

These three questions will tell you everything you need to know about a seller's motivation, so you can solve their problem. In this case, I knew we could wait until the seller got custody of his grandson. When that happened, all of a sudden the clock would be ticking very fast and he would want to leave.

So, what did I do? This was before we were even using a CRM, so I wrote his info down on a piece of paper and put it in his "let sit" folder. I checked this folder every six months or so, and called the seller to check in. A year and a half later, I got the reply I had been waiting for.

A quick exit

The seller had finally gotten custody of his grandson, and when I talked to him he was ready to make his way west. Literally! He actually had his truck packed and was leaving that weekend. He told me he would need to come to the property the next morning, so that's what he did.

I ended up driving two hours to the property that next morning, and they signed the deed right then and there. Nowadays, we would never do this. We have a whole process we use where we sign the deed in our office with an attorney present. But desperate times call for desperate measures, and this seller did not have time to wait.

So, what was the upshot?

The seller had originally had the house on the market for around $130,000. His payment was around $700 per month, and the remaining mortgage balance was around $80,000.

Payday #1 came in at right around $15,000. Again, this is lower than we would do nowadays—but we were still learning! Payday #2 was around $20,000, and Payday #3 was around $50,000. In total, that comes out to around $85,000.

Just think about that. $85,000 on a house that had a loan balance of $80,000 and was worth around $130,000 to $150,000. Our total was more than the loan!

How is this possible? It all comes down to the principal paydown and our 3 Payday™ system. And this type of thing isn't uncommon. We've had owner financing deals in the $60,000 to $70,000 range where we took home well over $70,000.

And THAT is the power of motivation! Without understanding the seller's motivation, this deal never would have happened.

Do you ask questions like these to understand your seller's motivations? Are there any others you use? Share your thoughts in the comments below.





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