In your real estate business, it’s critical to your success that you learn to ask the right questions when someone calls. When you get the right information every time, it will help you to quickly determine whether or not you are dealing with a motivated seller. Always bear in mind that even thought this person isn’t a motivated seller today, it doesn’t necessarily mean that they won’t be motivated in the future. Time and circumstances change all things.
I have a rule of thumb that I follow regardless of which category they fall into. So long as the house is one that I am interested in buying, I keep them on the mailing list until one of these things happens:
- I buy the house.
- Someone else buys the house.
- They ask to be removed from my mailing list.
That’s it. Don’t disqualify someone because they aren’t a motivated seller today. Keep on marketing to these folks. I have bought houses several years after I started marketing folks. Absentee owners that are “long distance landlords” are a group of people that sometimes become very motivated after a tenant trashes their house one too many times.
The 20 Best Books for Aspiring Real Estate Investors!
Here at BiggerPockets, we believe that self-education is one of the most critical parts of long-term success, in business and in life, of course. This list, compiled by the real estate experts at BiggerPockets, contains 20 of the best books to help you jumpstart your real estate career.
What Questions Should I Ask?
You should always use a standard Property Information Form to be sure that you don’t forget anything when a seller calls. I like to keep a stack of them on my desk. If you do that, you will always get the information that you need. Some of the things I have on my Property Information Form are listed below.
The Sellers Contact Information
- Their name, phone number and email address; try to get all of their phone numbers.
- The property address
- Be sure to get the name of the person that actually owns the house. Often the person calling may not be actual owner or the decision maker.
- Ask whether the property is vacant or occupied. If it’s occupied, who lives there? Is it a tenant, a relative etc? This will have an effect on how you can access the property.
- In the far right corner of my Property Information Form, I list the referral source and the type of referral:
-DM –Direct mail campaign
-PR – Probate
-AO – Absentee Owner
-Other Type of Referral (Bandit Signs, Referral, Ad etc.)
-What state do they live in?
It is important especially when working with absentee owners, to know which state they are calling from so that I know which time zone they are in. I don’t call them too early or too late.
The Property Information
- The number of bedrooms and baths
- The style and type of construction such as “brick ranch”
- Whether it’s built on a basement, slab or crawl
- When the kitchen and bath(s) were last updated
- Types of flooring: carpet, hardwood or other type
- The ages of all the major systems such as the roof, HVAC, etc.
- The type of fuel used for the heating system
- Be sure to find out if all the utilities are on in the house
- Ask them what repairs and updates they would do if they were to live in the house. You will be amazed at the information you will get just by asking this one question.
Try To Determine Their Motivation
- How long have they owned the house?
- Why are they selling? Probate, absentee owner, facing foreclosure (What’s their motivation)?
- What is their asking price? You want to find out what their “expectations” are.
- How much the house is assessed for? A lot of the time sellers have no idea.
- If the house is listed, if so who has it listed? When is the listing over? Ask if it’s OK to keep them on your mailing list just in case the house doesn’t sell.
- Do they have other properties to sell? Never forget to ask this question.
Existing Mortgage Information
You want to get specific information on what (if anything) is owed on the house. You may find out very quickly that you can’t help this seller no matter how motivated he is especially if there is no possibility of a short sale.
Figure Out What Your MAO Is
I have this right on the bottom of my form. I list the ARV (after repaired value) and the dollar amount of the repairs needed. Since I am a wholesaler, I also have a place to list the wholesale fee I want; “Me”. These figures will tell me my MAO or my “maximum allowable offer”.
I have set the form up so that I can put two sets of figures in this area. What I will do is figure the MAO for a complete rehab, and a “to rent” MAO. Landlords won’t necessarily do the same level of work that a rehabber would do for a retail sale. Some won’t do any updating at all; they will be OK with a bathroom that has pink tile if it is in perfect condition. After all, they won’t be living there. Doing this second MAO gives me another way to “create a deal” if I can’t get the seller quite as low as I need for a rehabber to buy this house, and I have landlords that would pay a little more.
When you talk to any seller, not only do you want to find out their motivation is, but you want to know if they have a “number in mind” to just walk away and be done and to be rid of this headache.
What problem do they need YOU to solve? Always remember; it’s never just about the money. When they have given you a number, wait a little bit before responding. Then ask them, “is this is the best you can do”? Once again, just wait. Wait for them to speak first.
You will be amazed at the number of people that will immediately drop their asking price significantly. Finally, ask them what they will do if they don’t sell the property; if they get stuck with this unwanted house.
I have uploaded the form that I use in my business in the BP File Place. You will find a number of good forms there that you can use. Just pick one and always use it.
Do you have any other information that you ask for when you speak with a seller?