APPROACHING MOTIVATED SELLERS: HOW TO GO ABOUT IT THE RIGHT WAY
Sellers can have a variety motivations to sell, some urgent, others not. Possible reasons to sell range from moving to death, divorce and taxes. Motivated sellers want to sell at the highest price and they want to sell yesterday. Often, they have an emotional attachment to their property, as well as unrealistic expectations about the results of a distress sale. Sometimes, they just see pie in the sky.
Perhaps a seller faces foreclosure or is in probate; he could be in the middle of a relationship break-up or relocating for a new job. His home may be the only asset he has and it’s not liquid either. A motivated seller is often worried and desperate, which makes him suspicious of your intentions. Because he is sure you will cheat him, he reacts accordingly.
BE RESPECTFUL AND PROFESSIONAL
Regardless of who approached whom, address the seller in a professional, courteous manner. Be conversational rather than authoritative or lecturing. Introduce yourself and present a confident, not arrogant, air. The seller may still be suspicious of your motivations, but she’ll also be impressed that you are polite to her.
MAKE THE CALL
While your seller may be in a hurry, he won’t be rushed, which is a good thing because you have some due diligence to conduct. Your first contact with the seller, often by telephone, should be for basic information about the property and the seller’s expectations. At a minimum, you want to know:
• Seller’s personal details: marital/partnership status, contact information, decision-makers
• Property details: Location, layout, recent upgrades/repairs (or lack of), type (single-family, Victorian, duplex, etc.), HVAC/utility information, etc.
• Financials: Rental property income, liens, taxes, mortgage, equity and asking price
SCRIPT IT OUT
Some sellers will not volunteer any information and you’ll have to drag your answers out of them. Others will tell you not only the history of the house, but also their family history unto the fifth generation. With a script or questionnaire, you can keep track of the important details and keep the conversation on course. You should not try to get all the answers in this call.
Do have a checklist; do not fire questions at the seller. Instead, ask the seller to tell you about the property. He may answer some of the questions on your checklist and you’ll have natural openings for follow-up questions. At a minimum, you can gauge your seller’s expectations: unrealistic, practical or somewhere in between. By the end of the call, you’ll know whether it’s worth your time to proceed.
BEFORE YOU HANG UP
Explain your needs to the seller. It is perfectly acceptable to give a range of what you’ll pay and how much you think you need to make any repairs or upgrades. You don’t have to have comps on area real estate, but if you’ve done your homework—like checking the assessor’s rolls while on the telephone with the seller—you’ll know the property’s assessed value. Because you are explaining the basis of your offer, the seller can make a judgment about going forward.
Above all, do not argue with the seller; don’t try to educate her in the realities of distressed property sales. It’s a waste of time and potentially damaging to your reputation.
As a real estate investor, you have questions you need to ask to evaluate the risks and costs before making the investment. It is in your best interest to treat a motivated or distressed seller with the same courtesy and respect you would give any business partner. Professional behavior on your part will enhance your reputation in the real estate investment sector, leading to increased investment opportunities.