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It’s no secret that being a successful real estate investor means finding motivated sellers. The good news is that finding motivated sellers is easy in today’s market when you know how. Where many investors go wrong is not understanding the intricacies motivating different sellers. It’s only once you understand the different motivators that you can exploit finding motivated sellers matching the deals you are offering.
There are two basic differences to consider when finding motivate sellers:
- Those in desperate financial trouble and needing to sell a distressed property as soon as possible.
- Those NOT in serious financial trouble but having other reasons for selling a house at a deep discount.
Finding Motivated Sellers in Deep Financial Trouble
Most investors work at finding motivated sellers in financial trouble. These are houses that you’ll do best with when you offer all cash purchases. You can use several different strategies to profit from these investments. One is the standard rehab and flip to an end buyer.
Another is holding it as a rental house as today’s rental market heats up. Another very workable strategy is selling it with seller financing for a price above market value and with an interest rate delivering a very generous return on your investment. Those are your basic options when finding motivated sellers with financial trouble.
Finding Motivated Sellers NOT in Financial Trouble
Very few investors work at finding motivated sellers not in financial trouble because they don’t know how to put together the kind of deal that appeals to these people. Also, these people don’t know what kind of deal will appeal to them until it is laid out for them.
Finding motivated sellers not in financial trouble is a great investing strategy because there is far less competition and this is a strategy requiring little or no cash from the investor.
You should work at finding motivated sellers that are making two mortgage payments, inherited a house, have a job transfer, etc. By finding motivated sellers that are not in financial trouble, you are able to use advanced investing strategies such as sandwich lease options and subject to existing financing. Again, you can learn exactly how to put these no / low cost strategies in place by reading Investing in Real Estate with Lease Options and Subject-to Deals.
Finding motivated sellers not in financial trouble means they don’t need immediate cash for the house. They might just want to stop being responsible for the maintenance or paying the property taxes or…. A good way of finding motivated sellers not in financial trouble and appealing to their specific situation is by explaining that an installment type sale defers any capital gain they might have.
Another way to appeal to motivated sellers not in financial trouble is by offering a slightly higher sales price than the “all cash buyers”. You can afford doing this because when you sell with a lease option, part of your profit is the option fee. Also, lease options and seller financing deals always sell for more than the current market value. Typically about 10% above market.
You now know that finding motivated sellers not in financial trouble is a niche to opening more doors for you than chasing after the financially distressed sellers that most other investors are going after. With the strategies you’ve learned here and the more advanced strategies in the book: Investing in Real Estate with Lease Options and Subject-to Deals, you’ll quickly be on your way to success in a low / no cost real estate investing niche. A niche that starts by finding motivated sellers not in financial trouble.