Probably the single most important thing I teach my Real Estate Investing Mentorship Students is to work only with a motivated seller. This is critical to your success in real estate investing.
My personal belief is it is very hard to find and work with truly motivated sellers if you are using a real estate agent in the typical real estate MLS system with a Selling Agent and a Buyer’s Agent.
The Selling Agent has a fiduciary responsibility to their client that often makes it inappropriate for them to discuss true motivation. Real estate agents (as a general rule) hate to allow buyers and sellers to speak directly. It causes them to lose control and that eventually puts their commission in jeopardy.
Now, I am not saying don’t use a real estate agent. A good agent can be a valuable asset and a necessary access to the system. What I am saying is set limits on how the game will be played with the agent you choose. If you are at a point in your career where an agent is truly unnecessary, a good real estate attorney may be all that you need.
There is a plethora of motivated sellers in almost every market currently. The secret to learn is – in any market – there are always motivated sellers.
I have a very specific definition of a motivated seller and it contains 3 points. They must have a significant pain associated with the real estate. They must have a dreadful alternative. Often, but not always, that alternative is foreclosure. Finally, the must have a time crunch that they personally understand.
When all three of these factors are present, you have the basis for negotiating a very good acquisition.
Earlier I said you want to speak directly with the Seller and not be filtered through the real estate agent(s). If the agents fight you on this (as they will), simply say to the Seller that is the ONLY way you do business and it is up to them. They can choose to work with you or not and you absolutely will NOT allow their agent to filter your communications.
Obviously, most motivated sellers will play by your rules in a heart beat.
The next secret is to clearly identify what the primary thing the Seller wants to accomplish and why. That should be your first goal. Once you find out if there is a way for you to do that, then you concern yourself about how to make the deal work for you. I assure you that this approach will reap enormous rewards for you.
Clearly, there will be times when you simply can’t help the Seller. They are too far gone or the numbers don’t work, or … If you take this approach, they will become a referral source for you.
My advice to my students and to you is ONLY work with truly motivated sellers.
