If someone owed you money, would you accept payment in the form of Monopoly money? Unless you were playing Monopoly and really wanted to buy Park Place, you would not. No, you would not accept it because it is not real money.
Most of us can easily distinguish the difference between genuine money and play money from a board game. We recognize the characteristics of real money.
However, many investors do not recognize the characteristics of counterfeit sellers. And because these folks sound genuine and say or ask some of the right things, too many investors waste their time dealing with counterfeits or pretenders. Some investors, do this much too often, get stressed out because they can't buy a property, and ultimately cave in and quit the business of real estate investing.
But it does not have to be that way.
Trained people can distinguish between a real $100 bill and a fake. There are some distinguishing marks on a real bill that most counterfeits cannot duplicate.
And armed with a little bit of knowledge, you can also differentiate between a really motivated seller and a phony that says some things that would make you think they are the real thing.
Here's some indicators to help you when you're dealing with one of these individuals. Of course, there's always exceptions, but generally these will help you gauge when it's time to walk away from a counterfeit.
What is a motivated seller?
I have yet to meet someone walking around with a "bandit sign" that identifies them as a motivated seller. And I confess that I have only been an investor for slightly a little more than three years, so it's not impossible, but I have yet to have a motivated seller put a gun to my head and drag me over to their house because they just don't want it anymore.
If only it were that easy. Even an investor with the I.Q. of a catfish would be a phenomenal success investing in real estate.
The reality is that you have to know what to look for in a genuine motivated seller. They have an urgent need to sell their house. In other words, they have a problem that needs immediate attention. Selling the property the traditional way by listing it with a real estate agent at market value is not an option. The property needs to be unloaded NOW.
So what are some of the pressing problems that will motivate a seller to accept an offer at less than full market value?
· Foreclosure
· Bad health
· Retirement
· Divorce situation
· Property condition
· Death in the family
· Job transfer and need to move quickly
· Job loss and can't afford the payments
· Financial problems triggered by too much debt
· Purchase another home and are now making two mortgage payments
The seller just needs some relief from their mortgage payments.
And that's where you come in. You must find out if they are motivated sellers. But how you ask?
Well, you just ask them a simple question like, "why are you selling your house?"
If they tell you that they heard real estate is hot and just want to know what their house is worth, do you think you have a motivated seller?
If they tell you that the neighbor across the street just sold their house for $90,000 and they are wondering if their house will sell for more because their house is larger, do you think you have a motivated seller?
If they tell you they want to sell the house but are in no hurry to sell unless they absolutely get top dollar because they have done all sorts of things to the home since they bought it, do you think you have a motivated seller?
NO. NO. NO.
You're dealing with counterfeits. You're wasting your time. Next.
A motivated seller will disclose why they need to sell their home pronto. If they give you one of the reasons noted such as a pending divorce or a death in the family, and insist they will move out as quickly as you can close, you have a no-kidding, genuine motivated seller. So does this mean you automatically buy a property every time.
Not exactly.
After you find a motivated seller, you must submit offers that provide benefits for both the motivated seller and for you. Real estate investing is not about stealing property from someone in dire straights, but about solving problems in a way that benefits the seller.
It's still a matter of you finding out what the real problem is and then providing the solution. If the seller needs to sell quickly, you need to be in a position where you have the ability to use creative techniques, the cash, or access to cash so you can quickly do the deal. The faster you can do the deal, the faster the seller gets the relief they are desperately seeking to get from you so they can get on with the rest of their life.
It's true about money and it's just as true about real estate sellers. A real thousand-dollar bill is worth a lot of money. So is a real motivated seller. Counterfeits abound everywhere. No one wants to get stuck with a counterfeit bill because it's worthless. And no serious real estate investor wants to get stuck with a counterfeit seller because they can also be worthless. In either case, you lose. So make it a point to spot the real sellers from the pretenders and your business will take off to new levels.
Lee Salinas, MBA, CPA is a full time real estate investor. Lee started investing in real estate three years ago after losing his job in June 2002. In three years, he has purchased over 170 properties and authored a business plan to help real estate investors get the cash they need to buy properties. The real estate business plan is available at his website - http://www.realestatebizplan.com
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