Learn How To Start Investing In Real Estate
Learn How To Start Investing In Real Estate

4 Types Of Sellers Investors Should Target To Close Deals Fast

Written by Paul Esajian

Two defining aspects of any successful real estate investor are their ability to not only find motivated sellers in real estate, but close deals fast. These unique qualities require investors to keep their eyes and ears to the ground at all times in order to find, identify, and seek out real estate motivated sellers. Although no easy feat, finding motivated sellers is one of the most important aspects of any real estate investing business, as the success of an investor will not only hinge on their ability to find motivated sellers and negotiate with them effectively, but find discounted properties and close deals fast.

As the number one target for savvy investors, the following represents the importance of motivated sellers in real estate, as well as the four types to target to close deals fast:

Close Deals Fast: The Benefits Of Working With Motivated Sellers

Find motivated sellers

The term “motivated seller” may seem redundant, as general consensus suggests all sellers are already motivated. For investors, however, it means something entirely different.

Unlike the typical homeowner looking to sell their home for a profit, a real estate motivated seller is someone actively seeking to rid themselves of their property — oftentimes, at a loss. Although motivated sellers come in many forms, the majority experience some type of misfortune or major life change that forces them into a dire situation where they need to recoup their losses and/or move on from their property. This can also apply to someone who has already bought their next home and is now under the gun to sell their previous home. For real estate investors, motivated sellers present a ripe opportunity to not only close deals fast, but do so at a bargain.

Buying from motivated sellers offers numerous benefits for investors. Not only are these distressed sellers willing to sacrifice thousands of dollars to make a deal, but they’re also willing to do so in a short time span. Here are the primary two benefits of learning how to find motivated sellers:

1. Discounted Prices: Since the recession, the majority of real estate investors recognize motivated sellers are the ideal candidate for investing opportunities in real estate, as well as the ability to close deals fast. In many cases, working with motivated sellers can assist investors in purchasing properties below market value. However, investors need to have a clear understanding of the seller’s situation and reasons for selling. If a seller’s motivation is money, investors can make an all-cash offer to potentially sway the seller in their favor.

Whether time or money, understanding the seller’s true motivations will allow investors to make the best possible offer.

2. Ability To Close Deals Fast: While working with motivated sellers can create the right set of circumstances to buy discounted properties, not all sellers can afford to sell below their asking price. A large portion of motivated sellers are under financially distressed situations and need to sell their home fast. Investors able to meet the seller’s demands and close on the seller’s timeline are much more appealing than an investor that can’t.

Lastly, it should be noted that a large portion of your success will occur during the due diligence phase. It is during this research phase when a seller’s motivation is exposed and truly great deals are discovered. Investors should spend a significant amount of time building rapport with sellers and strive to dig deeper into the seller’s motivating factors.

4 Types Of Motivated Sellers To Close Deals Fast

Motivated sellers in real estate

When getting started, it’s important to remember that sellers will generally want more money for their properties than an investor is willing to offer. As an investor, you’ll need to uncover the seller’s true needs, wants and desires.

While finding motivated sellers in real estate isn’t easy, there are warning signs investors can be aware of. That said, investors looking to close deals fast should focus on the following four types of distressed sellers:

1. Homeowners With Delinquent Taxes

For real estate investors looking to close deals fast, their best bet is to search for homeowners with delinquent taxes. These motivated sellers are ideal candidates for investors because not only are they at the end of their rope financially, but risk losing everything to tax foreclosures if they don’t sell. These types of motivated sellers offer investors an excellent opportunity to make low-ball offers and secure properties at a discount.

2. Homeowners Going Through A Personal Crisis

In the world of real estate investing, homeowners are oftentimes motivated to sell due to personal issues such as a death in the family, separation or divorce, a new baby on the way, or an unexpected job loss. Whatever the reason may be, their dire situation has now put them in a desperate situation that requires immediate action. Not unlike other homeowners mentioned, these motivated sellers are just as likely to sell sooner rather than later, including sometimes for less.

As part of your due diligence, it’s important for investors to seek out the homeowner’s true motivation, as this will not only determine the next step in making an offer, but also provide investors with insight on how they can better assist the seller. These motivated seller leads carry a lot of potential if you can get down to the root of what they really want.

3. Homeowners That Need To Relocate

Homeowners looking to relocate are another type of motivated seller that investors should target to close deals fast. Generally speaking, these sellers haven’t resolved their current living situation and need to sell to sell their old home, or face paying two mortgages. According to my colleague at FortuneBuilders and CT Homes, Than Merrill, the longer a homeowner goes without selling a property before they move into their next one, the more inclined they will be to discount their home.

“If for nothing else, absorbing the costs associated with two mortgages is not something the average person can handle,” says Merrill.

4. Absentee Homeowners

One of the more common types of motivated sellers that investors should target are absentee homeowners. These sellers — which typically don’t live at their property, but rather live out-of-county or out-of-state — represent a great opportunity for investors to snag a deal. In addition, these sellers are much more likely to part with their home because they have a vested interest in liquidating as soon as possible.

As an investor, the ability to close deals fast is one part locating motivated sellers, and two parts uncovering their reason for selling. Together, investors can leverage this information to not only purchase properties at a discounted price, but do so in the least amount of time possible.