Understanding the Seller’s Motivation

Like any business...there are prospects and there are suspects. Which ones would you rather spend your time talking to? I hate to be blunt, but if you continue to waste your time dealing with suspects, you may just miss out on that "home run" real estate deal that you have been waiting so patiently for! How do you think I know this?

My personal philosophy on this is...get rid of the suspects at lightning speed! They are nothing but "Time Vampires"!

Once again, how do you think I know this? Been there...done that! That's right; when I first started my real estate investing career I personally spent many hours on the telephone speaking to unmotivated sellers that really didn't care if they sold me their house or not! In some cases, I think they just wanted somebody to talk to and somebody to listen to their story. Unfortunately, that somebody happened to be me. It didn't take me long to figure this out and once I did, I freed up more of my time to deal with the people that really wanted to sell me their house!

When you apply this simple, but very important and effective strategy, you will be truly amazed at the results! Remember this; it's your job as a sophisticated real estate investor to understand what the seller's "true" motivation really is! Take a look in the mirror. You will notice that you have been blessed with two ears and only one mouth. There is a hidden message here. It goes something like this...We should be spending twice as much time "receiving" as we should be "transmitting"! Think about it for a minute. Kind of an interesting concept...isn't it?

Once you understand the seller's "true" motivation for selling, you will be amazed at how creative you can really be. To further support my theory, I will provide you with an example of a real deal that I created many years ago: I received a call from a prospect that was looking to sell his house. He called me as a result of one of my creative marketing campaigns that I was running at the time. I will not disclose his name, so I will call him Bob. During my "brief" (notice how I used the word...brief) conversation, I asked Bob why he was selling his house? He proceeded to tell me his story and believe me, there is ALWAYS a STORY! In his case, this particular property was not his primary residence. In fact, he had a relative renting the house.

Tony's Tip: Never rent a house to a RELATIVE or a FRIEND!

The relationship was not great and they had indicated that they would be vacating the property very soon. Bob advised me that he did not want to deal with The Terrible T's™ (Tenants & Toilets), so he had made the decision to sell.

Once I understood his underlying motivation, I then proceeded to ask him if he "had to sell the property". His answer was..."not really". I then proceeded to ask the following question; "If I could show you why you shouldn't sell your house, would you be willing to provide me with the opportunity to take over the day to-day management of the property?"

In essence, I would do all the work, while they could sit back and watch their investment grow. He liked that idea, but advised me that he would first have to consult with his wife Betty (not her real name). Good choice and a smart man, as I could personally relate to that request! I apply the following rule in my personal life...Happy Wife, Happy Life!

We set a date and time to meet. In advance of this meeting I performed a comparable market analysis (CMA) in order to obtain a better understanding of the "true" market value of the home. To cut a long story short, I met with Bob and his lovely wife Betty. I convinced them (using fundamental support information) and of course...a little bit of my "salesmanship" and my "charm", that the housing market would continue to rise substantially over the coming years. As a result, I offered them FULL market value (on paper) for their home. They agreed and I immediately assumed full responsibility of the day to-day management of the property. In essence, I turned the sellers and owners of their own home, into Joint Venture Partners. This was a great deal for me, as I just purchased another home with no money down and I did NOT have to...pledge my first born at some bank!

As I mentioned, I transacted on this particular property quite a few years ago. This property has since been sold - we sold it at the peak of the run up in real estate values in 2007. So this is how the deal turned out...we held the property for a period of about three (3) years. During that time I received 50% of the cash flow ($250.00 my share) per month. We sold the property for $465,000. During that hold period the mortgage was paid down by about $10,000. The (approximate) net gain on the deal worked out to be about $275,000, plus annualized (3 year) cash flow of approximately $18,000. Divide these numbers by two and my share was approximately $146,500. Not a bad return on my investment! Oh, sorry, I forgot one small detail...I did not put any of my own money into the deal, so it was actually an infinite return on my investment!

Personally, I hate these types of deals as there is no way for me to calculate my return on investment since you cannot divide your return (payday) into nothing down! Just kidding...I was okay with it, as it was another free house and free cash! Now that's my kind of deal!

Did everybody win? Absolutely! This is the ONLY way to do business! Let's recap the deal here: My Joint Venture partner (the seller) was looking to sell their home. Had they done so back then, they would have been lucky to pay off the mortgage balance and break even. I guess that's what prompted Bob to respond to my advertisement in the first place...and he may not have even done that if they used a realtor to sell their house. Because I was able to show them why they shouldn't sell their home, they pocketed a COOL $146,500 in profit, and they did not have to do anything except sit back and...Enjoy the Journey!

So how was all of this possible? Remember, I took the necessary time to understand their "true" motivation! With a little bit of training, you can do it too! It's really not that difficult! You never have to take advantage of anyone or steal anyone's home from them, in order to make money! It truly is possible for everyone to win!

As a result of speaking to thousands of sellers over the years, I have developed and obtained a unique ability to create a deal from just about any situation.

If you would like to "STOP...Swapping Your Hours for Dollars" and "Give Up Your Day Job", then I encourage you to "EDUCATE" yourself and become great at creating deals where everyone wins....You WILL be glad that you did!