How to Find Motivated Sellers – Guide for Real Estate Investors
A motivated seller is someone who is ready to sell and usually is willing to take a discounted price on their property in order to get rid of it.
Think of it like you would a person running a garage sale.
They know their items are worth more money, but they’d rather clear the clutter from their life and get rid of things they know longer want, quickly.
So they price these items cheap, well below true value. Same goes with a real estate transaction between an investor and a motivated seller.
The real estate investor is looking to shop around for properties well under market value so they can rehab them and build profit into the deal to earn return on investment.
The motivated seller is tired of the property and wants to move on in life so they’ll be okay with taking a discount. In most cases, the property is already in distress and the seller would rather not spend the money and headaches to fix it.
As an investor, you can earn a healthy living finding deals where seller’s are motivated. In the next section we will explore different strategies to find these motivated sellers in real estate investing.
Disclaimer: in most cases motivated sellers are facing unfortunate life events and this does not mean we are advocating taking advantage of someone. Finding motivated sellers is a way of helping someone by relieving them of their situation and their property that was going to cause them problems if they didn’t sell it.
Methods to Find Motivated Sellers
#1: Couples Ready for a Divorce
The first idea to consider is a couple who is undergoing divorce. Times are tough for the couple already and they are going to be spending lots of money now on attorney fees to get through the divorce.
So selling the property fast is a priority to them, which means they’ll be willing and motivated to take less than market value for the home if it means a quick sale that can help them finalize the divorce and disburse the share of funds from the sale.
To find divorcing couples, it may be a good idea to make friends with a divorce attorney who can refer sellers to you to see if you have interest in the home being sold.
Off market real estate deals are a win-win as the seller’s save on commission, which is another incentive they may take less than market value.
#2: Inherited Family Property
Imagine a family member who inherits a run-down, distressed rental property when their relative passes away. If they have no previous experience being a landlord then managing this property is only going to cause stress and headaches.
They become a motivated seller, ready to dish this problem property off to another investor in exchange for cash they can now go do what they want with.
To find properties of people who are dealing with death in the family and inheriting the property, check local ads running for “Estate Sales” as these are often garage sales for families dealing with an inherited property situation.
#3: Someone Who Lost Their Job
Another unfortunate situation in life that can lead to someone becoming a motivated seller is the loss of a job. Without the job, the person no longer has an income to support the bills of the property.
If their not financially sound to begin with when they lost their job, then it can quickly add stress keeping the property, forcing them to sell instead.
To find these types of motivated sellers will take effort and networking. Usually hearing about someone’s financial situation through word of mouth is most common as their is no list you can look up online of people who lost their job recently.
#4: Someone Not Paying their Property Taxes
When you stop paying property taxes, the government gets upset with you. This money collected is pooled with all other property tax money to be spent according to the city budget.
A good chunk of property tax income goes towards school systems and education for children as well as road work to keep streets nice around the city.
The city government will place a lien against the property for the amount of taxes owed and if it’s not paid they can foreclose through tax foreclosure with the court system.
In this case, as an investor you can swoop in and save the day by buying the home from the person not paying their property taxes. Rather than lose their home to foreclosure, they’d be happy to get it sold quickly at a discount and get some value from the property.
As the buyer, you would simply pay off the property taxes to remove the lien and avoid foreclosure. You also now own the home at a discount thanks to the motivated seller working out a win win situation between you two.
To find tax lien information you’ll have to run a title search on a specific property. You can also find tax delinquent lists.
There are also tax foreclosure auctions where you can buy tax liens from the government so you hold the rights to foreclose on the owner if they don’t make payment to you for the amount of the tax lien.
#5: Landlords Dealing with Problem Tenants
If a landlord is dealing with a problem tenant, this can quickly create a motivated seller situation.
Maybe the tenant isn’t paying rent on time and has a back log of rent owed. Or maybe the tenant is causing damage and being troublesome to evict.
Whatever the case be, these landlords see a sale of the property as a quicker, lower stress solution.
The best strategy to find these types of motivated sellers is to do a direct mail campaign. Send out a letter to landlords asking if they have a problem property on their hands and would consider selling.
Research properties where the tax mailing address is different than the property address. This can indicate a property being used as a rental with the landlord getting mail sent to their actual home address elsewhere.
#6: Vacant Properties – Hard to Rent
Another type of motivated seller is the landlord who is struggling to keep a property rented. Constant turnover of tenants leaving and high vacancy rates can quickly eat away the bottom profit line of a landlord’s cash flow.
If a property sits vacant too long, the cash flow is negative as the landlord spends more on taxes and insurance than they make from the property.
To find vacant properties and possibly landlords ready to sell, look online for for rent listings. Also drive neighborhoods and search for “For Rent” signs in yards.
Contact the landlord and see if they have considered selling and gauge how motivated they sound.
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