How Real Estate Investors Spot a Motivated Seller

Every buyer or real estate investor wants a motivated seller because it often results in getting a pretty good deal on the property… however, it’s not always easy to spot a motivated seller, at least not before negotiations begin. 

Over the years, I’ve figured out ways to find motivated sellers that I want to share in hopes they’ll help you find a steal of a deal on that next investment property or home for your family.

 

5 Ways to Spot a Motivated Seller in Real Estate

Pricing: This point is two-fold and somewhat obvious. Firstly, the most unambiguous indication of a motivated seller is that the initial price on the home is very sharp – aggressive so to speak. If the listing price was even or lower than any other property in the neighbourhood recently sold, you have a motivated seller.  You can figure this out very quickly by looking at current listings and recent sales in the neighbourhood of similar-sized homes. Your realtor has this data readily available.  Going back 3 to 4 months for past sales in the neighbourhood is the maximum for a comparable. Housing markets are as volatile as they’ve been in decades, anything over half a year is irrelevant. 

Secondly, in many jurisdictions, unless it was a new build when acquired by the seller, your realtor can find out what the home was purchased for and compare it to the listing price. Someone willing to sell close or below what they purchased the home for is very motivated. In a situation like this, it typically means the seller already removed conditions on another property and/or they’re in a financial situation where they have to sell.

 

House is empty: This happens more often than you might imagine. The seller has already moved into their next home, and the place is barren. They didn’t even bother staging it. That’s a seller who is mentally finished with the property and very motivated to sell (they’re likely carrying two mortgages). Unfortunately for them, it probably would have sold quicker, and possibly for more money, had they staged it. Nevertheless, this is your opportunity. 

When there is no furniture left in the home, the seller has already moved on, both figuratively and literally; and the longer that home sits on the market, the more stress it is for the seller. A golden opportunity for a buyer is when it is an empty home that has been on the market for more than 100 days. I stumbled across one of these situations about ten years ago, and the deal garnered was incredible. 

 

A home that first lists after November 15th: Everyone knows if you’re trying to sell your house at the ideal time (potentially generating the highest price) you don’t list anywhere near Christmas or the New Year. A seller who does this is either utterly ignorant to market dynamics or has to sell – a.k.a ‘A Motivated Seller.’

 

Quick price drop: Take this one with a grain of salt. If the price started ridiculously high, a quick price drop (lowered within the first 30 days on the market) merely means the seller is coming back down to reality. However, if a price drop occurred quickly when the original price was justified, you may have a winner on your hands. This likely means they’re motivated sellers, and there is almost always more room to drop.

 

Realtor to realtor conversation: Have your realtor inform their realtor that you are interested in the house, but that you’re looking for a bit of background information – namely the reason the seller is selling. Sometimes this is truly the best way to determine a negotiation strategy as it provides context to the situation, and it saves both you and the seller time. In such a scenario where your realtor learns the seller is motivated, you’ll have great starting ground to submit an offer. Start low.

 

Motivated sellers are a buyer’s ideal – and they’re what every real estate investor should seek out. Look for these five indications of a motivated seller when pursuing your next real estate investment. 

 

Stay hungry,

 

 

 

Aaron

PS – Entrepreneurship and successful investing are about finding opportunity and capitalizing. The art is in the finding. Subscribe to my weekly newsletter below. Only my best content will land in your inbox. 

About the author

Aaron Hoddinott

Like all of you entrepreneurs and investors out there, Aaron has been in the trenches. He is the founder of an influential online media and PR company. From oil wildcatters to mining prospectors, tech gurus to medical doctors, and even celebrities, Aaron has helped market and expand brand awareness for a diverse range of publicly traded companies ran by entrepreneurs from all walks of life.

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