- How Much Money Is Needed To Invest In Rental Property?
- Should A Real Estate Investor Get An Agent’s License?
- 5 Big Factors That Affect The Costs Of Renovating Your Home
- SIBOR Hike – What You Can Do With Your Current Loan
- 6 Basic Don’ts Of Real Estate Negotiation Tactics
- Will New Condo Relaunches Trigger The Great Property Sale We Have All Been Waiting For?
- 10 Proximity Amenities That Add Value To Real Estate
- How To Get Personal Loans More Easily With Good Credit
The Most Critical Aspect Of Sellers That Make Great Deals
The most important component of real estating is often said to be location location location. There is absolutely no doubt in anyone’s mind that location is the single most influential factor that can drive up or down a property’s market value. But if how much a house can be bought at is solely based on it’s location value, no one will ever be able to score a good price for a property. So the foundations of great deal making is actually finding sellers who have a certain aspect to their approach to the sale. And that is being “accommodating”.
We can then further break down accommodating sellers into 2 categories.
1) Those with problems that can be solved by selling the property.
2) Those who have a bad property and want to pass on the curse to an unsuspecting buyer.
If you have a sane mind, you will obviously want to work with the first type only.
Some things to keep in mind when seeking your seller
1) Sellers who are flexible and accommodating can be found anywhere as long as there is property. But there are certain niches where there is a higher proportion of accommodating sellers compared to other niches. Instead of pointing you to where they are and flooding these sellers with your offers, it is best you work out the niches that work best for you.
2) The speed of uncovering the seller’s motivations can put you at an advantage or disadvantage. If you can figure this out before your competitors, you can quickly put together a deal that meets the needs of the sellers. You might be surprised at how fast a seller can decide when your offer meets all their requirements. There is no need to feel guilty of taking advantage of them. You are actually doing them a favour by doing a quick deal.
3) A lot of times, a property that looks like a lemon can turn out to be a big winner if the seller is accommodating enough to the terms you proposed. For example, you somehow managed to find a piece of property that does not remotely look like it is human inhabitable. But getting a good price can allow you to use the saving to do up the place and put it out on the market for tenants. And you can also be able to dish out a low competitive rental rate at market yields since you effectively bought at a low per square feet price.
4) The Pareto Rule holds true. 20% of the deals you enter into will generate 80% of your income. And the 20% will usually consists of the most accommodating sellers you ran into. This is the most mind-boggling theory that always seem to raise eyebrows. Identify your winner and milk them.
5) You do not need to have good rapport with sellers. But you absolutely have to be able to communicate clearly and subtly to them in a way that is not intimidating and threatening. The job of building rapport is best left to insurance and real estate agents. You mean business and is in fact doing the seller a favour. They need you more than you need them. You also avoid rapport obligation when you keep your distance.
6) Accommodating sellers can be accommodating on 2 areas. Price and terms of the transaction. You will be a lucky bunny if you can run into one who is accommodating on both areas. Accommodating price is straight forward in that it means a lower price. Unless you are an experienced buyer who know exactly what you are doing, it is best to seek the advice of your agent or lawyer on what are the kind of terms you should ask for. Note that even with a non-negotiable high price, a deal can overwhelmingly tilt in your favour if you can get the right terms compromised.
Once you keep the gist above in mind, the next question you might ask is: How does a seller become accommodating? While we may never know the exact details of their personal endeavors, their problems usually always fall into one of 2 categories. Personal and financial. Personal problems include health issues, relocation, divorce, etc. And financial problems include bankruptcy, job loss, foreclosure, etc. When sellers have a need to sell their properties due to these problems, very often they become accommodating as they know something has to happen before a specific time. Failure to do so means that their problem multiplies.
When you are able to identify such sellers quickly, get them to reveal the source of their problems, their time frame and what they exactly need to solve them. You can then quickly structure a deal to satisfy him while looking like an attractive proposition for yourself.
For example, sellers who are selling due to job loss could be very accommodating if you allow them to rent the apartment at a good price after the property transaction goes through. Those who are facing bankruptcy might be willing to give you a bigger discount if you agree to make the transaction funds available in the shortest possible time. Relocating sellers could see you as a god-send if you somehow coincidentally have a property for rent in the place he is relocating to.
Although a lot of investors practice opportunism and would eat up accommodating sellers whole, a cut-throat approach it is not necessary to make killer deals. If some has to suffer miserably for you to get an advantage, maybe you should review your approach to real estating. Your competitors are buyers who are challenging your offer, not the seller.