When I first got into real estate, I thought it was impossible to buy properties for less than $1,000. The idea sounded so far-fetched to me.
I mean, seriously… who in their right mind would willingly walk away from a property they owned, free and clear, for less than a thousand bucks?
What kind of person does that?
I’ve bought dozens of properties for less than $1,000, so believe me when I tell you—it’s possible. Once I figured out where to find these people, I was pleasantly surprised to find that there were actually MANY sellers who were more than happy to sell their property for almost nothing.
In our trade, we call them “motivated sellers.”
The truth is, these kinds of sellers are all over the place, in every neighborhood, every city, and every state. The only catch is, they aren’t going to come and knock on your door. In 99% of cases, they aren’t going to take ANY action whatsoever. You need to find them.
What Is a Motivated Seller?
Believe it or not, motivated sellers aren’t that difficult to find once you figure out where to look. I talk to dozens of these people every week, and my voicemail is regularly jammed FULL of leads who are practically begging me to send them a low-ball offer.
I realize it may sound harsh. Some investors get hung up on the idea that they’re taking advantage of someone in their time of need—but this is the wrong perspective.
In all of my experiences in dealing with motivated sellers, I’ve found that the vast majority of them are happy to deal with me. In their minds, nobody wants to buy their property, and they had no hope… until I found them.
Types of Motivated Sellers
As crazy as these people may sound to folks like you and me, there are a lot of legitimate reasons why some sellers are willing to give away their real estate for almost nothing. Most sellers are dealing with one or more of the following issues, and they are a prime opportunity for you to do business.
1. The seller can’t afford their mortgage payment.
No, I’m not talking about foreclosures. A lot of property owners can’t afford to make their mortgage payment, but they haven’t yet reached the point of actually missing their payments.
We get a lot of people who are on the verge of financial ruin and are desperately looking for someone to bail them out. These properties often don’t have enough equity in them to justify my involvement, but you can occasionally find great opportunities this way.
2. The seller has delinquent taxes on the property.
I come across lots of people who own their property free and clear—no mortgages, no money owed. However, for one reason or another, they are either unwilling or unable to pay their taxes. If they don’t pay off their taxes soon, the local municipality will foreclose on the property and they will lose everything.
I know, it sounds weird. Why would somebody walk away from their property just because of delinquent taxes? Well, it’s a lot more common than you’d think, partially because these sellers have issues that go far beyond financial problems. In fact, in 2014, it’s estimated that local U.S. governments sell $5-6 billion worth of delinquent taxes to the private sector every year.
3. The seller inherited their property and doesn’t want it.
Through some twist of fate, some people find themselves as the owner of a property that they don’t want. Perhaps their parents or grandparents owned it, and the property just fell into their lap. They have absolutely no interest in it, but suddenly the property is theirs, but they don’t see it as an asset. They see it as a problem, along with all of its headaches, expenses, and liabilities.
Sometimes, these people will make an effort to sell it with a realtor. Other times, they’ll just let it go to tax foreclosure. They don’t have the time or energy to deal with it, and, frankly, they just don’t care. It’s a surprisingly common situation.
4. The owner has moved away.
Many people buy property because they plan to develop it or move there someday, but people’s lives change. People get new jobs, move away, get sick, or go broke. People buy properties for various reasons, and then, through unforeseen circumstances, their attention is redirected to other things.
I talk to a lot of people who literally haven’t seen or thought about their property in years. The property has been pushed down (or completely off) their priority list. They don’t care about it because they’ve moved on to bigger and better things.
5. The seller has gone through a significant or traumatic life event.
Some people own properties that have become a significant financial or emotional burden for them. They need this property to disappear at any cost. “Making money” on the property is the least of their concerns. Believe it or not, I’ve even had the occasional seller offer to give me their property for free. Heck, one guy even offered to pay me to take his property!
People in this position want to unload their property so badly that they will do almost anything to get it out of their lives. These kinds of sellers are a prime opportunity for you to make your move.
6. The property is an absolute train wreck.
You probably know the type of property I’m talking about. Some houses are literally caving in on themselves. Others have become makeshift landfills. Even some of these properties can be a dream come true for a rehabber, I frequently find trashed properties with no real value. Some properties (in my opinion) aren’t worth it—no matter how you slice it.
In these cases, the cost of fixing, cleaning, or repairing the property FAR exceeds any potential value that they (or even you) could extract from it. Of all the situations I encounter, this is the only one that I almost always choose to pass on.
What Should I Expect From a Motivated Seller?
When you find these sellers, you’re essentially bailing them out of a bad situation, and they will usually be grateful for your help.
The idea is to find the right people at the right time. If someone doesn’t like your low-ball offer, believe me—they won’t take it, and that’s their prerogative. As a real estate investor, you’re not forcing or coercing anybody to do anything; you’re just giving them your best offer and in some cases, it will be their best option. It has to make sense for both you and them to work—and many times, it will!
Coincidentally, you’ll also find that most of these “motivated sellers” have put absolutely ZERO effort into listing their property for sale. It’s odd, but I’ve learned that when you meet people looking for a quick and easy solution and you make the process quick, easy, and painless, many motivated sellers will gladly sell you their property for pennies on the dollar.
It may sound unreal, but I’m telling you—the opportunities are everywhere. And if you’re looking in the right places, it won’t take long to find them.