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Whenever anyone is selling a property most potential investors always want to know why it’s being sold. Not only is it human nature to want to understand the history but their reasoning on why they are selling could impact you as the buyer in a multitude of ways going into the transaction. During my 20+ years of being involved in investment real estate I can tell you that all sellers generally fall into one of four categories on why they are selling:
They are motivated by price: These are the lease motivated sellers and if you are in the market for a real bargain then chances are you will not find it with one of these sellers. This seller is purely motivated by an increase in market conditions that is going to garner them a nice profit and while there are many of us that are like this, this seller is generally the least motivated since they do not have to sell and most likely are running their property well.
Opportunity motivated: These sellers are motivated to sell because another opportunity has presented itself and they would like to take advantage. An example of this may be that they own a 10 unit building and now they have an opportunity to purchase a 40-unit building, so they want to sell this property to move into the newer property. These sellers are generally a little more motivated than the price motivated ones, but you need to be cautious because if they do not hit their pricing they could just as well keep the property, refinance it and get the money they need for the new investment that way.
Change motivated: Sellers motivated by change are very similar to sellers motivated by opportunity. Some differences with these sellers maybe they are changing other areas of their life such as their employment, area where they are living or something along those lines and they are looking to potentially sell a property that they self-manage because they have an opportunity to take advantage of a major change in their life. Depending upon the significance of the change could determine just how motivated they are, so when negotiating with a seller like this keep that in mind and see if you can help create the change they are seeking.
Problem motivated: Sellers that are motivated by problems are generally the most motivated sellers in the market. These sellers have an issue that they need to resolve therefore the sooner they can resolve that issue the more relief they will have. Some of these problems could be a job loss, divorce, partnership breaking up, death or some other extenuating circumstances. It is with these types of sellers that you will likely have the most success in finding a bargain.
The reason a seller is selling their investment property can be just as, or in some cases even more important than the property itself. So, as you look for opportunities remember to find out as much as you can about the back story and the sellers’ motivations so that you can work to create a workable and winning solution for both you and them. Here at CAP real estate, we work with all different types of sellers and buyers, and we do as much upfront work as we can to help ensure smooth and easy negotiation and transaction. If you want to find out more about how we navigate this process or what opportunities we have available please send us a message below for a consultation.
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