On this week’s podcast, Dr. Matt Motil discusses what you should do after you have a motivated seller talking. Getting a seller is half the battle and negotiating for the best deal is the other half. Real Estate Investing is all about finding the best deals and using them.
Negotiating with a Motivated Seller
You’ve seen me talk about getting two or three properties without costing me a dime. Everyone wants to know how I did these deals with no cost to myself and how you can get into real estate investing with little money. Real estate investing is about selling and what kind of mindset you need to be a successful real estate investor.
Dr. Matt Motil talks through what you should do after you have a motivated seller talking. Getting a seller is half the battle and negotiating for the best deal is the other half. Real Estate Investing is all about finding the best deals and using them.
It doesn’t matter if I am trying to buy your house or sell your house or get you to look at some fitness supplements. The product doesn’t matter. What I am trying to do with the seller is build a relationship and find out what your pain point is. What is causing you to want to sell or buy something? In real estate investing, if I am talking to a seller, the best thing I can do is get a good deal for the seller and a good deal for myself.
I want to start out by saying that I am buying his two properties and he is writing me a check for $15,000.00. One of the properties is rented out and the other one needs a little bit of work.
So, this guy contacted me after getting a direct mailer from me (one of the many kind of marketing techniques I use).
After he called me, I did a lot of research. I checked the tax record to see if he is behind and what he pays each year so I know what my ROI will look like. If I can’t get the tax records, I will check on RedFin or Zillow. Now, use these sites with a grain of salt because they are not always accurate, but they are good to get a general idea about a property. I checked with him about the tenants and what they are paying in rent each month. It’s all about due diligence.
After I crunched all the numbers for renovations and the area the property is in and what kind of ROI I want, I asked the seller what he wanted to sell his property for. I already know what range I am willing to pay for this property, but I let the seller tell me what he wants because it matters that he feel he is getting a good deal. Sometimes a seller will tell you a ridiculous number, and you can negotiate with that too.
After I looked through the property, I talked with the seller a little bit. He’s from South Carolina, so I asked him about that and found out a little about his family. I then asked him if he could use a magic wand and use it to get his dream deal for the house, what would it be? He said he would love 40k a house, but knew it wasn’t an option in this market. He settled on 50k for the two houses. After using rentometer.com I knew I would pay about 24k for the one house that has no tenant and needs help.
I told the tenant, that after I had looked at the renovations and the market prices, the best I could do was 48k. He disclosed to me that he still had a 70k loan on the one house that needs 15k of renovation. He was willing to pay 20k at closing to get away from the house. I told him I would take over his mortgage and he would only need to pay 15k at closing. I got a great deal and an immediate 15k check in closing before I even do the renovations and restructure the loans. Both of us got a great deal. He saved money and I made money. Can’t beat it!
I talked to a woman that owed nothing on the house, but hated being a landlord. I asked her if she likes the passive income from the house and she agrees that she loves the money, but she hates having to pay out of pocket for damages and those kinds of things. I told her that her house was not worth much for cash, BUT I could work with her on a creative structure. I suggested that I buy it from her, but she carries a loan back on it for me. Then I told her I would pay her “x” amount for the note and each month and after 6 months I would restructure the loan and pay off the deal completely. I did not offer her a down payment and she did not ask for one.
We went to a title company and got all that paperwork done. I became the owner of that house with a tenant and within 6 months I will pay off the balance of her loan.
Not all real estate investing has to be just about the investor. I just gave you two different deals where I helped eliminate someone’s pain point and still got a good deal. With each deal, I left a happy seller with extra money that is going into my pocket.
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