The Importance of Finding Motivated Sellers

Finding motivated sellers is the most important part of an active real estate investing business. That's my assertion. What I'm going to do in this article is explain why. Finding motivated sellers without understanding why you need them won't do you much good at all.

Before we get started, here's a little information about how why learning how to find motivated sellers is so important to every active real estate wholesaler and investor.

The #1 Secret To Consistent Success
In Real Estate Investing Is To Make Money When You Buy

It means that you make it a habit to only buy income properties. Properties that yield a positive cash flow after accounting for on-going ownership costs (loan payments, taxes, insurance costs, etc).

It means that you purchase properties at a enough of a discount of value that the financing and operational expenses of purchasing a property are covered by the rental (or other) income produced for you by the property.

The #2 Secret to Consistent Success
In Real Estate Investing and Wholesaling Is To Buy Properties At A Discount

After Repair Value is the equivalent of Fair market value, usually used by real estate investors attempting to project the value of fixer uppers after they are renovated.

For property rehabbers, that discount should be deep enough to account for cost of renovation (labor, parts,supplies,permits, etc), financing, holding costs, soft costs, your rehab profit, and a discount for your retail buyer.

For real estate wholesalers, your discount should be deep enough to obtain a wholesale fee or wholesale profit, while giving your rehabber buyer enough room to cover her projected costs (see above paragraph) and make a profit.If your wholesale deal is appropriate for rental property investors to purchase directly, your discount still has to factor in the discounts that the most experienced (and usually most prolific) buyers would require.

Most experienced rehabbers or rental property investors would be expecting to buy properties from you at roughly 60 percent to 70 percent of ARV minus repairs. Understanding your Maximum Allowable Offer (MAO) and estimating repairs are topics for another day, but it's important that you understand why getting substantial discounts on property is the lifeblood of your business.

#3 Secret to Real Estate Success:
Finding motivated sellers and making tons of offers

Having said that, I have personally gotten properties at huge discounts for reasons that I still cannot fathom...Even in situations where there was no financial desperation.

I have had someone sell property to me at a discount for the convenience of being able to move 2 months early to move to another school district... There are tons of reasons why people decide that selling their house fast is worth taking a substantial discount.

For instance, finding a motivated seller who isn't in financial distress is a common occurrence for probate investing individuals because the sellers in this situation are typically family members who would rather sell at a discount than fight with each other (down the road) over their inherited property.

As you begin to market your services, you'll notice that tips for finding motivated sellers that you get on this website, will attract a lot of sellers but they'll also bring you another problem...they will attract some sellers who are not motivated.

The sooner you recognize these unmotivated sellers and avoid them, the greater your real estate profit and your piece of mind will be.