If you’ve been perusing house listings online or have begun your search for your dream home, odds are good that you’ve run into the term “motivated seller” on more than one occasion. This is a somewhat strange term to use to describe the seller, since you would think that every seller would be motivated. If they’re not motivated, then why are they selling? Motivated sellers are selling for different reasons and the use of the word “motivated” is supposedly enticing to buyers. Before you get drawn to a listing put up by a motivated seller, you should have a clearer understanding of what a motivated seller could actually be. The following are three different types of sellers that may refer to themselves as motivated sellers, and how to deal with them:
1. Someone that is desperate to sell
A seller that is desperate to sell fits the term “motivated seller” much better than anyone else. They are motivated to sell their home as quickly as possible for one reason or another. Maybe the house has been on the market for too long and they just want to get rid of the house at this point. Maybe they need to relocate for work and simply don’t have the time to try and make the most money they can. Could be a divorce sale, a possible probate situation, or something positive like a new Grandbaby on the way where the sellers want to be present for the new baby.
Your real estate agent should be able to find out if the seller is desperate since, at this point, they are no longer willing to play games — they just want to sell and probably are willing to take a loss. You could try to make an offer that’s largely below the asking price, but even though the seller is desperate, they may not be willing to take that big of a hit. The safe bet is to have your agent determine probable fair market value based on recent sales and determine what YOU believe the actual value is and what you would be prepared to offer. Remember, a low ball offer could get you a great deal or shoot you out of the running altogether. If you are going to offer 10%, 20%, 30% below the asking price, be prepared to walk away if they flat out decline your offer.
2. Someone that is trying to start a bidding war
A seller who does this is only using the term “motivated seller” as a way to draw interest. This is because they think they can fool a group of buyers into thinking they will get a good deal on the house and end up bidding against each other until the price is at or above the asking price. The thing is, these sellers might be right. To go about making an offer to a seller like this, make sure you get a mortgage pre-approval. This shows them that you have your financing in place. When you submit an offer, only mention the price you are willing to pay — don’t mention any terms. Write a letter to submit with your offer describing who you are and why you want to buy the house. By making your offer a personal one, you can establish an emotional connection with the seller that other buyers won’t. Sellers don’t always choose the highest bid; they sometimes make emotional decisions based on whom they like.
3 Someone that made a bad investment and is trying to recoup their losses
This type of seller falls somewhere between the desperate seller and the seller that is trying to fool buyers into a bidding war. That’s because this type of seller made a bad investment buying the property and is now desperate to get rid of it. But the seller doesn’t want to disclose why it was a bad investment to begin with, which means they are trying to trick buyers by using the term “motivated seller.” So what should you do to avoid buying a house from a seller like this? Make sure you have a professional perform a home inspection to see if there are any major issues. Then check a city planning report to find out if there are any major construction projects planned around the property. The value of the house is going to plummet if a freeway is going to be built through the backyard.
When you see the term “motivated seller” in a home listing, odds are it means the owner is one of these three types of sellers. Know who you are dealing with to figuring out whether the house is worth buying and how you should go about making your offer. You should try to find out as much about the seller’s actual motivations as possible.
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