Qualifying Property Sellers in Real Estate
When we entered the real estate business in India early in the year 2015, we had decided that we will choose our company (those whom we choose to work with) wisely. Because otherwise as with many other ventures started by so many professionals and entrepreneurs, their endeavours end before they even begin! For one in the real estate business you have to work with a lot of property sellers and you need to ask yourself one thing before you join hands with them,” Are the property sellers motivated enough?” If yes, then the business of selling properties becomes a pleasurable one. If no, then we do not need to say anything else!
Now, this may sound obvious – when you are a well known real estate agent / Broker , you will get many calls from sellers who want to sell their homes or commercial premises. And we get our fair share of sellers who contacts us on a daily basis hoping to sell their homes / commercial spaces through us. But first things first let us define a “Property seller” first.
Property Sellers
Sellers are that set of people who want to sell their homes on a retail basis. After a lot of analysis after being in this business for almost 5 years we have come to the conclusion that this opportunity is wasted by most of the brokers in the market. Let us see how they tend to waste a good deal. Firstly, most agents spend a lot of time trying to make something out of nothing. In their primary desire to bag a deal, the real estate consultants, the novice ones (or even the experienced ones), will scoot all around town trying to meet with sellers, without judging whether they are fit for a deal. We believe that Brokers need to qualify the sellers first.
Qualifying Sellers
But here another question arises. How do you qualify sellers first? Well firstly, you need to set forth a simple set of eligibility standards. It will act as a template of sorts for filtering property sellers. Then you can apply these filters to all the sellers and see whether they are any good or not. With this method, we easily come to know within the first few minutes, whether the sellers have those good offers or are they simply talking BS! Just talking on the phone for a few minutes with sellers can save you a lot of time.
But what are those criteria on the basis of which you will be able to sort sellers? Here are three simple guidelines that helps us quickly cut down on the chase with a whole database of sellers.
Do they reside in the property they want to sell?
If yes, then that’s the first criterion to strike out their name from the list. Why so? For one, they will not have a deadline in mind for sure. Owners rarely want to walk out of a snug, warm, and safe shelter. It’s even better if they do not live in the same state. In fact, the further away property sellers are from their property, the less it will seem to be worth to them. These owners who live away from their property can be motivated to sell off because of many factors chief among them the maintenance responsibilities that takes a huge amount of effort and money.
Do They Have To Pay Off Its Mortgage?
If yes, then the chances of them being motivated to sell off the property decreases even more? Now you would ask why will the seller refrain from selling when somebody is ready to take on his liabilities? That’s because there are certain legal hassles such as the bank or lender asking the seller to pay a penalty for prepaying the principal amount. Banks earn money on the interest in the mortgage and this prepayment might affect their plans adversely. This in turn might affect the deal going through because the seller has changed his mind at the last minute!
Does the selling party have a pain point?
Many motivated sellers have very sad and woeful backstories. Bad things happen to good people quite frequently than you would assume in life! If they ask you to have a look at your property, then there is a chance that you could capitalize on it. If they have a sad story or two to tell you, then our ears are all attention, for this is the second sign of selling. These sellers use a common vocabulary like must, need, or have to sell when it comes to selling off their property.
Weeding Out The Lookers
When property sellers call us we ensure that we have sorted the callers to determine what they want. They should have a motivation point. They should also have a certain set of expectations to meet. We have to know this before we invest extra time with them. A lot of questions about the background of the property are asked by us. If they tell us the entire story over the phone, then all we need to do is listen to them and then go for closing in on the deal by securing an appointment.
The Process Of Weeding Out Lookers
Just as you can never buy a house over the phone, similarly one has to meet the owner of the property and also check out the property in detail before committing to sell the property. For us that’s the only way one can secure the deal of selling a property. There are a couple of more points also that we get cleared on the phone before meeting the owner:
- How long has the selling party lived in that home?
- How much do they owe on the property?
Get these two questions answered and you could save yourself a lot of time in the future. Sometimes sellers just want to see what you think is the right price on their property. You can find out because they will call and preface the conversation with phrases like:
- “I do not need to sell it off but…”
- “I was just wondering how much is my property worth…”
- “You have a buyer for it? Come by and call me back if there is an offer…”
This kind of talk immediately sends our alarm bells ringing. When these phrases are used in the conversation, you will get a signal that the seller isn’t that motivated to sell his / her property. He / she is only testing the market and looking for a higher offer for his / her property. But how do you tackle such situations? Here are some of the best stock replies from our side – “Great, But I help home owners that have either distressed properties and they have to sell their home quickly. Do you have a situation where you require similar assistance?” This generally puts an end to the fishing conversation!
How To Blast Out The Deal?
When we talk about a contract with potential sellers for selling their property, we make sure to drill into their heads that we need to create a proper marketing plan and and an info package ready for potential buyers. What should the info package consist of? It should cover all that the buyer needs to know to make an informed decision. It should have:
- Good pictures and a walk through video
- An accurate estimate of After Repair Value (ARV)
- A solid estimate of repair costs
- A way for getting into the home or property for inspections
If owners are living in the property, then we schedule all the inspections at one time.
Always Controlling The Deal
We never let the seller or buyer get hold of the reins of the property dealing scenario. As a rule in this business you never let the buyer get control of the property before you are able to close the deal. Generally if the property owner is in India that generally never happens but if the property seller is abroad it is our responsibility as agents to control every aspect of the deal and to never let it get out of hand. Giving you a grasp of this control issue needs an example so that you can understand the whole situation clearly. This is something that happened in the US, and it is relevant here as well!
A Small Story
An investor got a probated land deal under contract. He was originally planning was to wholesale the property. He talked with his hard money lender. The property had a great upside potential. So they decided to close on it, perform a quick renovation, and then they would retail it out to the sellers.
While conducting inspections, a neighbor paid a visit inquiring about the property. He was a doctor and wanted a second home in the neighborhood for his daughter and grandchildren. After some discussion, the doctor offered to pay the investor $20,000 for the contract assignment and wanted to supervise the renovation as well.
The investor accepted the offer. He employed an assignment contract that didn’t transfer the ownership until closing. Later on, the investor found out that the doctor would be out on an overseas vacation somewhere near the closing date. The doctor wired the $155,000 in advance. He gave his daughter power of attorney for signing closing documents.
In the meantime, the doctor’s daughter did not respond to calls, texts, or emails for the closure of the deal. The doctor was absent. The investor had to close on the deal. The doctor returned the following week. But he offered no explanation for why his daughter was unresponsive. It may have been a ploy to try and cause the investor to default on the contract and save the $20,000.
So you see how buyers can screw sellers especially when both the seller and the agent are desperate to make a deal. Moral of the story? Always have a professional and experienced real estate consultant engaged in selling your property!
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