How To Squeeze The Best Deals Out Of Desperate Sellers

Ask any regular dude off the street on how to make money from property, and you’ll probably get this answer: “Buy low and sell high.” Like most cliches, while it’s most certainly true, it’s also pretty useless if you think about it: I mean, how exactly low is low, and how exactly high is high?

One of the most common mistakes that newbies make is to mistake cheap for low. Just because you can get a Mont Kiara condo for less than $300,000 doesn’t mean that you’ve necessarily gotten yourself a bargain if it faces a sewer tank and or if it was the scene of a Charles Manson style triple homicide. A dud property is a dud property – no matter how much (or little) you paid for it.

The One Question That Will Change Everything

When you come across a piece of property that seems to be priced below market value, therefore, your alarm bells should start ringing. From my experience running theDealMatcher service for more than a year now, most “under market value” deals usually turn out to be duds, and the legit ones are so competitive that by the time you know about them, they would have been snapped up by others.

So here’s the $64,000 question – how to know if a below-market-price property is dud or not? Of course, you can do the complete due diligence like researching previous transactions, pricing trends, who lived next door for the last 20 years, you know, the whole enchilada. But, of course, since these below market value deals are pretty rare you can bet that apart from you, there are a whole bunch of other investor jerks and their starving agents also eyeing the same deal as you do, and by the time you’ve completed your homework it would have already been too late.

Therefore, in the spirit of 80/20, you’ll need a heuristic to quickly ascertain the legitimacy of a deal. The smart thing to do, therefore, is to go directly to the source and ask this simple question:-

“Dear seller, why are you selling this property?”

The answers you ‘want’ to hear include “I inherited this house”, “I am separating from my spouse”, “I need money to send my kid to college” or “I’m leaving this place for good.” If the seller is reluctant to tell you the reason (or he gives a generic answer as “I just feel like cashing out”) then it’s likely that he has got a dud in his hand which he wants to unload to the next sucker (you).

How To “Squeeze” Desperate Sellers For Fun And Profit

Now let’s say you’ve got a genuine deal in your hand with a genuine seller with a genuine reason to sell. You should know that the amount of money you’re going to pay is inversely proportional to the degree of desperateness inherent in the seller. Now if you’re going to live by the “buy low and sell high” mantra, then you’re going to buy at the lowest price possible, and by extension you’ll need to find the people who are the most desperate to sell.

Below are the three types of “sticky” situations where people are especially desperate to sell off their property, and also some suggestions on how you can exploit their desperateness for possible gain of huge amounts of filthy lucre and your own wicked enjoyment depending how broken your moral compass is.

Divorce: The “I’m Getting Dumped” Firesale

When marriages end and there’s a family home, then you’ll often find the property getting offloaded for less than market price because they just want a quick settlement and move on with their lives. Also, don’t be surprised if one of the partners decide to sell off the house cheaply in order to “spite the 8@st@rd / 81tch”.

There’s one thing to watch out though: if both parties have joint ownership of the property then when it goes for sale, its price may instead go up because of unrealistic expectations – simply because the couple may not easily agree on the price especially if they are “hostile” to each other.

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How to negotiate: Divorces are often a emotionally-charged affair, and you don’t want to inject extra drama into the mess. You want to maintain a professional decorum at all times, and present your offer in the simplest terms. Remember that the sellers are usually already drained emotionally, and will often not go into the nitty gritty of the deal which may be advantageous to you. Very often the seller(s) would just want to negotiate a sale and move on, and your “deal-readiness” will work to your advantage.

Leaving On A Jet Plane: The “I Need To GTFO” Firesale

There are a couple of reasons for what I call the “GTFO” sale:-

  1. Need to move away to start a new job
  2. Need to move away to start a family / romance elsewhere
  3. Need to move closer to schools
  4. Need to sell because of legitimate cashflow problems (i.e. buying new before selling the current house)
  5. Emerging “needs” (e.g. facilities for ageing family members, etc)

How to negotiate: Sellers of this kind are usually driven by deadlines (i.e. new job start dates, etc). Needless to say, the more urgent the deal needs to be done the more leverage power you will have. The more ruthless negotiator will purposely stall the process until there’s an opportunity to use the time constraint to drive down the prices.

Inheritance: The “My Rich Uncle Is Dead” Firesale

Death is usually tricky because it’s the inheritors who sell, and there’s an extra layer of complication if there are multiple stakeholders in the property. Also, similar to divorces, there is the additional dimension of grief and sorrow which means that negotiations and deal making should be done professionally and as discrete as possible.

How to negotiate: Eager beneficiaries are not desperate per se, but as sellers, they are usually not as savvy as, say, people who buy and sell property regularly to make money. Also, as opposed to professional investors, they may not know (or even care much) about fair market value of the property that they inherited. Again, they will often choose the “path of least resistance” and if you can offer them a fair, no-hassle deal then you’ll stand a better chance of snagging the property.

–GOODPLACE.MY

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