Bread & Butter Properties

Bread & Butter Properties
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Friday, July 16, 2010

Who are the Motivated Sellers?

I only want to buy from motivated sellers. Period.

Who are they? They are the people who really want to sell their properties; not those who say "well, maybe if I can get the right price" or " actually, sell also can, but it's okay if I don't." No. These are not the people I am looking for. That is why, you need to go through the numbers (as I mentioned in my earlier post) - so that you can find the motivated sellers. They are usually the ones who tend to sell below market price.

So, what are some of the types of people that I have bought from, that were motivated to sell? I use the word motivated but sometimes, the people were actually desperate to sell their property, for whatever reasons. If you are looking to be acquire a few rental properties in the area, it is also important to remember to be fair in dealing with these sellers. Although they may be desperate to sell, you don't want to have a bad reputation, as someone who "takes advantage" of their predicament or bad fortune. It's always better to have a win-win deal.

Motivated sellers:
1. People who are going through a divorce. Both parties don't want to keep the house, and neither one wants to pay for the instalment. They are usually quite happy to sell it quickly and get out of this mess. So, you are doing them a favor. 

2. They have just bought a new house. With another mortgage payment for new house coming up, they usually just want to sell their old place, and move. Sellers like these are usually quite happy to take a lower price, as long as it closes quickly as they don't want to incur interests on their loan while still paying for this one.

3. Gambling problem. It is the usual story where they may be pursued by Ah Longs and need to settle their debt like yesterday. Sometimes, the house may have been left empty for a while as they fled to hide, so may be in "as is" condition. You can find some good bargains, but make sure the seller's title and documents are in order before you buy.

4. Terminal illnesses. It is sad but sometimes the seller needs money for medical expenses, like for cancer treatments. The house is most likely to be fully paid up. They would want a quick sale, for obvious reasons, and normally would take a discount to the market price. In this situation, you are also helping them but be fair when it comes to pricing.

5. They don't know the market price. yes, it happens but not very often. In a mature area, the owner may have lived there since day one, when he bought it at RM30k, for example. He doesn't comprehend that prices have moved up a lot, and is happy to sell for double the original price? But the market price could be RM90k? Happens when the owner sells the property himself (without an agent's help).

6. He/She is an investor. I have bought a few units from people who are like me, investing for rental income. They may have lived in the area, and subsequently rented it out to others. After a few years of collecting rent, they may have moved on to investing in commercial properties, for example. They are quite happy to see another investors take over, and these transactions usually are quite smooth, and the pricing, a win-win.

In all these cases, the only way to find motivated sellers is to go through the numbers. You will find them. And another important point is, always ask. If the price is stated as X, it does not mean that it has to be that. You can always offer a lower price; and sometimes, they may be motivated to sell to you. You'll never know what their circumstances could be. It always pay to Ask.


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