The American Education Institute

You will soon descover tht finding flexible sellers is truly your key to success as an investor in real estate.  You need to realize that, in any given market place, upwards of 80% to 85% of the sellers are firm on their terms or firm on their asking prices.  They do not wish to negotiate with you at all, so don’t bother.  Do not waste your time trying to bargain with sellers who are convinced in their own minds that they do not need you;  they’re sure someone else will come along who’ll be willing to give them their price as well as their terms.  Let it happen.  Walk away and concentrate instead on the 15% to 20% of the sellers in that market who are willing to bargain.

In some market places, you might even find upwards of 30% of the sellers who are almost desperate to sell properties they no longer want to own.  These sellers are willing to negotiate their terms with you or their price or both.  (Consider, for example, that old saw of “flight to the ‘burbs” and of the current situation of “suburban sprawl.”  At one time, there wee thousands of sellers in the inner city quite anxious to flee to the suburbs.  No moral judgment call here;  this was just a fact of real estate life in the big city–most big cities.)

In any event, you want to find these types of sellers and negotiate with them.  They have become flexible probably due to many diverse reasons, but among the more likely are usually the following:

1.  Death (usually of a loved one, but could be the owner too)

2.  Divorce

3.  Lack of employment

4.  Job transfer

5.  Property is owned by an estate

6.  Problems managing the property

7.  Emotional reasons for disposing of the property

8.  Problems with tenants

9.  Neighborhood thought to be deteriorating

10. Owner is absent

Sometimes flexible sellers just want to move away.  They don’t always need to be undergoing hardship.  Consider the following:

REASONS WHY PEOPLE MOVE (Percentages of Persons Responding)

Desired the tax and investment advantages of home ownership – 45%

Required larger home – 38%

Paying rent no longer desirable – 35%                      

Dissatisfied with previous neighborhood – 19%

Relocated to new location by present employer – 15%

Relocated in order to change employers – 13%

New Household formed through marriage, divorce, or other – 11%

Desired a smaller home – 6%

Desired new location after retirement – 4%

Sought change of climate for better health – 3%

Desired vacation home – 1%

From the above chart, it is easy to see some of the other, more positive, reasons why people decide to sell and move.  Sometimes these more positive reasons can be more compelling to a seller than a negative reason.  And sometimes, although rate, a seller who is not already motivated to be flexible can be converted to flexibility by the terms you might offer.  A classic example?  Offer the seller more than his or her asking price (!) in exchange for you more flexible terms.  This neat idea can become a “win-win situation” for all parties concerned.  Such strategies as this are discussed in my text entitled 100% Financing When Buying Real Estate.

Furthermore, as time goes on and a property sits on a seller’s hands for months and sometimes years on end, the emotions of that seller can indeed change.  In fact, his or her emotional needs and other wants and desires are always changing.  An inflexible man today could well be quite flexible tomorrow.  You will find that the more you meet with people with property to sell today, or that may be for sale tomorrow, the more you’ll discover how frequently and profoundly people change.  The more you become aware of thier changing situations–and communicate that sensitivity to them– the more likely they’ll be to call you first whenever they are redy to negotiate that “tomorrow sale” with you. 

Make a contract with every possible property seller you can, and continue occasionally to maintain that contract.  Have a card and give it to everyone.  Send Christmas cards, post cards, birthday cards, anniversary cards, and do every other kind of thing you can think of.  Play the numbers game and you will be a successful real estate investor in any market place.

Dr. Eric T. Martin / 100% Financing When Buying Real Estate / 5-24-09