What Does Motivated Seller Mean In Real Estate?

Published on July 31, 2023

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What Does Motivated Seller Mean In Real Estate?

What Does Motivated Seller Mean In Real Estate?

If you are new in the real estate industry, one of your first tasks would be to learn about the industry’s jargon and terms. One such term is "motivated seller." This phrase holds significant implications for both parties involved in every property transaction. 

To help you learn more about motivated sellers in real estate, we'll unpack it in detail in the following sections. Specifically, we’ll discuss the motivations behind a seller's urgency to sell, explore the ways how to find motivated sellers, and more!

What Does it Mean When a Seller is Motivated?

What Does it Mean When a Seller is Motivated?

In real estate, when we refer to a home seller as motivated, it usually means that the seller is eager to sell the property as quickly as possible. There could be various reasons for this urgency, such as an impending move, financial constraints, or even the emotional toll of maintaining a property they no longer need or want. 

The term "motivated seller" is often seen in property listings to convey this sense of urgency to potential buyers.

A motivated seller is often more open to negotiation compared to other sellers. They might be willing to accept a lower reasonable offer, cover closing costs, or agree to other terms that might not be as favorable to them but expedite the sale. 

While this might not always mean that buyers will get a drastically lower price, it can create opportunities for negotiation and quick transactions, which can be beneficial, especially in a fast-paced real estate market.

Signs That a Seller is Motivated

Signs That a Seller is Motivated

Many sellers label themselves as motivated when they actually aren’t. They just want to get a lot of offers that’s why they use the term. To help you identify motivated sellers, check out the following signs:

1. The property is priced below market value.

2. The listing uses phrases like "must sell quickly" or "all offers considered."

3. The property is vacant (has an absentee owner) or the seller has already purchased another home.

4. There have been multiple price reductions.

5. The property is being sold as-is.

6. The listing has been on the market for a long time.

7. The seller is willing to negotiate on price or terms.

8. The seller is responsive and eager to schedule viewings or open houses.

9. The property is part of an estate sale.

10. The seller is facing pre-foreclosure, foreclosure or bankruptcy. 

11. The seller is relocating for a job or personal reasons.

12. The seller is willing to make concessions, such as paying for closing costs.

13. The seller is willing to sell the property with furnishings included. 

14. The seller is responsive to home inspection issues and is ready to make repairs quickly.

15. There's a personal event driving the sale, such as divorce or retirement.

Types of Motivated Sellers

Types of Motivated Sellers

Before you go looking for motivated sellers, you must understand that they come in different types, too. You should be really discerning to identify which one fits your objectives.

Desperate Seller

A desperate seller is typically one who needs to sell their home quickly due to pressing circumstances, such as financial distress, a job transfer, divorce, or health issues. These motivated sellers are often willing to negotiate on price, terms, or conditions in order to speed up the sale. They are usually more flexible and may accept lower offers. 

Seller Who Wants to Start a Bidding War

This type of motivated seller often sets the price of their property lower than the market value to attract multiple buyers and generate multiple offers. The hope is that competition among interested parties will drive the price up, potentially even above market value. 

These motivated sellers are often in markets that are highly competitive or in desirable locations, and they may not be in a hurry to sell. 

Average Seller

An average seller is usually someone who is selling their home under normal circumstances. They're not in a rush to sell, but they're also not trying to hold out for a bidding war. Their pricing is typically based on the market value of their home, and they're willing to negotiate to a reasonable extent. 

They often expect to go through the standard process of receiving and comparing offers, then proceeding with home inspections and negotiations before finalizing the sale.

Tricky Seller

A tricky seller may be attempting to offload a property with hidden issues or one that isn't quite as valuable as the asking price suggests. They might resist thorough home inspections or attempt to rush the sale process to prevent potential buyers from discovering these issues. 

This type of motivated seller may also set the price unrealistically high initially, only to drop it later to make the deal appear more attractive. 

Common Factors That Affect Seller Motivation

Common Factors That Affect Seller Motivation

There are several common factors that can affect a home seller's motivation to sell their property. Understanding these factors can give potential buyers insights into a seller's level of urgency and flexibility, which can be helpful during negotiations. 

  • Financial Factors: Sellers may be motivated by various financial circumstances. For instance, if they are facing financial distress like a job loss, a costly divorce, delayed mortgage payments, pre-foreclosures, low rental income, or bankruptcy, they may need to sell the home quickly to ease their financial burden. On the flip side, sellers who are financially secure may not feel the same urgency to sell.
  • Personal Factors: Changes in personal circumstances can significantly influence a seller's motivation. A job relocation, retirement, the birth of a child, or a health issue could mean that the seller needs to move quickly. 
  • Market Factors: In a seller's market, where demand exceeds supply, sellers might be less motivated to compromise since it's easier to find buyers. But in a buyer's market, where supply outstrips demand, sellers may be more willing to negotiate to secure a deal.
  • Property Factors: The condition and location of the property can also affect seller motivation. If a property is in poor condition and requires significant repairs, the seller might be motivated to sell "as-is" to avoid bearing the repair costs. If the property is in a less desirable area or has been on the market for a long time, the seller might also be more motivated to negotiate.
  • Time Factors: If the seller is on a tight timeline, their motivation to sell may increase. For example, if they have already purchased another home, are starting a new job in a different city, or need to sell by the end of the school year.
  • Emotional Factors: Selling a home isn't always just about finances or logistics; there's often a significant emotional component as well. Those who view the home as a burdensome reminder of the past or an emotional strain may be more eager to sell quickly. 

What are the Advantages of Buying From Motivated Sellers

What are the Advantages of Buying From Motivated Sellers

Buying a property from a motivated seller can offer several key advantages to a buyer. It's crucial to keep in mind that while these benefits can be substantial, it's also important to conduct proper due diligence to ensure the purchase is a wise decision and that you will really earn with closing more deals.

Faster Transactions

A motivated seller usually wants to close the deal quickly, which can speed up the entire process. This is especially beneficial in a hot market where distressed properties are sold quickly. 

Buyers can often move in sooner than anticipated, which can be a significant advantage if they're on a tight timeline.  

Seller Cooperation

Motivated sellers are typically more cooperative throughout the selling process. This can mean they're more amenable to home inspections, quicker to complete necessary repairs, or more likely to vacate the property in a timely manner. 

This cooperation can simplify the buying process and reduce potential stress for the buyer.

Negotiation Power

Motivated sellers are typically more flexible and open to negotiation. They may be willing to reduce the asking price, cover closing costs, or make other adjustments to speed up the sale. 

This negotiation power can translate into significant savings for the buyer. However, this doesn't mean buyers should unfairly exploit the seller's situation; negotiations should be conducted respectfully and fairly.

Potential for a Good Deal

Because motivated sellers are often willing to accept lower offers (price reduction), buyers may be able to purchase a property at below market value. This could result in immediate equity in the home, which can be beneficial for future resale or refinancing. 

Less Competition

Properties listed by motivated sellers can sometimes attract less competition, particularly if they've been on the market for a while. 

This is particularly advantageous in a competitive real estate market, where multiple offer situations are common. Less competition can give buyers a better chance of having their offer accepted.

Customization Opportunities

If the property requires renovations or repairs, a motivated seller in real estate may be willing to sell the property as-is. 

This gives the buyer the opportunity to customize the property according to their personal preferences. While this means the buyer will bear the cost of repairs, it can result in a home that is tailored to their specific needs and tastes.

Motivated vs. Distressed Sellers

Motivated vs. Distressed Sellers

Although motivated and distressed sellers can sometimes overlap, there is still a difference between them.

A motivated seller is someone who has a strong desire to sell their property quickly for any number of reasons. 

These reasons might include a job relocation, a lifestyle change such as downsizing or upsizing, or a desire to sell an inherited property. The motivation might also be financial, but not necessarily distressing—perhaps the seller wants to liquidate their real estate assets for other investment opportunities.

On the other hand, a distressed seller is specifically a homeowner who is under financial duress. This term often applies to sellers who are facing foreclosure or bankruptcy or who owe more on their mortgage than their home is currently worth, a situation known as being underwater. 

Distressed sellers are often forced to sell their homes to alleviate their financial burden, and because of this urgency, they may be willing to sell the property for less than the fair market value just to close the sale and mitigate their losses quickly.

Who is Your Competition When Going After Motivated Sellers?

Who is Your Competition When Going After Motivated Sellers?

When you are interested in purchasing a property from a motivated seller, you may face competition from several groups that are also after an attractive proposition from the seller. To help you prepare and snatch the best deal, we described each of these competitions for you.

  • Other Buyers: These could be first-time homebuyers, buyers looking to upgrade or downsize, or individuals interested in investment properties. They may be represented by real estate agents.
  • Other Investors: This group includes house flippers, rental property investors, and real estate companies. They are always looking for quick-sale properties (rental property, etc.) that they can buy at a lower price or seller financing, renovate or refurbish, and then sell for a profit or rent out for a steady income. 
  • iBuyers: iBuyers (short for "instant buyers") are companies that use technology to make quick offers to buy houses and then resell them on the market. They offer sellers a fast transaction and hassle-free selling process, often in exchange for a lower selling price.
  • Real Estate Wholesalers: Wholesalers look for motivated sellers, get the property under contract, and then sell that contract to an end buyer, typically a real estate investor.

How to Approach Motivated Sellers

How to Approach Motivated Sellers

Approaching motivated home sellers requires a mix of tact, empathy, and negotiation skills. Your goal should be to make the process as smooth as possible for the seller while also securing a fair deal for yourself.

Understand the Seller's Situation When Finding Motivated Sellers

Start by gaining a comprehensive understanding of why the seller is motivated. This information can often be gathered through your real estate agent or by directly asking the motivated seller or their agent. Is it a job relocation, financial distress, a desire to quickly close an estate sale, or another reason? Understanding their motivation can guide your approach and negotiations. 

Be Prepared

Preparation is key when finding motivated sellers and approaching them. This means being pre-approved for a mortgage if you're not paying cash, preparing for owner financing, having a clear understanding of your budget, and knowing what you're looking for in a home even before you purchase properties. 

Make a Strong Offer

Motivated sellers are often looking for a hassle-free process. If you can afford it, make a strong offer upfront or direct mail. While they may be willing to accept a lower price, a solid offer shows the seller you're serious and could make your bid stand out, particularly in a competitive market.

Show Flexibility

If possible, show flexibility with your terms when dealing with motivated real estate sellers. This could mean agreeing to the seller's preferred closing date, waiving certain contingencies (while still protecting your interests), or even renting the home back to the seller if they need extra time to move.

Communicate Effectively

Keep lines of communication open and clear. Prompt and clear communication and marketing message through direct mail or face to face can help build a positive relationship and avoid unnecessary delays or misunderstandings.

Proceed with Empathy

While you want to secure a good deal, remember to proceed with empathy. Selling a home can be stressful, particularly for a seller who is under pressure. Be respectful of their situation and strive to make the process as smooth and stress-free as possible.

How to Find Motivated Sellers (Sources and Strategies)

How to Find Motivated Sellers (Sources and Strategies)

To help you find motivated seller leads, we have listed some of the best strategies and sources below. The first three sources are meant to speed up your lead generation, while you can test the other strategies if they'll work for you, too.

Property Leads

Using SEO (Search Engine Optimization), Property Leads captures highly motivated seller leads who are actively looking for cash buyers. This proactive approach significantly increases the likelihood of identifying property owners who are eager to quickly dispose of their properties.

Moreover, Property Leads provides exclusivity with their fresh leads on motivated sellers, significantly reducing competition and enhancing your chances of closing a deal. Their system is designed to send leads in real-time directly to your phone, email, or CRM, ensuring that you can respond promptly and secure the deal. 

LeadVine

Lead Vine uses advanced niche filtering capabilities to provide real estate investors and professionals with tailored data specific to their needs, including pre-probate, pre-inherited, widow, divorce, tax delinquent leads, and other motivated leads. They are one of the best sources if you want to find motivated sellers.

In contrast to many other data providers who simply resell data, Lead Vine aggregates data directly from the source and optimizes it for real estate investors and real estate agents, delivering a high degree of comprehensiveness and accuracy.

SEO Meets Real Estate Investors

SEO Meets REI serves as an excellent source of motivated leads in real estate due to its unique blend of firsthand real estate investing experience and an effective SEO strategy tailored specifically for this market. 

The founders, Keith and Andy, are real estate investors themselves who, after overcoming initial challenges, have been able to generate 1000+ SEO leads per month. This level of lead generation to find motivated sellers is a testament to the potential power of their SEO approach for real estate investors.

Drive for Dollars

This strategy in finding motivated seller leads involves physically driving around neighborhoods looking for properties that appear vacant, run-down, have boarded-up windows, or are neglected.

These signs could indicate a property owner who may be struggling financially, has moved out, or simply doesn't have the time or interest in maintaining the property. 

After you have identified these properties and sellers, you can send direct mail to them using online tools or target them with your other marketing efforts. Give them an all-cash offer for their proposed purchase price to speed up the deal.

County and City Inspectors

Building and code inspectors often have information about properties that are in disrepair or have code violations. This information is typically found on public records and can be accessed online or at your local municipal building. 

The property owners can be motivated seller leads, especially if they can't afford the necessary repairs and want to sell the property fast at a discounted price. Send them a direct mail to assess their readiness to sell.

Local Attorneys

Attorneys who specialize in real estate, bankruptcy, divorce, or estate law often work with clients who are motivated to sell their properties quickly that's why they are a great resource when finding motivated sellers.

By networking with these attorneys, you may be able to get motivated seller leads consistently. There's also the bonus that they know a lot about real estate law, seller financing, and current market trends.

Expired MLS Listings

When a property listing on the Multiple Listing Service (MLS) expires, it means the home didn't sell during the listing contract period with the real estate agent. This can happen for a variety of reasons: the home might have a higher price, it may not have been marketed effectively by the seller's agent, maybe the market conditions were unfavorable and most buyers prefer other types of properties, or the sale doesn't have favorable terms. 

The property owners might be frustrated and motivated to sell in an investment property marketplace, making them potential leads.

FSBO (For Sale by Owner)

These are often distressed properties that are being sold directly by the property owner without the help of a real estate agent. Property owners might choose to sell this way to save on commission costs, but if their property isn't selling as quickly as they'd like, they might become motivated sellers. 

FSBO listings can often be found on local classified websites, FSBO-specific websites, and sometimes even on the MLS if the motivated real estate seller has opted to use a flat-fee MLS listing service. This is one of the most common ways to find motivated sellers and you can contact these sellers through direct mail.

Key Takeaways: What Does Motivated Seller Mean In Real Estate? (How to Find Motivated Seller Leads)

Real estate investors would find dealing with motivated sellers advantageous for their real estate business as they often lead to profitable investment opportunities. 

However, it's worth noting that while the term motivated seller may suggest urgency or desperation, it does not necessarily reflect the property's quality or value. Careful evaluation and due diligence are still necessary for every potential real estate purchase.

Now that you already have a background in motivated sellers, be sure to check out Property Leads, Lead Vine, and SEO Meets REI to get motivated seller leads. These are highly reputable sources of real estate leads, so you’re sure to close on good deals!

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