How to Buy Houses from Motivated Sellers in Real Estate Investing
No matter what your real estate business model is, motivated sellers remain the most profitable source of good deals. Efficiently locating good deals from motivated sellers and closing them must therefore be a part of successful real estate investing.
In this article, we point out important areas you must focus on in your business.
The key sources of attracting motivated sellers are covered in a separate article. Once you have identified motivated sellers, the next step should be to secure and close the deal.
I get all my leads through my real estate investor website in my business. Approximately half of them are submitted directly by the motivated sellers. The other half calls and leaves a voice message and my virtual assistant pre-screens them for me and submits the information on my website.
I therefore receive all my deals fully pre-screened, and pre-negotiated. I can therefore easily identity a good deal in a few minutes.
You must then set up an appointment to see the house as soon as you identify a good deal. The main reason you need to see the house is to estimate repairs. If you have bought a few houses, then you know you need about 10 minutes to come up with a fair ball-park repair estimate.
You do not have to get it detailed down to the nail, you just need a safe rough estimate, preferably higher than normal to be safe.
Make sure you sign the contract while you are with the buyer.
If you later happen to crunch the numbers and find you cannot make the deal happen, you can always cancel the sale.
If the deal works, fax the contract to the title company so they start title work. In order for the contract to become binding, make sure you deliver or mail the earnest money check. Make sure that you deposit any earnest money with the title company, not with the seller.
depending on your exit strategy, the next steps are determined by your business model:
1) Wholesale the deal
This is when you market the deal to other real estate investors if your exit strategy is to wholesale the deal. If you have a good real estate investing website, then you have probably built a list of potential buyers and you simply email you new deal to your wholesale buyers list.
Once you identify the wholesale buyer, you then sign a contract with you as the seller if you plan to do a simultaneous closing. Alternatively, you can assign the contract for an assignment fee.
The title company will then do the closing and disburse all the money as agreed.
2) Lease option / Lease to own
Your title company should conduct the closing if you plan to take over existing payments.
This is why you must select a title company that understands real estate transactions and works with real estate investors.
3) Straight buy
A straight, traditional transaction will be needed if you plan to buy fix and sell, or to buy and hold.
These three business models are the main ones; others would follow similar steps.
When all is said and done, your success in real estate investing, largely depends on the efficiency with which you pre-screen your leads, follow up with them to tie up the deal, and efficiently close the deal.
Simon Macharia - About Author:
Find out how you can run your real estate investing business from an interactive real estate investor website that automates most aspects of your business delivering pre-screened and pre-negotiated deals so you spend less money, time and effort while you close more deals.
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