How To Pre-screen Motivated Sellers
In this article we are going to explain to you some of the questions that you need
to ask sellers to pre-screen them and to make a decision on whether or not you have money making deal. Whenever we talk to sellers, whether they come through our website or give us a call through our toll free line, we ask them the same questions, and the reason why we ask them the same questions, so we dont what question to ask. And theres a particular form that we use, and this form is called The Property Profile Form.
Our property profile form is very simple, one-page form that you can use. It asks for basic information such the contact information of the seller, the name, the mailing address, a couple of phone numbers, and fax number and email address. You want to have multiple ways to contact your prospects so that you have multiple ways to give them an offer or multiple ways to follow up with them. A lot of people have phone numbers, home numbers, cell phone numbers, work phone numbers, so on and so forth. So, make sure you get as many numbers and many contact information as possible. Also, make sure you get their email address. Email is a very inexpensive. You can send a lot of information via email. We will be writing about how to follow up with sellers automatically using auto responders in the future, so be sure to visit our web site, www.therealestatedealer.com so that youll be updated and notified of the new article.
How did you hear about us?
In our business, we send out fliers, post cards, and letters. We post billboards, we use web sites, we use vehicle signs, thus we have multiple ways to generate leads from motivative sellers. So, asking a question about how did they hear about us is an excellent way to find out what method of advertising works best.
Where is the property located?
This is self-explanatory. Dont assume that because you have the sellers mailing address that they live in the property that theyre trying to sell. A lot of people over the last few years have bought investment property and theyre in a situation where they either want to get rid of it because of adjustable-rate mortgages, problem tenants, or whatever the case may be. Make sure you get the property address and dont assume that the property address is the same as the mailing address.
How much do you want for the property?
This is getting the asking price for the property. Often times, the seller would try to be sort of coy and not give you an actual price. They may say make me an offer. Well, you tell them, if they dont want to give you an actual price, your offer is $1.00. Tell them that youre interested in purchasing their property for $1.00. Thats going to raise their eyebrows and get their attention when you tell them that youre offering them $1.00. Then, they may say I dont want to sell for $1.00. They will give you a counter offer which will answer your original question of how much do you want for the property.
What condition is the property in?
Whether youre buying property to hold on to it for a long-term investment or flipping it, you want get a general idea of what condition of the property is, i.e. good, bad, etc. We always ask what the condition of the property is and we want to make sure that we find out what the state the major functions of the house such as the plumbing, the heating and the air conditioning, the structure, etc. We want to get an idea on how much its going to cost to get the property repaired.
How long have you owned the property?
This will give you a rough idea of approximately how much equity the person has in a property. If they havent owned the property long, then you can assume that they dont have a lot of equity in the property. Many people who purchased property over the last few years are in a situation now where they need to get rid their property. So, again if they havent owned the property long, then they probably dont have a lot of equity. Conversely, if they had owned the property for a long time, then its safe to assume that they have a little more equity than a person who havent owned it for a long time. It gives you a rough idea if they have a lot of equity in their home.
How much did you pay for the property?
If you know the fair market value of the house is in the area and you know how much the persons paid for the property then, you may find out approximately how much equity they have in the property. Again, equity is basically taking the fair market value subtracting what is owed.
Do you have a mortgage on the property? And if so, how much or whats the balance of the mortgage?
Thats an excellent question to ask. If you know the values of properties in the area and you know the balance of the mortgage and the monthly payment, then you can figure out what type of deal to do. Youll know if a short sale is feasible or if you may want to do a subject to deal. A follow up question to that would be if they have a mortgage on the property, what is their monthly payment? If youre working in the area where you know the fair market values and you know what the rent rates are, then you can basically decide whether or not the rent that you can generate from that property is adequate enough to cover the mortgage.
Are you current on your payments?
If they are not current on their payment, then your next question would be how many payments are you behind? Now, remember the last question about the amount of the monthly payments? If you know how many monthly payments youre behind you multiply that by the monthly payment and youll know approximately how much their arrearage is. Of course youll actually include principal, interest, and the extra expenses that arise with delinquent mortgages. But, at least youll have rough idea of what its going to cost to bring that mortgage current if they are behind on their payments.
How much is the property worth, or how much do you think the property is worth and why?
Theres a lot of resources out there that will allow people to find out approximately how much their property is worth. You have Zillow, Real Quest, Bank of America and other sites to find home values. There is even a site called homevalues.com. They are excellent resources for the seller to find out what their properties worth, but keep in the mind, the best way to find out how much a property is worth is by using an appraiser or a real estate agent. When you ask them how much do they think the property is worth and why theyre going to tell you I went on this website or I had an appraiser done or I had a realtor do a comparative marketing analysis or they may say something like I have a neighbors house whos listed for x amount of dollars.
Remember that the best value of the house is actually taking properties that have sold in the area, as opposed to properties that are listed because the listing is not going to necessarily be the asking price. So, you want to get an idea about what the seller thinks their house is worth, and then you want to investigate it.
Why are you selling?
You know, in our business we look for motivated sellers. Were looking for people who have to sell their house, not people who just want to sell their house. This is where you want to find out why theyre selling, maybe again, a foreclosure, a bankruptcy, divorce, etc. They might be upsizing or downsizing. They may be tired of being a landlord or tired of the area. Whatever the case may be, you want to find out why theyre selling. If theyre say something like I just wanna get an idea what I can get from our property, then you know that theyre not really a motivated seller, and then you probably want to thank them for calling and then keep moving towards the next deal.
Are you moving out of the area?
We dont ask every seller this question. We guess this will be a follow up question to the previous question if theyre relocating out of the area. If theyre moving out of the area then there probably more motivated to sell their property especially if theyre currently living in Chicago and theyre moving to California . Its going to be really hard for someone to manage the property over a couple of time zones and several states. So, if theyre moving out of the area, they may be more motivated to sell.
Now, towards the bottom of the property profile form, we start to ask questions like how many bedrooms and bathrooms does the house have. In our business we dont buy anything less than three bedrooms. Families are a little bit larger now, and two bedrooms is a basic starter home for a small family. Families are a bit larger so you want a house with as many rooms as possible.
The last question is a very important question:
Do you need to sell to for all cash or you would you be interested in selling on terms?
Dont assume that everyone that calls you is interested in receiving all cash. If they know that they dont have equity in their property and if they have a rough idea of what their values are in a particular area, then they may be open to some type of subject to or contract for deed deal. But dont assume they want all cash. If you know the areas where the persons calling you from, if you know what the fair market values are, you ask the questions of the monthly payments, the mortgage balance, so on and so forth, you start to get an idea what sort of deal that you can do for the person, whether it be an all cash deal or some other type of deal.
Now, remember, if you do offer all cash, you should expect a discount. If the property has a fair market value of say $150,000 and you paying off cash, do not dare offer $150,000.
At the bottom of our property profile form theres a comment section where we would basically write notes about the information that seller sent or gave us. And we also write down whether or not we want to follow up. Below that section, there is another section where we put the date of the submission and the method of the submission.
by: Richard Woodfork
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