Finding the right investment property to buy is not an easy task and negotiating the right price and terms can be even harder. The best deals are made between buyers and sellers who are motivated. So the question worth asking is how to buy an investment property from an unmotivated seller? Although it may sound impossible, there are tricks to buying from unmotivated sellers.
You can waste a lot of time and energy with a seller who’s not motivated to sell at market value. Picture this: You find your dream house, fall in love with it and decide to make an offer. You expect the seller to embrace you with open arms. But, sadly he doesn’t. In fact, he’s disappointed because he really wants to sell for quite a bit more than he’s asking. Sucks right?
Last year, sellers obtained multiple offers and high selling prices–the result of years of healthy home-price appreciation. This year it is different. In most areas prices aren’t dropping. But they aren’t rising at nearly last year’s pace either. Unfortunately, some sellers are still pricing their homes for last year’s market price. That’s why when real estate investors search for real estate properties the only thing they seem to find is an overpriced house! So how can you keep from wasting your time on an unmotivated seller? Let’s find out!
How to Buy an Investment Property: Find out What the Seller Paid for the Property
When preparing yourself on how to buy an investment property and making a purchase offer, it helps to know what the seller has invested in the property. If you can discover when the seller acquired the property, you should be able to formulate a fairly good idea of what was paid for it. By talking to neighbors and telling them that you’re interested in purchasing in the area, you can lead up to the seller’s property and find out when it was purchased. Neighbors who were living there at the time the property was purchased may even remember what the present owner paid. Also, you may be more likely to uncover the real reason that an owner is selling from a neighbor than from a real estate agent. Knowing what the seller paid for the property can help you when making an offer to an unmotivated seller.
How to Buy an Investment Property: Know How Much You are Able to Borrow
Now that you have figured out how much the seller paid for the real estate investment property, ask yourself do I even have the ability to purchase it? If yes, begin thinking of ways to get a mortgage. Get a letter of pre-approval from a mortgage lender that outlines how much you are eligible to borrow before you start your home search. This puts you in a stronger position when you find a house you want to make an offer on, and it could give you an advantage over other potential buyers. Showing an unmotivated seller that you are prepared is a great step forward in understanding how to buy an investment property.
How to Buy an Investment Property: Learn to Comprise
When it comes to dealing with unmotivated sellers, they are in control of any negotiating that might occur. You on the other hand, as the buyer, must be willing to compromise. Decide about whether you’re willing to pay above fair market value or pay a portion of closing costs to make your offer more attractive.
How to Buy an Investment Property: Be Willing to Accept Anything
Another point you should keep in mind when you want to understand how to buy an investment property from unmotivated sellers is that you should be willing to accept the property as it is. An unmotivated seller really has no reason to fix broken windows, replace dead plants or perform any type of repairs a buyer might ordinarily request of a motivated seller. If you put too many conditions on your offer, you may be passed over for another buyer who is willing to take the property without conditions. It sounds like a really unfortunate situation to accept the property as it is with all its flaws, but that’s how dealing with unmotivated sellers is.
How to Buy an Investment Property: Above and Beyond
Wondering how to buy an investment property from an unmotivated seller? Well for starters, offer above the asking price. While it may seem like a counter-intuitive move, you can outpace your buying competition with this approach. For example, give the seller a short window of opportunity to accept the offer to prompt him/her to action. If you have a real estate professional working on your behalf in negotiations, you can also perform a variation of this approach by allowing the realtor to up your asking price by a certain percentage if there are multiple bidders fighting for a property.
How to Buy an Investment Property: Earnest Money Deposit
Offer a large deposit of earnest money. This is a sum of cash offered to the seller at the time an offer to purchase is made. If the offer is accepted, the earnest money goes toward the down payment you will be putting for the property. A normal earnest money deposit is 1 to 5 percent of the total sale price. Offering a deposit at or above 5 percent portrays you as someone serious about making a deal.
To sum up, knowing how to buy an investment property from an unmotivated seller is a tricky task but if you have a few tricks up your sleeve you can have the investment property of your dreams! In the end, if you’ve tried all the rules in the book and still can’t get the seller to nudge then remember that if the seller’s not flexible, find one who is.