Hi guys, Naomi Findlay here! Today it’s all about finally snatching your perfect project off the market.
You’ve trained hard for the race, you’ve done all the hard work. All the nitty gritty research side of your business is ready to go and now you’re walking up to that start line. If you were being marked on effort and preparation right now, you would score an A+.
The adrenaline is high and the crowd is buzzing. This is the exciting part.
Or at least it should be.
Is this uncharted territory for you?
Are you worried that, despite all your research leading up to this point, you might lose your head when it comes to the real deal?
Or are you biting your nails wondering if you will get caught up in the excitement and pay more for the property than what it’s worth?
And how do you make sure you don’t overpay when the market is so hot?
All of these things might hurt your end profits, yes. But you don’t have to worry about them. Why? Because I’m here to give you a little insight on why people choose to sell, and how that will help you pay the right price.
So, you’ve found the perfect property. It’s right up your alley – just ripe for a kitchen revamp and extension – and it ticks all the patch and strategy boxes. The only problem is, the market is still pretty hot, and so the seller has set the price just that little bit too high.
Do you give up on the whim? No, the game hasn’t even started!
Or do you give in and pay the seller what they want? That’s no to that as well. You don’t want to cave in to a price that you know won’t give you your pot of gold at the end of the rainbow.
What do you do instead, then?
Well, you can negotiate, of course. But if the market is just too hot most people won’t budge because there’s probably another cowboy waiting around the corner.
Unless, of course, they are desperate to sell.
The difference between landing a good price and a great price lies in the seller’s motivation.
Knowing the seller’s motivation is one of your most important negotiating tools.
If the seller has only put their property on the market to get a feel for how much they could potentially make, this might be a bit of a booby trap for you. And that’s because they’re not really ready to let go of the place until someone comes along with a big bag of dollar signs.
These are the types of sellers that aren’t really motivated to sell. Nothing is pushing them to shake your hand at the end of the day.
But what if that seller all of a sudden had to sell in a rush? What if it turned out they were getting a divorce, and the court ordered them to sell? Maybe they had just inherited the house from a great aunt and couldn’t afford to look after it.
Now you will have a bit more bargaining power. And why is that? Because the seller has a real motivation to get rid of that property.
The more pressing the motivation, the more bargaining power you have.
These motivated sellers will also be much more realistic when it comes to what their property is worth – inflating the price is not an option, because they need to sell it quickly. These sellers can’t just “wait and see” who gives them the biggest bag of cash. This is where you can jump straight in to secure a great deal.
Just like in the examples above, people will have a lot of different reasons they might need to sell. There are 4 main ones that I call the 4 “D’s” that will push people to sell fast.
The first D stands for debt.
Maybe someone in the family gambled away the loan repayments. Or maybe a company has gone under and the breadwinner was made redundant. Or it could just be that the bank has hiked up interest rates that are no longer a realistic option. It could just be the fact that they have put a deposit down on another property and need sell quickly to be able to access that money.
Whatever the reason may be, when a person can’t afford to keep a property because of financial struggles, they will be motivated to sell. And sell as quickly as possible to get their money boat back afloat.
The same thing goes when a bank is selling a property. Banks aren’t in the business of being property tycoons and holding impressive portfolios. All they want is to recover the money that’s owed to them. As long as they get that, they don’t really care about any surplus.
The second D is about health and wellbeing.
Unfortunately, sometimes people get very sick or injured. It could be a stroke that limits movement, or a serious motorcycle accident that requires wheelchair access. Even a serious bout of asthma could mean that a move away from the city to an area with cleaner air.
These changes will mean that the home they are in is no longer suitable for their lifestyle. This motivates people to sell quickly so they can better accommodate their changed state of their or their loved one’s health.
The third D stands for divorce.
Break-ups are never pretty. The use of lawyers, courts and the involvement of children can make things very messy and stressful. Selling the family home is yet another stressful thing to add to the list.
Regardless of whether a court has ordered it or not, a lot of the time people going through a divorce will sell their house so that they can move on with their lives. And the quicker that happens, the better.
The last D stands for death.
Sometimes, the memories of a home can be too painful when a person has just lost a loved one. Sometimes it can get too hard to look after the property, especially for an older person. Maybe it was a home passed on from the grandparents that needs to be sold because the grandkids don’t have the time or the money to maintain it.
Now I know these four “D’s” are not the happiest of scenarios. They can be sad and unpleasant, and usually involve a low point in people’s lives. But it also means that you can help people by offering a quick sale when they need one, and at the same time finding yourself a well-priced renovation project.
These are also not the only reasons people will be motivated to sell, they are just the ones that usually create the most urgency.
As long as you know your seller’s motivation, you will be able to get a good deal on your renovation project.