How To Find a Motivated Property Seller (And Three More Ways You Can Slash the Asking Price for a Property)

Dominique Grubisa Dominique Grubisa

Making an offer on a house below asking price requires knowledge and negotiation skills. DG Institute founder, Dominique Grubisa offers some tips for real estate investors on lowering property prices.

Offering what the property owner wants is one of the key mistakes that an investor can make. Never forget that all sellers want to make as much money as possible. In real estate investing, your job is to pull their prices down so you benefit more from the investment.

That’s what this article will help you to do.

We’re going to cover some of the key techniques for how to lower the price of a house.

Technique #1 – Find Motivated Sellers

Every vendor has their own motivation to sell. When you decide to buy a property, one of your first jobs is to find out what that motivation is.

In some cases, you’re going to find that the seller’s in no rush. Or, they want to sell to take advantage of strong market conditions.

With these sellers, you’re unlikely to get away with offering below asking price

But then there are the sellers who need to sell the property as quickly as they can. These are the people who offer you opportunities to snag a bargain that you can turn into a strong investment proposition.

For example, the seller may have recently changed jobs and need to move as quickly as possible. Or, they may have gone through a divorce and have decided that selling the property is the easiest way to divide the assets.

In such cases, you’ve got a highly motivated seller who’s willing to negotiate. 

There are several signs to look out for when searching for a motivated seller. For example, a property that’s been on the market for a while could lead to somebody wanting to negotiate. You may also find that the property’s priced to sell. In other words, it’s available for less than similar properties in the area.

When you spot these signs, you also have to approach the negotiations with the right strategy.

In an article for Forbes, investor Holden Lewis highlights the importance of having pre-approval:

“With a mortgage pre-approval, you can close faster and the seller is assured that the deal won’t fall apart because of problems getting financing.” 

He also says that offering a larger deposit and providing flexibility on the closing date will help.

If you get it right, you’ll secure a property that makes it more suitable for your investment strategy.

Technique #2 – Find Distressed Properties

This is a technique that Dominique Grubisa and the DG Institute team specialises in.

According to Finder:

“A property can become distressed for many reasons, from financial misfortune to environmental damage to market decline or even relationship breakdown.”

The property may also become distressed if its value falls sharply or the owner passes away. These types of properties also tend to have motivated sellers, which means that the two often go hand-in-hand.

In an interview with yourmoney.com.au, Dominique Grubisa points out how you can find such properties:

“Deceased estate(s), probate, and those sort of things will go to a court list. And once they’re on a court list, you can often negotiate off-market with the seller and owner and help them out of a sticky situation.”

With distressed properties, it’s possible to buy for up to 40% below the market value. That’s going to give you a lot of room to work with when you’re trying to make a property investment work.

Technique #3 – Prepare Yourself to Negotiate

So, let’s assume that you’ve found a property that you think you can get for less than the market value.

The important thing is that you don’t treat the negotiation flippantly. Even a motivated seller may decide not to sell to you if you’re too arrogant in negotiations. Or, you could end up overpaying if you don’t do enough research on the property beforehand.

Preparation is the key to successful negotiation. Here are a few things that you can do to make sure that you’re ready:

  • Always enter the negotiation with a target price in mind. Your research, coupled with your investment goals, will determine this price. Aim to get the property for less than that price and never go over it. If the seller won’t accept the price, the opportunity simply isn’t for you.
  • Come with as much market evidence as you can find. For example, you may be able to find similar properties in the location that have sold for less than the seller’s asking for. Or, you may find that the property sold for a lot less only a few years ago. Both of these facts lend weight to your argument regarding the price.
  • Don’t be afraid of being completely transparent about your objectives. Tell the seller that you’re an investor and that you’re looking at other opportunities. This can create a sense of urgency, especially amongst motivated sellers. They won’t want to miss out on a potential sale for the sake of a few thousand dollars.
  • Prepare to offer some concessions to sweeten the deal. We mentioned providing flexibility on the closing date. However, you may also offer to cover all of the closing costs of the sale. If you get the property for a low enough price, that concession is a drop in the ocean.

Above all else, know why the seller wants to sell. While you don’t want to be cruel about it, you can use this motivation to swing a negotiation in your favour.

Technique #4 – Be Prepared to Walk Away

A seller may become emboldened if they believe that you really want to buy the property. Any hint of emotion could result in them deciding to hold firm on a higher asking price. They assume that you’ll come up to them because you’ve fallen in love with the property.

However, you’re a property investor and this is a business purchase rather than a family home. That means you’ve got to be willing to walk away if the seller won’t play ball with you.

Sometimes, this will lead to you missing out on the opportunity. Of course, that’s far preferable to buying an investment property when the numbers don’t add up.

At other times, the seller will realise that you’re serious and will come back down to try to tempt you back in. This puts you in a position of strength again because it shows you that the seller’s more desperate to sell than they appeared.

It’s Time to Find the Right Property

Finding a motivated seller may be your key to securing an investment property for less than its market value. And if you can find other signs of distress in the deal, you may be able to get as much as 40% off the asking price.

These techniques will help you to find the right deal. But once you’ve got the property, you’ve also got some work to do to turn it into a sound investment.

If you’re interested in learning more about property investment and profiting from distressed property, join the upcoming Real Estate Rescue webinar with Dominique Grubisa.


Good Debt Vs Bad Debt With Dominique Grubisa - DG Institute

DOMINIQUE GRUBISA
Lawyer, Asset Protection Specialist and Property Educator

Dominique Grubisa is a practising legal practitioner with over 22 years of legal and commercial experience. She is a property investor and developer, an entrepreneur with businesses in Australia and Southeast Asia, a speaker, educator, writer and published author. You may contact Dominique at info@dginstitute.com.au


This column has been written for general information purposes only. It is not intended as legal, financial or investment advice and should not be construed or relied on as such.

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