It can be tempting to get lured in when you read the words “motivated seller” in a home listing. After all, that term implies that the seller is somewhat desperate to sell and therefore may be more willing to accept a low offer from a potential buyer. But beware, as that is not always the case. Some sellers use this term as bait to draw multiple buyers into a bidding war. A little knowledge and inquisitiveness can go a long way to determining what type of seller you are actually dealing with.
A seller who labels him or herself as “motivated” generally will fall into one of three categories. In order to determine the category of the seller you’re dealing with, be sure to ask questions and pay close attention to the listing, the real estate agent(s), and the home itself. Being aware of the motives of each of these sellers is an integral first step. Here’s what you need to know.
Category #1: True desperation
With this type of seller, what you see is often what you get. That means that circumstances have actually caused them to become motivated to sell their home as quickly as possible. Possible reasons for this could be that the house has been sitting on the market too long, or maybe there is a divorce situation, an estate sale, or other personal reasons. Speak with your agent to determine if and why the seller is actually desperate, and how low of an offer they may be willing to entertain.
Category #2: Bad investment
This category can be a bit tricky. That’s because the seller who made a bad investment is actually motivated to sell quickly in order to recoup their losses. However, the reasons this house was a bad investment may also be reasons YOU should steer clear of it. Moreover, this type of seller is most likely trying to hide what made it a bad investment. Therefore, you will need to be extra diligent in obtaining information about this house. Be sure to hire a professional home inspector to thoroughly inspect the home to rule out any major problems with it. If the condition of the house passes muster, your next step is to visit the local town hall to request a city planning report. This report will disclose all of the major construction projects planned for the area so you can determine if there is likelihood that the value of the home will be diminished.
Category #3: Trying to incite a bidding war
There are a couple of signs to look out for in a seller who is trying to draw you into a bidding war. The first is an unreasonably low asking price, and the second is a wide range in the asking price. Both of these tactics are often used to dupe multiple buyers into making offers in the hopes to start a bidding war. Before you get involved in this, arm yourself with a mortgage pre-approval, a written offer, and a thick skin. The idea is to make present yourself as the most eligible buyer in the group in terms of finances and character.
Becoming aware of these motives is the first step in ensuring you don’t get lured into making a bad investment. For further help, consider receiving expert guidance from a licensed mortgage loan originator throughout the entire home buying process. Call Cliffco Mortgage Bankers at (516) 408-7300 or fill out the form here today.