Why would anyone sell you, a real estate investor, their house at a discount?
Every real estate investor will face this question at some point.
Those thinking about investing in real estate will all have this question posed to them, if they have not already. If they are not being asked that question, I guarantee it will come up.
It may be you asking yourself this question.
That’s your value as a real estate investor that allows you to buy single-family or multifamily homes at deep discount. It’s inherent in your value.
4 reasons someone would sell their house at a discount to you, a real estate investor
No. 1 – The Seller’s net sheet
You are able to offer a cash price to a seller for his home equal to what he would net if he were to hold the house, fix it up, hire a Realtor and ultimately sell the house.
You can offer, today, cash, “as is” for this property. You can say, “I am educated enough and I have the experience and knowledge … let me show you what you would make if you choose to hang onto the property and fix it and sell it yourself. I will show you that you will end up in just about the same place that I can get you today, cash, as is.”
That is a key competency of a real estate investor – your ability to educate a seller and demonstrate to him the various scenarios and why yours is the best.
The tool is called a seller’s net sheet. It’s a mathematical exercise. You can find it from a fellow investor or on the Internet. It takes you through the steps you can walk a seller through. Nine times out of 10, it will show them how they can get there quicker, easier and more stress-free with you than if they do it themselves.
Your value as an investor to a seller is this: “Look, I understand what I can do, what I can provide and how it can benefit you. I can walk you through the numbers that will show you why this is beneficial for both of us.”
No. 2 – Speed is a motivator
Speed was a critical factor when Kevin purchased this home just in time to help the homeowner avoid foreclosure.
There are many sellers out there today whose priority is speed. Just the thought of interviewing Realtors, putting a sign in the yard, entertaining showings, appraisals, surveys, home inspections is overwhelming.
That process and the time it takes in itself will drive many real estate owners to seek out investors who can eliminate all of those steps and buy the property quickly, efficiently, legally and ethically and cut that time to almost nothing.
A cash investor anywhere in the country can purchase and close a home in as little as 10 business days.
And that is incredibly appealing to a seller who is on a timeline – for whatever reason. He may have a new job. He be going through a divorce. His financial clock may be ticking in terms of his ability to continue to make his mortgage payments.
Speed is a critical motivator and critical value you can provide to a motivated or distressed seller.
You want to make these sellers’ lives easier and solve their problems.
No. 3 – Convenience
There is a huge convenience factor I talk about with sellers when I meet them.
Many people do not have the time, energy or the bandwidth to execute a real estate transaction. For example, many calls and inquires I get are from people who have inherited a property that they never planned to own or be responsible for. And, on top of that, a lot of times, they are geographically distant from the property.
So I am here in Dallas, Texas, running a HomeVestors franchise but I cannot even count the number of times I have had an individual call me from, for instance, Chicago, saying, “Regrettably, my mother has passed away and she has left me a house in Dallas. I am in Chicago, I have a wife, a family, a career … I never intended, planned or even wanted to own this house. But I do. And I need to liquidate it quickly, efficiently and correctly. And I need somebody I can trust to do that for me remotely.”
That is a huge convenience factor and a huge value to those individuals and that is a very common scenario that is out there today. A real estate investor who is able to work remotely, quickly and efficiently is a huge value to someone in that situation. And that is the convenience value you provide as a real estate investor.
No. 4 – Privacy can help your credibility
This will drive your credibility really high with a seller. A real estate investor can offer privacy to the seller.
You would be surprised at the number of individuals, who for whatever reason – and very legitimate reasons, I might add – do not want others to know they are selling the property.
They do not want signs in the yard. They do not want streamers hanging up on Saturday morning advertising open houses.
They don’t want the house to appear on multiple websites out of their control. They want privacy in the transaction. They don’t want people to see pictures of the interior of their home. They don’t want people to know what price they are asking. And the list goes on and on.
It is privacy that is a huge value to them. Your ability to maintain their privacy builds credibility with them. As a real estate investor doing a cash purchase, it is you, the seller and the title company doing the work. There are no signs in the yard, there are no open houses, no pictures of their master bedroom all over the World Wide Web.
It’s very sincere, very private and you can respect that individual and his needs. You can maintain that privacy and still successfully purchase the home, solve his problem and allow him to move on. And that is a tremendous value to many individuals out there. And it is one of the values that will motivate them to sell you their home at a discount because they are willing to pay for that credibility, that privacy and that value.
Never underestimate your value as a real estate investor
When you can demonstrate these values of exercising the mathematics, speed, convenience and privacy you are creating tremendous value that they are going to share with others. And that can only result in improving your business, your credibility and your value among other potential sellers in that market and even beyond. You will be surprised.
Never underestimate your value as a real estate investor. Never doubt sellers’ willingness to sell at a deep discount if you are doing the right things, acting the right way, demonstrating the right knowledge and the right professionalism and clearly showing the value you have to offer as a real estate investor.
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