How Do You Determine a Seller's Motivation?

There's no magic question that will determine a seller's motivation. Instead, here is our best advice.

People often ask us why sellers would be motivated to enter into a terms deal (lease purchase, owner-financing, or subject-to) instead of selling their house conventionally. There are a few primary reasons why these deals make sense for sellers—which I'll go over below—but the reality is that every seller has a unique motivation.

In real estate, no deal is the same—and that extends to terms deals. Every seller and buyer is in their own unique situation, and they all have their own motivations. So let's start by taking a look at some of the most common motivations that sellers have for selling on terms, and then some of our best techniques for determining a seller's motivation as you develop a relationship with them.

Why would someone want to sell their home on terms?

This is probably the question we get asked the most. At first, it might seem like there are no benefits to selling a home on terms—but once you understand how these deals work, there are many clear benefits for sellers.

The first and most obvious benefit to sellers is that there are no realtor fees with terms deals. That means, on average, sellers are saving about 6%. That's $30,000 on a $500,000 home! Or $12,000 on a $200,000 home! This is not an insignificant amount of money, and it is one of the primary reasons why sellers become interested in terms deals.

The second main benefit is that it gets the property out of their hands immediately. When we enter into a terms deal with a seller, we take over everything. That means they don't have to worry about the mortgage payment, maintenance, or repairs on the home. (And, for the record, we don't worry about maintenance or repairs either, as we pass that on to the tenant buyer.)

This alone is one of the most common reasons why sellers enter into a terms deal. If you need to get rid of your house quickly because you're moving or going through a divorce, for example, we provide a great solution.

And the final common reason is that we guarantee the seller that they'll receive their full equity in cash at the end of the term. When most people are selling a home, that's what they really want. They want to know that they're going to get what they're owed—not a lowball offer, and not a measly amount after fees and taxes. Because we're selling the home to a completely different market of people and we're capitalizing on the principal paydown throughout the term, we can make sellers happy by providing a reasonable price (sometimes even over asking) for their home, ensuring they get the equity they deserve in cash.

Finding your seller's motivation

The motivations above are common, but they're not necessarily going to apply to every single seller you come across. Your seller might be motivated by one of those reasons above, a mix of all three, or something entirely different.

Your mission is to find that unique motivation, and the first thing you need to understand is that it will take time. There is no magic question you can ask within the first five minutes of meeting a seller that will reveal their motivation.

Think for a second about what motivates you to make major decisions in your life. There are probably a lot of factors that come into play, right? Well, the same goes for sellers. This is a major life decision, and it would be silly to think that there is one single motivation that you can determine immediately.

When working with sellers, it's important to develop a relationship. These things take time. Although we'd love to only work with sellers who are ready to go immediately, the majority of sellers will need some time to get to know you, trust you, learn the process, and finally commit to selling on terms.

With that in mind, here are some questions you can ask your seller as you begin to cultivate that relationship:

• May I ask why you are selling?
• Where are you going next?
• When would you like to be there?
• Who else is this going to affect?
• How does that make you feel?

You're providing a solution to their problem

We often tell our Associates that we are in the business of solving problems. As you develop a relationship with your seller, it's important to understand where they are currently, and where they want to be in the future. If you can provide a solution to bridge that gap, they will commit to a deal with you. If not, then you're probably not the best solution for them at that specific time.

And that's okay, because you may be the perfect solution in the future. In this niche, it's not uncommon to speak with a seller who seems largely uninterested, but then get a call from them three to six months later. Circumstances changed, their problem is now different, and your solution can help them.

Always focus on the problem and your solution. When you do that, there's no need to "sell" or "convince." All you need to do is explain the service you're offering and how it can solve the problem, and the rest will sort itself out.

Were these questions helpful? Do you have any additional questions you like to ask sellers when determining their motivation? Feel free to share them in the comments below.