15 Types of Motivated Sellers in Real Estate
In this guide, I will provide you with a list of 15 types of motivated sellers with a detailed explanation of each. Those are categories I’ve encountered throughout my real estate career as an agent.
It’s important to understand the situations motivated sellers find themselves in so that you can find motivated seller leads easier for your real estate wholesaling, investing or agency business.
Read on to learn about all of the motivated seller types.
Owners of Properties in Bad Condition
Property issues are almost always a source of stress for the owners. Owners may feel trapped in the property because they cannot afford to fix the issues.
It’s also maybe because they do not have time, or they assume no one will buy their run-down home. An owner like this would be a very motivated seller in the face of a good offer.
Fixer-Uppers are houses that need major or minor repairs, such as:
- Cosmetic repairs
- Structural repairs
These could be homes owned by elderly people who can no longer maintain the property. They could be rentals that are poorly maintained by tenants.
Or, they could be vacant, foreclosures, or just older homes in need of updates.
These sellers may not list their homes for sale because they cannot afford to fix them up and prepare them for sale. They may have decided they don’t care about the property anymore.
Knowing the seller’s motivation can help investors determine if they are motivated enough to sell at a discounted price.
If they have a mortgage, they may not be able to sell the property for less than the amount due on the loan.
They may want to also get enough to pay for moving expenses or a down payment on their next home.
If they do not have a mortgage, this puts investors in a better bargaining position because there is no absolute minimum. In this case, your offer would depend on the motivation.
For example, an elderly couple living in a fixer-upper that would like to downsize may just want enough to pay cash for a modest condo or to make a down payment.
An owner who doesn’t care about the property may be so relieved to get out from under it that they will sell at a steep discount.
The easiest way to find fixer-uppers is through word-of-mouth and by driving around. Look for houses and lawns that are poorly maintained.
You can also look for houses with boarded-up windows, and for houses with “For Rent” signs in the yard.
Severely Damaged Homes
Owners of homes that have been damaged by fire or natural disaster often want to start over with a new home, but they feel trapped in the damaged one.
They may be forced to live in temporary housing for a year or more, while waiting for FEMA to repair the home or build them a new one.
The more uncomfortable they are, the more motivated they will be to sell.
These motivated house sellers could be traumatized by the events that transpired, especially if loved ones were killed in the disaster.
Living in the home could be too painful, and they may feel unable to continue living there.
Sellers like these would be motivated enough to consider nearly any offer. Just be sure to speak to them with compassion and an attitude of helping them.
Owners of Homes with Building Code Violations
Building code violations commonly happen in homes that were built before codes existed.
These violations are also fairly common in homes owned by individuals who do their own remodeling, also known as do-it-yourselfers (DIYers).
Older homes tend to be grandfathered in, but codes that are meant to prevent safety hazards, such as those relating to lead, asbestos, and electrical wiring, would have to be addressed.
These issues should be dealt with before the home can be sold on the open market.
Homeowners that do their own repairs or remodeling often commit multiple code violations. Some of the most common violations include the following:
- Work completed without required permits
- Improperly installed decks
- Improper electrical installations
- Fences that are too tall
These homeowners often find out about the code violations when they try to sell their homes on the market. They find that they cannot sell the house until these violations are fixed.
When faced with these violations, they feel they may not be able to afford the costs. These costs can be overwhelming.
Even if they do sell on the open market, the new owner could sue for any code violations they discover.
These homeowners quickly become motivated sellers when they realize they are stuck in their home. They realize their only option is to sell to an investor at a discounted price.
These homes are often in good shape other than the code violations, which provide a great opportunity for a quick profit.
Improperly Zoned Property Owners
Homes located in areas zoned for business are extra hard to sell because they are difficult to finance and the property taxes are higher.
The property may have been recently rezoned, or perhaps owned by the same family for generations.
Owners have the option of applying for a variance or requesting rezoning, but most homeowners do not want the hassle.
The longer they have been stuck in the property, the more they will realize they had better accept whatever offer they can get if they ever want to escape it.
Owners of Homes in a Bad Location
A bad location can mean any place where it’s difficult to sell a house. For example:
- an unsafe neighborhood with high crime rates
- a neighborhood with an industrial enterprise nearby creating pollution and noise
- a location with bad access to roads
- a flood zone
Such places tend to be rich in motivated home sellers failing to find anyone interested in buying a property to live in an inconvenient neighborhood.
Keep in mind that part of your work as an investor, wholesaler, or agent is to resell the property.
While other problems, such as legal issues attached to the house or disrepair, can be resolved, location is something you can’t usually change.
Significantly lowering the price can do the trick. Be careful with determining the purchase price you can pay for such a home.
Historical Property Owners
Many well-meaning homebuyers and investors purchase run-down historical buildings with the intention of restoring them, but it never happens.
They may find out the repairs were more extensive than they realized, or they may have been unable to overcome local regulations. In some cases, they may have just never had the time.
Chances are, their money is tied up in the building, and getting out from under this, even at a low price, will free up their finances and allow them to buy a new home or investment property.
These sellers are often thrilled to get an offer.
You will be hard-pressed to find a seller more motivated than a burned-out landlord. Renting property is stressful.
Landlords have multiple responsibilities to balance, and so many things can go wrong:
- Tenants destroy the property
- Tenants refuse to pay rent
- Evictions take months
- Tenants make unreasonable demands
- Tenants may sue the landlord
- The landlord could experience long vacancy periods
They may find they cannot break even from month to month. They lose more money than they make while dealing with one aggravation after another.
Some landlords are so burned out, they would almost be willing to pay you to take the property off their hands.
This is especially true of landlords who do not hire property management companies and try to manage their properties themselves.
Urgently Relocating Sellers
Unforeseen circumstances often lead to situations where homeowners need to relocate.
This can happen due to a new job, job transfer, military transfer, or the need to move closer to aging parents who need care.
Homeowners that move for a job opportunity may be fortunate enough to have an employer who covers the additional house payment in the new location.
This is usually only for a limited time, and not all employers offer this.
They also may be forced to rent until the existing home sells, as they may not be able to get a mortgage for two homes at the same time.
In this case, the existing home has become a source of stress and a barrier. The seller just needs to get rid of it. This very motivated seller is ready to make a deal.
People in the military often move as often as every four years, and if they own a home, they may be forced to live on a military base until it sells.
This is because they may not be able to afford two payments. They will be open to all offers.
Homeowners with aging parents may have to move suddenly to offer care. In many cases, one spouse stays with the aging parent while the other stays in the home.
The couple is forced to live in separate cities or states until the house sells. This can be taxing, and couples in this situation often accept less for a quick sale.
Most real estate is purchased by using a loan rather than cash. Failure to make the required monthly mortgage payments results in default.
This gives the lender the right to sell the property at a public foreclosure auction to recoup the unpaid loan amount.
Distressed Property is a common industry term used to describe properties where the most recent owners have defaulted or are about to default on a mortgage.
This term does not refer to the physical condition of the property. Distressed properties can be in brand-new condition, falling down, or anywhere in between.
Pre-foreclosure begins when a lender sends a Notice of Default to a property owner who has failed to meet the required monthly mortgage obligations.
The Notice of Default is also published in the newspaper and filed with the county recorder, according to the laws in the state where the property is located.
When the Notice of Default is recorded, it becomes a matter of public record.
This gives investors the ability to know when a property is in pre-foreclosure. The pre-foreclosure is now a distressed property.
Distressed property owners have the following options:
- Stop the foreclosure from moving forward by paying the lender the amount due
- Try to prevent the foreclosure by negotiating with the help of a mortgage relief service
- Ignore the situation and wait for the inevitable foreclosure
- Sell the property before the foreclosure action is complete
Unfortunately, some distressed homeowners do nothing, due to anger, depression, or denial.
Most homeowners of distressed properties are very motivated sellers who are willing to sell at a low price to avoid a foreclosure.
In hot real estate markets where property values are rising and homes sell quickly, distressed home sellers may be able to sell on the market, or at least walk away without owing anything.
Most distressed house sellers who wish to avoid foreclosure are unable to sell the house on the open market. It may need repair, or they may owe too much on the home.
A pre-foreclosure motivated seller in this situation has the option to sell the property as a short sale.
A short sale occurs when the lender allows the owner to sell the house for a price that is lower than the amount due on the loan.
Short sales require authorization from the lender and must meet certain criteria, including the following:
- The buyer must not be a relative of the seller
- The seller must be behind in mortgage payments
- The seller must prove financial hardship
- The seller must disclose to the buyer that it is a short sale
Upon completion of the short sale, the lender releases the lien and releases the seller from the loan.
The lender reports the short sale to the credit bureaus, and this appears on the seller’s credit report. This is considered derogatory, but it is less severe than a foreclosure.
If you are a real estate investor or agent who looks for this type of homeowners, read our guide on how to find distressed home sellers.
Delinquent Property Tax Debtors
When property owners fail to pay their annual property taxes, the county where they live can place a lien on the property.
The lien will be sold to the highest bidder, often for the amount due on the taxes.
The homeowner then has a limited time period to redeem the property by paying the past-due taxes plus interest.
If the taxes are still unpaid, the investor can take possession of the property.
Homeowners who lose their property this way end up with nothing. If they are unable to pay the past-due tax, they become very motivated real estate sellers. They have two options:
- Selling the house quickly for a low price and walk away with at least a little
- Losing the house and walking away with nothing
These sellers have a lot to lose by not selling, so they are some of the most motivated sellers who will sell at the lowest prices. Learn how to look up properties with tax liens.
Owners of Properties with Liens
A lien is a legal claim against a property whose owner has outstanding debt they are failing to pay in a timely manner.
An owner of a property with a lien on it may not be able to sell it without permission from the lien holder and encounter other difficulties.
Here are a few examples of lien types:
- Judgment liens from creditors, such as banks, credit unions, and credit card companies
- IRS liens for unpaid income taxes
- County lien for unpaid property taxes
- Municipal liens for unpaid utility bills
- Contractor liens (also called mechanic liens) for unpaid work
- Medical liens for unpaid medical bills
- Child support liens
If the homeowner does not pay, the lien holder could foreclose on the home.
If the homeowner is unable to pay, the homeowner’s best recourse could be to sell the home, especially if the amount is prohibitive.
The problem is, the lien encumbers the title, making it difficult to sell the home.
These homeowners feel trapped. They are very motivated property sellers who would welcome a way out.
When couples divorce, one of the most significant assets to split is the home.
Couples frequently come to the difficult decision to sell the home for a combination of financial and emotional reasons.
Divorcing couples may decide to sell the home for several reasons:
- The individual spouses are unable to afford the mortgage payments
- There is a considerable amount of equity in the home, and selling the home is the only way to split it
- Neither spouse wants to live in the home for emotional reasons
- The spouses decide to relocate to get a fresh start
- The court has ordered the home to be sold
If divorcing couples can sell the home before the divorce is final, they could save on capital gains taxes.
This creates a sense of urgency and motivates couples to sell the house within a time frame. Urgency is the primary motivator to sell at a discounted price.
Divorce is a stressful, emotional process. The memories associated with the house can be painful.
Many couples will accept almost any offer so they can sell the house as quickly as possible and move on with their lives.
People with Urgent Need for Money
Some of the most motivated real estate sellers are people who need the money as soon as possible for personal reasons unrelated to the property itself.
“How soon do you have to sell the house” is one of the standard questions to ask motivated sellers when wholesalers, investors or agents qualify them as prospects.
Some healthcare costs are not covered by insurance, and some homeowners don’t even have health insurance.
Healthcare costs can be quite high, but sometimes a homeowner has to do whatever it takes to pay them. Paying these costs could be the difference between life and death.
Health issues can prevent a homeowner from continuing to work. This makes it difficult or impossible to keep paying the mortgage.
A homeowner who suddenly becomes disabled may need specialized equipment and furniture that must be purchased out-of-pocket, often while not working.
Healthcare costs can be brought on by extended family members also. A grown child may need expensive treatment that must be paid out-of-pocket.
The homeowner may have to take a leave of absence from a job to care for a spouse or loved one with health issues.
These matters of life and death can quickly create motivated property sellers who will accept almost any offer.
Unfortunately, some homeowners have poor spending habits, and they take on more debt than they can handle.
Before they know it, their minimum monthly payments on their credit cards are higher than they can afford. No matter how much they pay, their balances don’t come down.
They may also have student debt, car payments, and personal loans. High debt can lead a homeowner to feel helpless and stuck.
They may prefer to sell their house, pay off the debts, and start over, rather than go into default or file for bankruptcy.
These homeowners will continue to feel overwhelmed and powerless until they sell.
They need to sell as soon as possible, so they can get their lives back on track and start over, hopefully having learned some valuable lessons about spending.
Some homeowners decide to sell their homes so they can travel. This is common for empty nesters and retirees.
They enjoy staying in exotic destinations around the world, or they want to purchase an RV and camp around the country.
Of course, this takes cash, and when homeowners are ready to start traveling, they become excited and are very motivated to sell as soon as possible.
Lenders Owning Foreclosed Properties
When a home is sold in a foreclosure auction, the lender attends the sale. If no one bids at least the amount due on the loan, the lender purchases the property.
These properties are commonly referred to as REO properties (real estate owned) or bank-owned properties.
Most foreclosures happen within the first few years of homeownership, when distressed home sellers have little or no equity in the home.
In some markets, they may even have negative equity.
Often, investors cannot make a profit if they purchase these properties for the amount of the loan balance at the foreclosure auction and the house doesn’t sell.
This forces the lender to hold the property as a REO (Real Estate Owned) property to protect its own interests. When lenders hold a property, they lose money until it sells.
This motivates them to sell as quickly as possible. The longer they hold a property, the more motivated they are.
The more motivated they are, the lower the price they will accept.
REO listings can be found on lenders’ websites. Many investors compete with each other trying to get foreclosure listings from banks.
Inheriting real estate may seem like a happy development, but it can create stress. This is especially true in certain situations:
- The property is in poor condition
- The heirs live a great distance from the property
- Multiple heirs share an interest in the property
The heirs may be unable to move into the home or take care of the home. They may not have the resources to repair the house or prepare it for sale.
Or, they may not be able to afford to maintain it while it is empty.
These heirs could be motivated to sell for either of the following reasons:
- They don’t wish to be burdened with the property
- They want to liquidate so they can receive and divide cash between the beneficiaries
Either of these motivations is enough to create a very motivated seller.
Heirs will often sell for less than fair market value whether they want to avoid the burden of owning the property or cash out, since all the proceeds will be profit.
Vacant Home Owners
Vacant homes are almost always a burden for property owners. They must be maintained. There may be utility bills or a mortgage.
These homes are often the target of vandalism and burglary and need frequent monitoring. This can be both time-consuming and expensive.
If they are not monitored and maintained, they can quickly lose value, thanks to pests, weather, and crime.
Owners may be unable to rent out the house due to necessary repairs.
They may also be unwilling to rent out the house because they do not want to deal with the headaches that often come with rentals.
They may be afraid to rent it out because tenants could damage the house.
They may not want to live in the house because they already have a house, they dislike the area, or the house does not meet their needs.
Here are some examples of vacant homeowners:
- Burned out or retired landlords
- Elderly people who have downsized or moved into a care facility
- Heirs who do not wish to live in the house
- People who have relocated for job, family, or other reasons
There could be a variety of reasons why they have not placed the house on the market. They may be procrastinating, or they may plan to fix it up first.
Or, they may not know what to do with the house.
These owners would be thrilled to receive an offer. The empty house is costing them in some way.
This is because even if they are ignoring the maintenance, an unmaintained house loses value the longer it sits.
Even if the house is in good repair, these owners are motivated enough that they are still likely to accept a discounted offer for the property.
The house is a problem for them, and you have an opportunity to be the solution, making this a win-win situation.
How to Get Motivated Home Seller Leads?
I described 15 ways of how to find motivated seller leads and 9 free ways to find motivated sellers in separate articles. But here, I have two easiest options to suggest for real estate wholesalers, investors, and agents looking for motivated sellers.
1. HouseCashin Investment Property Marketplace
HouseCashin Investment Property Marketplace is a good place to find properties listed by motivated home sellers.
The platform is created with the goal to enable wholesalers and investors to find homeowners needing a quick sale.
A good portion of the listings there are FSBO (for sale by owner) properties whose owners need cash ASAP.
2. Real Estate Bees’ Motivated Seller Leads
Real Estate Bees also designed an affordable and effective solution for you.
Their network of real estate online platforms generates motivated and distressed seller leads for wholesalers, investors, and agents.
You can conveniently get them in your Real Estate Bees dashboard upon subscribing.
Real Estate Bees use high-quality informative content for motivated house sellers.
Landing pages and lead collection funnels are designed with high attention to detail to keep leads highly convertible. Unlike in many other sources, they are up-to-date and qualified.
Payment options include a monthly subscription fee and even a free option. Learn more details.
If you want to contribute your expert advice on a topic of your expertise, feel free to apply to our Expert Contributor Program.
About the Author
Kristina Morales is a REALTOR® with over 20 years of professional experience. She actively practices real estate in Ohio but also has practiced real estate in California and Texas. Conducting her real estate business in three states has allowed her to gain unique experiences that make her a well-rounded realtor. She obtained her Bachelor of Arts in Business Management and her MBA with a concentration in Banking and Finance. Prior to real estate, Kristina had an extensive corporate career in banking and treasury. She ended her finance career as an Assistant Treasurer at a publicly traded oil & gas company in Houston, TX.