The Owner Occupant

When contracting a property from an owner occupant you have to first find out how attached the seller is to the home. Discovering the reason the owner has decided to sell can help in determining the owner’s level of attachment. In most cases, contracting from an owner occupant is more complex because there are usually more emotions involved. For this reason, negotiations should be done in person. The bright side is you do not have to worry about competing with hundreds of buyers. Your competition is smaller thus your chance of contracting the property is higher. With that said, these types of properties take a bit more time to find.

Once you have discovered that an owner is selling because he/she can no longer afford the home, you can assume that the emotions and the attachment levels are high. This is where justifying your offer is very important. The seller is already being forced out of his home and now you, the investor, are looking to purchase it at a low price. Expect an immediate no, some explanation to why the home is worth so much more and/or some yelling. Remain calm! Listen to everything the seller has to say. Once he/she has finish speaking begin presenting your FACTS. Make sure the seller understands that your offer is based purely on factual information. Explain to him/her how you arrived at your offer. Make sure not to speak over the seller’s comprehension. In most cases the seller is not a savvy investor so make your explanation as simple and clear as possible. If you do a decent job the seller will see your point of view and realize your offer is not as terrible as he/she thought it was. Negotiation begins.

Contacting a property with an emotional owner occupant can be intense. Contracting a property with a less emotional owner occupant is usually less exhausting. An owner occupant that is less attached to the property or not as emotional about the sale is selling with a purpose. These sellers are usually selling to downsize, upgrade, relocate and/or just ready for a change. In this scenario, you still need to present the facts but they are usually not the determining factors. These sellers are looking for speed, convenience and service. They are ready to make the move and if you can provide this you will more than likely contract that property. Price is always a factor so you have to show how selling the property to you will make their life easier. Show them how you will be providing them the speed, convenience and service they are looking for. Once they see the value in selling to you versus another buyer, your offer, even if low, becomes reasonable. Negotiation begins.

Now that the negotiations have begun it’s time to make it a win-win situation. In the first example, you may give the owner a few days after closing to finish relocating. Usually these sellers need the funds from closing to relocate. Make sure that the seller has an incentive to relocate ASAP. For example, you may keep an amount of their profits in escrow until they have completely relocated. You may also structure the deal so that if they have not vacated the property by a set date they will be paying you a per diem from the escrow account. The less emotional sellers are usually already out of the home so they want a quick close date. Give it to them. They want the headache of dealing with two homes gone, yesterday! Owner occupants also tend to be slower decision makers. Make sure you let them know that your offer has an expiration date. Do not let them shop your offer.