Every prospective home buyer is hoping to snag the deal of the century. One way to do that is to shop the situation and find a seller who is, in real estate parlance, “motivated.”
We’ll go one step further. Here are six likely clues that the home you’re interested in has a seller who may be desperate:
1. They have a crib in the master bedroom and bunk beds everywhere else.
Small houses are great starter homes. But once a family starts growing, so does its need for more space. If you see a crib in the master bedroom and a heap of toddler toys on the bunk beds in the only other bedroom, you’re probably on the right track to think, “This is a family that has outgrown this tiny two-bedroom house.” You can confirm your hypothesis by using the family photos on display: Count the kids and figure out who sleeps where until you’ve run out of beds to put people. And then start thinking like a stressed-out parent.
Unless you’ve ever tried to sell a house and keep it show-worthy while sharing it with a rabbit warren of small children, you cannot fully appreciate the certain hell of the situation. Sellers like this just want the misery to end. They simply cannot keep the house neat and clean long enough for it to show well, nor can they continue indefinitely to pack up the strollers and ankle-biters on five minutes’ notice to clear out when an agent calls and wants to bring over a potential buyer.
And if the kids are school-aged, you can probably hear a clock ticking in the background. These sellers will likely be happy to pay a premium ― which is to say, take less money ― to preserve the sanctity of the school year. They will want their children to be settled in their next home by the first day of school. They may have listed their starter house at a higher price in the early days of spring, but come June, they will just want it sold. By July 4, you will be able to taste their fear. They are desperate to sell and have this moment be over. Their scars will heal in time. But show mercy. They are still good people.
2. They are elderly sellers still living in a multi-story home.
For the most part, elderly people want ― and need ― single-floor living. To paraphrase the words once spoken by President Bill Clinton, “It’s the steps, stupid.”
The first sign that an older person may need to sell their family home comes when they can no longer easily climb the steps to their second-floor bedroom. Two-story homes that were great when their knees were younger very quickly become uninhabitable if there isn’t a first-floor bedroom and full bath.
How can a buyer spot evidence that this is what’s going on? If you see a full set of toiletries in the downstairs bathroom and blankets in the family room next to the recliner, it’s a pretty good bet that this seller is sleeping there. And not for nothing, a buyer can also just ask the seller’s reason for leaving.
Elderly sellers may be attractive to a buyer in another way, too. If the sellers own the house outright, could they hold a mortgage for you? This would save you money in closing costs ― no points or application fees ― and could even help them skirt capital gains taxes. This situation is perfect for buyers who can’t get a conventional loan because of credit or income issues. Win-win!
3. They’re a divorcing couple eager to get it over with.
Depending on how well the selling couple can hold it together, their divorce may present opportunities to cash in on the misery. Well, admit it, that’s what buying is about, right?
Divorces can be ugly. They can involve cheated-upon sellers who want revenge, dumped partners in the throes of depression, and ― wait for it ― a need to quickly liquidate assets, including the house, so that the money can be divided up and everyone goes on their merry way.
Sometimes, one partner wants to sell and the other doesn’t. Sometimes, listing the house is just a bluff when one partner is negotiating to have the other partner buy them out. A lot can happen to a house for sale when the co-sellers aren’t on speaking terms.
The upside for buyers? If you can steer clear of the drama, understand that any situation that creates an urgency to sell is a good situation for buyers.
4. The house is completely empty.
An empty house screams, “The seller has already left the building and the meter is still running!” While vacant houses may be easier to show ― no appointments are necessary, just a lockbox ― many real estate agents hate showing them because they just don’t show well. Empty houses feel cold and sterile and are harder for prospective buyers to envision themselves living in. Buying a home is an emotional decision. And an empty property is just, well, kind of dead inside.
An empty house is also evidence that the seller has already moved out. But despite the fact they aren’t living there anymore, the bills haven’t stopped coming. The electricity and heat still need to be on to show the house, so those expenses are still being paid. Insurance on the house still has to be maintained and, of course, the taxes still need to be paid. And let’s not forget the mortgage payments. In other words, the seller is still paying real money for this house they no longer live in.
Kind of a perfect time for a buyer to negotiate, wouldn’t you say?
The National Association of Realtors advises agents to discourage listing clients from leaving a house totally empty, so it’s not always easy to tell when they’re still around. Even if clients move out, agents should use the services of a professional stager and the listing will sell faster, a NAR report said.
5. The listing history contains clues.
Some houses languish on the market. When that happens, the houses become stale, and interest in them eventually just dries up. Sellers of stale listings sometimes blame the listing agent and may try re-listing with another agent. This ignores the reality that, ultimately, everything has a selling price, and the house may just be overpriced.
The listing history can show a buyer just what is going on. Has it been listed and unlisted with multiple agents, but always at the same price? This could indicate a stubborn seller with an unrealistic idea about what the property is worth. Or was it just listed by a new agent at a much lower price point? That could signal the seller is in a negotiating mood. The listing history will also tell the buyer what the seller paid for the house and when. If there haven’t been any major improvements, a buyer can multiply what the seller paid by the average annual appreciation in the neighborhood and see if the listing price makes sense.
A reminder: An agent is legally required to submit all offers. Why not go ahead and make a low one? A stale listing isn’t going anywhere fast unless the price drops. And a smart agent will advise the seller than an offer is an invitation to negotiate, so negotiate.
6. The house is being sold at an absolute auction.
All auctions are not the same, and the only time you are likely to find a desperate seller at a real estate auction is if it’s an absolute auction. Real estate auctions, in general, are just another way to market a house and generate interest in the property.
Just because a house is being auctioned doesn’t mean the seller is in financial trouble. You can pretty much dispense with the idea that there is a bank waiting in the wings, ready to seize the property if it doesn’t sell on the courthouse steps at 3 p.m.
But you might be able to find a desperate seller at an absolute auction, which requires no minimum bids and sells the property to the highest bidder, regardless of price. Absolute auctions attract the most buyers because they know the property is going to sell. They also provide no safety net for the seller ― which translates to absolute auctions being pretty hard to find since few sellers want to “just take anything.” There also may be no time for prospective buyers to inspect the property, which will most likely be sold “as is.” Absolute auctions are definitely not for every buyer, but they are where you will find the most desperate sellers.
For those still interested, the other kinds of real estate auctions are minimum-bid auctions at which the lowest acceptable bid is pre-determined by the seller, reserve auctions for which the seller has the right to accept or reject the highest bid if it doesn’t match or exceed a pre-determined but undisclosed price, and a sealed bid auction at which all bids are confidential but otherwise meet the criteria for a minimum-bid or reserve auction.
