Property Option Expert Blog

By Mark Jackson

Why moths are drawn to a flame is a mystery.  But drawn they are.  A light in the night can attract them from 70 meters away!  Once trapped, the moth can circle for hours, working hard but getting nowhere.  More important things like feeding, pollinating plants, or just enjoying life become secondary.  Freedom comes when day breaks or the flame dies.

Motivated sellers are similar.  What was once appealing and attractive has now become a trap.  The emotional cost and energy spent can be huge.  They need to move on.

Motivated Sellers

Emotion is the mother of motivation, not logic.  A situation which has become emotionally charged and draining needs resolving.  A Seller is motivated strongly when uncertainty or the fear of being trapped or unable to cope, or simply the desire to move on, becomes overpowering.  “Motivated” means the mind of the person you are talking to right now is full of how to sell the house. They need peace of mind, certainty and freedom.  Lease Options are brilliant for giving that, allowing the homeowner to start enjoying life again.

Your aim is to help the moth move on.  Motivated sellers will be attracted to your solution and away from the flame, and do not need to be manipulated, persuaded or convinced. Lease options are a breath of fresh air, powerful enough to blow a flame away.

Here are 4 situations where Lease Options can really shine.

1.  Financial difficulties

The stress created by the struggle to make ends meet, and the threat of repossession is enormous.  Many sellers I talk to have difficulty covering the mortgage in the face of job loss, wage cuts or illness. They feel tied to a place which is stealing their life away.  A house bought on emotion by those who could never really afford it quickly becomes insatiable in a falling market, like a cuckoo in a sparrow’s nest.  Many have been burnt by a deal that initially looked brilliant when struck by a generous lender.  People get tired, so tired, they just want to walk away.  I like to point out that they can walk away… and keep their credit clean, or have it improved! The question – “Let’s imagine I’m able to help…  would you be willing to sell the house for what you owe?” is often all that’s needed to get started.

Michael and Julie were highly motivated, having decided to walk away from their 3 bed semi in a good area of Newton. They had already found a smaller house to rent. Meeting monthly payments of almost £1,000 was exhausting. They could think of little else, sleeping was difficult. They were frustrated after six months’ of pointless effort to sell the house.

They responded to a line ad I’d placed in the local paper…  I initially suggested they switch to Interest only, get consent to let and use the rent to cover the mortgage until they could sell.  I felt this was in their best interests. About 4 weeks later they called again, asking me to take the property off their hands.

We agreed a 120 month Lease Option to buy at £93,000. They were willing to cover payments on a second charge which will be cleared within the term. I promised to contribute a maximum of £500 monthly towards the mortgage, with any surplus due to future rate rise offset by them and added to the final purchase price. 2 days after they moved on, a family moved in, paying £160 a week rent.  After a little effort, the mortgage payments were reduced to below £500 pcm. Michael and Julie are much better off financially. They have peace of mind.  They avoided repossession unsinged. The tenants (Michael and Julie kindly did the viewings) have improved the property and all are now firm friends. You can see and hear more about them if you visit www.propertyoptionexpert.co.uk

2. Splitting up

Relationship breakdown is painful.  It can be expensive too.  People need closure.  Trapped in a space filled with negative emotion and surrounded with triggers for painful memories, selling and moving out becomes a priority, a fire not a flame.  Often it’s too expensive for one person to cover the costs of running a family home, adding another burning issue to the emotional one.

One of the 12 Option deals I’ve agreed in the last 10 days falls into this category.  Natalie and her ex-partner John had remortgaged and invested heavily in their 2 bed end terrace in County Durham.  Animosity and frustration got temperatures rising; they both wanted and needed closure. Natalie had been offered housing from the local authority and wanted to move out yesterday. Unable to sell for what was owed, they felt trapped, caught in a downward spiral.

We agreed a 60 month Lease Option, with me paying a modest amount to John to allow him to move on. We will avoid a hefty Early Repayment Charge by waiting at least 24 months, and I will be able to pay Natalie £2,000 above the redemption amount when I buy.

3.   Letting Blues

It’s so easy to get burnt in property, especially if it’s not your profession.  There are masses of motivated landlords trapped and waiting for dawn in the UK and to date I have helped 11 different ones.  One exhausted investor sold me most of his portfolio of 17 houses over a two year period – all through Options. What makes other investors a pleasure to help? They want to let their property out!  They often don’t have equity, so are not banking on a lump sum to move on.  A 60 month lease with rental guarantee, the property fully maintained and insured and a sale within the term is daybreak to a struggling landlord!

I have granted Options on property I bought in the early days to other investors because I didn’t want the headache of keeping or selling it.  I once exchanged Lease Options on two houses I’d got cash out of but didn’t want to maintain in return for a number of new deals.  Those properties would have had me flying around in circles! Getting rid was better than paying a hefty finder’s fee.

4.  Relocating

Whether for work, to emigrate, downsize or upsize, people need to move on. Given a deadline that need can become a burning desire.  Rattling round in a big house after the kids have left; having to climb stairs with two bad knees and a dodgy hip; or family growth when the house can’t stretch – these are all situations which create high motivation.  Lease Options can work brilliantly here!

Caron owns a beautiful 2 bed semi with a conservatory and well kept gardens in a good part of Darlington.  Although she had moved into a Park Home in the countryside 40 miles away, she was unable to settle and enjoy life with her partner Lee. They were paying £490 for the mortgage on the empty house, not to mention insurance and council tax. Their concern had matured into anxiety.  Thoughts about vandals and burglars were taking the joy out of life.   They wanted to cut the 40 mile elastic band tugging them back to their house, but couldn’t sell it and didn’t want to become landlords.  They even considered giving up their dream of living in the countryside.

We agreed a 48 month option to buy at £97,000 (the house was on the market for £125,000). The mortgage has now been reduced to £278 pcm and we have an excellent tenant who pays £104 per week. Caron has peace of mind and no stress! You can meet Caron at www.propertyoptionexpert.co.uk

Once you appreciate the situations which create powerful emotion that motivates, you are able to target your marketing and find or attract the right sellers easily!

Finding Motivated Sellers

Use the Moth Attractor Method

Let your light shine! A flame is more hazardous than an energy efficient light bulb.  Plug yours in and switch it on.  At times you can blow the flame away with your Lease Option strategies, but you can also draw attention to your solutions by using low key, modest and inexpensive marketing.

1. The best way of doing this is to simply do the right thing.  I’ve had loads of referral business because I did what I said I would and treated people fairly.
2. Use line advertising in small, community papers (often run on a charitable basis).  Follow the ADS principle –

1. Address the need
2. be Different
3. keep it Simple

In a small publication delivered weekly and full of local news I run a line ad in the births, deaths and marriages section (some classified ads are squeezed in there too!) which reads: Wanted! 2 or 3 bed house in the local area.  Please call Mark on (Landline). I love paying for the word please. Why?  I get lots of calls from older people, and have been able to help many with Purchase and Lease Options.  Not bad for a 70p ad. I have had good success with other one word introductions like Stuck?… or Struggling?… because they address the emotional need of the Seller.

3.  Use leaflets with a simple, clear message. I’ve had great success with postcard size leaflets.  They are easy to deliver and very keep-able. I avoid language that may be technical, replacing phrases like “negative equity no problem” for ones like “I can buy even if you owe more than your house is worth”.

4. Post letters to empty properties. These are just goldmines! Owners of empty properties are often much more motivated than other sellers. The letter needs to be written simply, in a non-corporate style with a message that says you can help.

5. Deliver slips.  You can print a message that reads, “Wanted, 2 or 3 bed house to rent or buy in the local area. Please call….” on a sheet of A4 paper and cut into 5 or 6 strips.  These work remarkably well.

Sniffer Dog Sourcing

Sniff out motivated sellers by following through on their advertising! I’ve had very good results by calling those advertising in the local press and online for tenants. Calling ads which are at least 3 weeks old is much more effective!  For good workable scripts see Wendy Patton’s book “Investing in real estate with lease options and subject to deals.”

Lease Options are so powerful because they allow you to work with empathy.  They almost understand the emotion behind a situation, and can give immediate relief.  Lease Options let you blow a flame away.  With the burning issue gone, motivated sellers can move on.  The peace of mind and freedom these solutions grant the seller, and the satisfaction and wealth they can provide the buyer means Options are here to stay.  At last – daybreak for moths!

Besides distributing a regular newsletter highlighting expert tips for other Option investors in the UK, Mark Jackson conducts regular workshops, sharing his experience and helping others succeed.  He also offers a personal mentoring service.  Just write to mark@optionexpert.co.uk for details.

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