I’d like to talk about what I call the “WOWWW” formula. It’s a simple formula that you need to understand and incorporate into your business if you’re serious about real estate investing.

There is simply no way you can structure a truly creative, no money down offer if you don’t understand this formula. There are only five pieces. Four of which are “W” and one of which is an “O”. The Five Important Elements of Working with a Seller Before you can structure an offer, you need to know these five pieces of information.

“w” when

You must know when. That’s basically when they want to sell? You want to understand their sense of urgency, their level of motivation. If they want to sell within months, they are not very urgent. You’re not going to get a very good deal, and it’s really not something you should spend a lot of time on.

I’m not saying you don’t capture that person’s name, email, and phone number, and put it in a database somewhere and follow up with them regularly through postcards and such. But they’re not going to be a deal this week or next month. They just aren’t.

If they are not properly motivated, and when is the motivation, if they are going to make a deal in the next 30 days due to foreclosure, moving out of state, or out of state or about missing a mortgage payment because they’ve been trying to sell it for a year and they can’t sell it and they’ve run out of money, so their ‘when’ has really shortened.

“W” what

What is your situation? That’s somewhat related, but you need to understand what’s going on with them. Why do they need to sell? Is it a foreclosure or pre-foreclosure? Is it a divorce? Is it a sale where they can’t sell it? Is it that they bought it to freak out?

We are seeing a lot of this. People bought stuff to turn it around, went in and rehabbed it, spent a lot of money, and hoped to sell it, but the market turned against them and they were stuck. So you need to understand what their situation is. That is an important element of this.

“W” How much is the house worth?

The value is always hard to pin down, but you should do your homework and figure this out. You should look at listings or appraisals or any other source of information you want to try to figure out the value of repaired properties.

It could be worth $150,000, $200,000, $300,000, or who knows. You must have an idea of ​​what the property is worth to make an offer.

“or” should

You should know how much the person owes on the mortgage or mortgages. This is a critical element and something that many people don’t understand. You cannot make an offer through the MLS system if you do not know how much the other person owes. It’s very difficult to make a creative offer if you don’t know how much they owe you.

If the property is free and clear and there is no mortgage, then that will dictate a completely different type of offer. If they’re completely sunk and the house is worth $130,000 and the mortgage is $150,000, that’s going to lead to a whole different type of offer. If they owe $90,000, that will drive the final offer.

You can’t make quality offers to sellers if you don’t understand what they owe. It is absolutely critical. All five are critical.

“W” what they want

Probably the least important thing is what they want. That will change over time. If they’re not motivated and don’t need a quick sale (one and two aren’t really in place), they most likely want a high price. They’re not really ready to make a deal. They are not where you need them to be to make a deal.

What they want first all changes over time. It is also probably the least important of the five elements. However, you need to know what that is. If they want a fancy number, you don’t want to spend a lot of time and effort on it.

That’s the WOWWW formula. Use it on every deal and make much better offers.