Real Estate Investing: The MARLA Formula
The MARLA formula consists of 5 magic questions that will help you quickly weed out the motivated sellers from the rest of the pack. MARLA is an acronym for Motivation, ARV (After Repair Value), Repairs, Loan balance, Asking price. Here are the 5 magic questions.
1. Why do you want to sell your house?
2. How much would the house sell for?
3. What repairs does the home need?
4. How much do you owe on the house?
5. What is your asking price? Follow-up: Is that your bottom line?
Let me explain why we’re asking these questions.
”Why are you selling the house?” reveals MOTIVATION. If the answer is indicative of a MOTIVATED SELLER, that’s a good sign. If the seller shows no sign of motivation, then it’s your call. I figure I’ve got them on the phone so I may as well get answers to my other four questions and make an offer, but that’s me. Some sellers withhold information until you build rapport, then they’ll spill the beans that they’re MOTIVATED. Be patient.
”How much is the house worth?” gives an indication of the home’s market value. Most sellers have some idea of how much their house is worth. Of course you should do your own due diligence before actually buying the house, but for now you can just go with what the seller says. If the seller doesn’t know what the house is worth, you may be able to get a good deal. Ignorance is expensive.
The third question will give you an idea of what needs to be done to bring the house up to market condition before selling it. If the house does need repairs, make a list of what needs to be done. Have the seller give you an estimate. Often the seller will give you a high figure that you can use to your advantage.
To find out about the existing financing on the house ask, “What’s the current loan balance?” Don’t be afraid to ask. MOTIVATED SELLERS will tell you. If the seller won’t tell you, then s/he is not motivated and you can move on.
The final question gives you the seller’s asking price. It’s a good idea to ask a quick follow-up question to see if the seller is being truthful. It’s amazing how quickly sellers will drop their asking price by thousands of dollars in seconds.
You may need more information to make an offer - sometimes not. But at least now you can sort out the unmotivated sellers in minutes. Now it’s time for either a few follow-up questions or an offer but that’s a topic for another article.
How to find motivated sellers, negotiate the best deal, sell the property quickly, and cash the check with a smile. Discover more at the Real Estate Blog
- Robert Rentalman
