Dealing with time wasters will probably drive you out of the real estate investing business so here's a formula to pre-screen sellers quickly. It's called the MARLA formula and it consists of 5 magic questions. Here's what the MARLA acronym stand for: Motivation, ARV (after repair value), Repairs, Loan balance, and Asking price. These are the 5 magic questions:



1. What's your reason for selling the house?

2. How much would the house sell for?

3. Does the house need repairs?

4. How much do you owe on the house?

5. What's your asking price for the home? Follow-up: Would you accept a lower offer?

If you're wondering why we're asking these 5 questions, read on.

The first question reveals the seller's MOTIVATION. The best case would be if the answer indicates a high level of motivation to sell the house quickly. Most sellers will not be motivated and if that's the case with the seller you're speaking to, then it's your decision whether to ask more questions. You've got them on the phone so you might as well ask and make an offer. Sometimes sellers will hide pertinent facts until you warm them up. Then they'll reveal their motivation so don't give up too quickly but don't try to squeeze water out of a rock either.

You'll get a ballpark idea of the home's market value from the answer to the second question. In most cases, sellers have a pretty good idea of what the house is worth. Do some due diligence to confirm the sellers word but initially you can just use it as a ballpark figure. When you find a seller how doesn't know the market value of their house, you might be about to get a good deal. Find out how much they want.

You'll need to know what repairs the home needs to put it in good sellable condition. That's the point of the third question. Make a list of the repairs that need to be done, if any. Ask the seller for a repair estimate. It's common for seller to provide a high estimate which will work in your favor.

You'll get information on the existing mortgage from the fourth question. Motivated sellers won't hesitate to tell you so don't be timid, just ask. This is an excellent question because unmotivated seller will not want to reveal this information. That's great. You've saved yourself time by quickly eliminating an unnmotivated seller which frees you up to move on to the next seller.

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.

It's possible you'll have enough information to make any offer at this point. At the very least you'll know if you're dealing with a motivated seller or not. The next could be a few strategic follow-up questions or formulating an offer which is the subject of another article.