After reading the highly recommended book, The One Thing, I did a lot of meditating about what it is that really IS my one thing as a real estate investor. My first very wrong conclusion was: MARKETING!!
I didn't launch my marketing, I didn't get any leads. Without leads, I
didn't get any deals. But wait! I could have all the leads in the world,
and there have been times in my early career when I certainly had more
leads than I knew what to do with, but that didn't necessarily mean I
had lots of deals. What is missing?
Even though I came from a
background of sales, and I mean very high digit sales and contract
negotiation, I had NO CLUE what to ask a potential seller when he/she
called. I even went so far as to hire someone to handle calls for me.
While this is a great idea to help you build a business, most investors
don't need that much overhead when first starting out and definitely
don't have the lead generation in place to justify a person handling
your trickle of leads.
It was only out of pure, desperate need of
income, and lack of performance by my then lead handler that I got rid
of him and started doing it all myself. Because what I learned from
reading The One Thing is that making offers is MY one thing.
I need to make offers to buy houses. I need to buy houses to make
money. I then can use some of that money to launch more marketing,
generate leads and MAKE MORE OFFERS.
At first, I had all kinds of
crazy scripts printed out and in a pile on my desk. It was like a Choose
Your Own Adventure of negotiation. If the seller says this, I can say
this or that. If the seller then says this, I can respond with this
sentence on this sheet over here, or that statement on the sheet over
there. Can you imagine walking into a meeting with a script and trying
to have a conversation with someone?! It would be absurd!!
what to do? Well, when a seller calls it is a conversation. Nothing
more. It is not this mythical negotiation only hardened experts can
handle. If you have ever talked on the phone and purchased something at a
yard/garage sale or flea market where you have to ask what the price
is, guess what? YOU ARE QUALIFIED TO BUY REAL ESTATE! (If you haven't, I
highly suggest you go to a flea market or stop at the next yard sale
and give it a shot. It's fun and worst case scenario, you buy something
you don't need for fifty cents!!)
You are supposed to be the
expert in the transaction. The person you're talking to might have only
purchased one or two houses in his/her entire life. He/she has less of a
clue what to talk about on the phone than you. Really!
You need to know exactly one question in order to buy a house:
Would you take $XX,XXX for the property?
How about $XX,XXX (that is a slightly higher number)?
How about $XX,XX?
if they say "Yes," to your first question, you can do the exact
opposite and lower the number each time. Just because you asked if they
would take $XX,XXX the first time doesn't mean you were offering that
much and feel free to tell him/her that. (I don't recommend this
strategy for beginners though.)
Here are a few simple questions I
ask and then, while I'm listening to the seller talk, I'm quickly
checking title, comping the house, and plugging my numbers into my
handy-dandy deal analysis spreadsheet. I can have an offer together in
1. What is the address of the property you are
interested in selling to me? (This is an NLP question as it implies
they actually want to sell you a house.)
2. It was built in 19XX.
Have you done any updates to it or is it all original inside? (I
honestly don't care because I factor a full rehab on every house I buy. I
just need to keep them talking while I work my system.) If you don't
know the age, you can certainly ask that question first.
are you asking for the property, you must have a number in mind? (Again,
I don't care. Many times they say they are calling me for a price since
I'm the one who wants to buy. I like to respond with a snarky remark
sometimes such as, "I can't sell it and buy it!" but I can get away with
it. You might not want to try that until your extremely comfortable
talking on the phone with people you don't know.
At this point, I
am ready to throw out a number. Now, I'm sure you've heard "He/She who
says the number first loses." Well, I buy a lot of houses and the last
one I bought, as of this writing, I paid $70K for it and I will resell
it for around $130K. The seller had no idea what it was worth and there
wasn't anyway he was going to give me a number, so I'll let you decide
if that is a true statement or not.
4. Would you take $XX,XXX for
the property? You can dress this up a bit and say: "Based on the
age/location/condition (or a combo of all three), would you take...." I
sometimes mix this up with "I'd be a buyer at about $XX,XXX-$XX,XXX" and
give the seller a range of about $5K. I might follow that up with, "If
that sounds like it might interest you, I'll take a look at the
outside/inside and write it up." Or, if you're one of those that needs
to meet with people, you can say, "If that sounds like it might work for
you, let's meet...." This is a soft close and it will save you a lot of
wasted time meeting with people who are not really sellers. There is
nothing worse than driving all the way to some non-sellers house and
wasting time talking about a property you are not going to buy.
after you've said some version of #4, you be quiet and listen. If
he/she says "No," I then ask, "I thought you didn't have any idea of
value? Sounds like you do have a number in mind. So, what were you
Does all this sound like I'm some master negotiator,
or just a person having a conversation about a house? Maybe that is what
makes me a "master negotiator," is that I am able to turn a high dollar
transaction into a simple conversation? I don't know. Next time you get
a call, have a conversation. If you can't throw out a number as quickly
as I can, you need to: A. Learn your market better so you have an idea
what houses are worth.
B. Tell the seller you'll call back tomorrow after you do some research and come up with a number that works for you.
C. Call the seller back the next day and...
JUST MAKE THE OFFER ALREADY!!
trouble talking on the phone or don't know what to say when you meet
the sellers in person? Let me know how I can help by commenting below.