It’s all about The Price… Right?
From Dave Ludena, Real Estate Rockstar…
Joe felt pretty good as he walked up to the seller’s door. He had a great deal of rapport built on the call, seller had some motivation and house is distressed. All the ingredients seem to be there. As Joe walks in, he scans the beat-up surroundings, and then his eyes fall to the kitchen table where he sees at least a dozen postcards and yellow letters stacked like a plate of IHOP pancakes.
Suddenly, Joe’s optimism falls faster than a feather tied to an anvil as he realizes he isn’t the only investor sniffing around this deal.
Sound familiar? Hey, it happens and it will continue to happen. In this market, I’ve had this happen more and more. In a negotiation, many people think that it all boils down to price, and in our case, who can offer the highest price to the seller to get them to sell. Remember, we are NOT motivated buyers.
That is what many investors become, but not you… you are a Clever Investor, so today I’m going to show you how you can meet with more success in these instances.
Now, I’m not downplaying the importance of price. This means we need to know our numbers. I’m going to assume you ran your comps and have properly analyzed the deal and know what you should offer. This is more about how we want to frame our offer by adding value to the seller.
Would You like Extra Value with that Offer?
This really starts out on the first phone call when we discover the seller’s motivation.
One of my favorite questions to ask the seller is: “So, Mr. Seller can you tell me about your situation?” Really flesh this out. Many investors stop when they get just a superficial answer like, “We are just tired of it and want to sell.”
You need to open them up with some open-ended questions and find out what is going on and where you can inject some value.
This continues as you walk around the house, with your investigator hat on and discover some clues about the hidden needs of the seller, whether physically with the property or personal with the seller that will allow you to be an “all in one” solution. Essentially, what can you offer the seller other than just price?
One thing I keep in mind when I make an offer is getting my seller to make small commitments by offering them these “value adds” that will alleviate some stress from their lives.
Think about these:
1. Closing date and move out date. Here we can offer the seller time – be that more or less. It could be that they need to move like yesterday, so you can offer to close quickly and save them another month of a mortgage payment, insurance, hassle, etc.
2. Do they need help moving? I don’t have a moving company, but how hard is it for me to make a referral to some moving company I create a relationship with? How about giving them a number to Pods, telling them you can deliver some boxes, etc. How about referring them to a good estate auction company?
3. Do they need an attorney? Some sellers have never sold more than one house in their life and find the whole thing stressful and overwhelming. I deal with a lot of probates and inherited situations, some of which require a legal eagle. Just so happens, I know a nest of ‘em.
4. Do they need a new place to live? Hey, I’m in the house business. I may have a rent to own, or know another investor that has a place to sell or rent, leasing agent or Realtor that can help them.
5. Debt negotiation is another value add. I’m not an expert, but I know credit repair experts that can help. I’ve even offered to pay for that in some cases.
These Don’t (Typically) Cost a Thing
These are just a few ideas that cost me nothing – but I have created a few relationships that I can refer the sellers to.
Now check this out: Think that all those people you introduce your seller to might want to return the favor? You bet. Referrals are a two way street, so don’t be surprised if you end up getting a call from one of these professionals with a deal to look at.
Look, really understand your seller’s pain and finding ways to make it go away is the answer here. Price is just a part of it. You will see that many times the seller hasn’t even realized they have a problem until you flesh it out for them.
Find the pain, agitate it, and then bring the solution.