Real Estate Investors: 5 Things To Know Before Talking To Sellers

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You simply cannot make an unmotivated seller motivated.

This statement will save you a lot of time and headaches. When taking calls from people wanting to sell you their house, how do you determine whether they are motivated or not? What questions need to be asked and what are the main objectives of the conversation? What about when you are meeting them at the house?

I’ve put together a list of 5 things that I feel you should really know and understand to better enable you to weed out the unmotivated sellers and get the most out of your interactions with motivated sellers.

  1. Don’t Waste a Seller’s Time or Your Time
  2. First things first. Determine, quickly, whether the seller is in a position to sell you the house at a price that will assure profit or cash flow. You don’t want to spend an hour on the phone with someone that just wants to see what they can get for the house when they just bought it a year ago and owe what it’s worth.

    Usually, when sellers start describing all of the nice updates they’ve done and how great it is that the house is on a corner lot, they are going to waste your time. You want to spend the time building rapport with the people that call and have a pressing need to sell their house. Situations such as an inheritance that they don’t want to mess with, a tired landlord that is absolutely sick of tenants trashing their house, a separated couple in the middle of a divorce, job transfer and need to move quickly, bought another house and can’t afford both house payments, owner of a house that needs a lot of repairs and they cannot afford to fix it, and, of course, the person facing foreclosure.

    You need to be able to quickly get to the root reason why they are selling and how much is owed on the house. Incidentally, asking how much is owed on the house should be handled in the same way as asking how many bedrooms the house has. Typically, if they won’t tell you how much is owed, they are not motivated enough. 98% or more sellers that I talk to do not hesitate to tell me how much is owed, so don’t fret about asking.

    Don’t try to help someone because you feel sorry for them. You might be tempted by someone’s sad story, and you will hear a lot of these. But, if there is no realistically possible way to buy their house, don’t waste their time or yours trying to find it. They need to focus on things that will help them get out of their situation and don’t need you making them feel like all will be well because you are going to ‘work on it’. If you can’t find a way to be able to buy the house, it’s best you let the seller know that as soon as possible.

  3. Gather The Necessary Information
  4. When you get a call from a seller, you need to ask the right questions to be able to determine whether you should spend more time working on the lead. These are the questions that I ask when a seller calls. Notice that I quickly ask the questions that will reveal the level of motivation and how much of a discount is possible.

    The questions aren’t always in this exact order and are intended to be asked in the normal flow of the conversation. You just need to direct the conversation so as to have these questions answered without seeming too much in a hurry and ignoring what they are telling you. They want to know you are really listening to them. Expand on their motivation to sell by asking open-ended questions. Over time you will develop your own style.

    • What is the address of the house?
    • How many bedrooms and bathrooms does the house have and is there a garage?
    • Does the house need any repairs?
    • Why are you selling the house?
    • How much is owed?
    • What are you looking to get for the house?
    • Do you know what similar houses are selling for in the area?
    • Is there anything that you do not like about the house?
    • If they bought the house recently, ask how much they put down (if not much, probably not doable).
    • How fast do you need to have it closed?
    • If I were to pay cash and close quickly, what is the least you would be willing to take? (You’ll be amazed at how much below the asking price they just gave you this will be.)
    • How did you find out about me? (You want to keep track of what marketing is pulling best.)

    If they seem motivated and have enough equity to make it work, ask some more open-ended questions like ‘what else can you tell me about the house?’ and other questions relating to why they are selling. You want to build a good rapport with the seller.

    I don’t typically ask specifics about the number of rooms in the house or the exact square footage (most people don’t know anyway), because I can quickly look these things up on my local tax assessor’s website. You should spend time having them explain the problems they are having and figuring out just how motivated they are. It’s also important to note that a lot of sellers, even if motivated, may not give a great asking price right off the bat. Don’t ignore a lead because their asking price was not low.

    If a deal seems to be possible (amount owed is below what you would typically buy for and there seems to be some motivating factors), try to schedule an appointment to see the house before you get off the phone. It’s not definite, but I feel this keeps a lot of sellers from calling more of your competition as they feel like they’ve accomplished what they set out to do. If, after getting off the phone and doing some more research, you determine there is no way you could possible create a deal, you should call the seller and inform them of that fact. There is no reason to beat around the bush or lie, just tell them there would be no way for you to buy the house and you don’t want to waste their time.

  5. Listen Listen Listen
  6. Let them do more talking than you do. You have two ears and just one mouth for a reason. Ask open-ended questions. Get to the root of their reason for selling. You will bring this up again when meeting at the house so that they feel the reason why they are selling the house and are more willing to accept an offer when it comes time to negotiate.

    If you really understand the seller’s situation, you will be in a better position to offer what they are willing to accept. If you are just bent on thinking it is all about price, you might miss out on a lot of deals that you could sign up if you were truly listening to the seller.

    Many sellers are worried about what they are going to do with all of the junk that is in the house. You might offer to allow them to leave anything they want behind (you are going to be getting a dumpster for demolition anyway). Some might be in a predicament and will need to remain in the house for a couple weeks after the closing. If you are listening and determine this to be their problem, you can offer to lease the house back to them for a couple weeks (you would want to withhold some of proceeds of the sale until after they have vacated the house and this needs to be in the contract). As you can see, there are a lot of times when it’s not necessarily all about price and I hope you can find out what they really want and need.

  7. Build Good Rapport
  8. Talk to them about things in the house or other things that come up in conversation. Don’t go in as a high-powered real estate investor that makes them feel uncomfortable. I really feel that the biggest fear most motivated sellers have is that someone will take advantage of them. Be friendly and courteous. Get them to want to sell to you, even if you offer a lower amount than your competition. This does happen often.

    Do NOT go in and tear the house apart. The sellers know what condition their house is in and are probably embarrassed enough already about it. Don’t go rubbing it in their face, unless you are shooting a television show and are looking for drama to increase ratings. I usually just talk about the positive aspects and let them know that the house has a lot of ‘potential’. If they mention or are visibly embarrassed, help make them more comfortable by telling them that the house will be a real showplace when you are done with it.

    Try your best to take the time to sit and listen to them. Sometimes it’s tempting to rush through a house (I have this problem), but you really should sit on the couch and let them talk. You will come across the couch that you do not want to sit on (trust me), at which point you might want to mention what a nice day it is and suggest talking outside.

  9. Don’t Be Afraid To Negotiate
  10. Even if their asking price is a great deal, most people will feel like they could have gotten more if you do not negotiate with them. Of course, if it is a home run deal and there is competition, sign it up.

    It doesn’t have to be the price. If you want to, try to get them to throw in appliances, furniture, or even the lawn mower. Sellers need to feel like they got the best deal they possibly could have. Don’t leave them wondering, that night while laying in bed, if they could have gotten more. Their thoughts might lead them to want to call more investors and see if they can get a better deal.

    There are ways to try and protect a contract, but what it all boils down to is whether you are comfortable forcing someone to sell you their house. I’ve had a seller sign contracts the same week with two other people. The seller had changed his mind and I needed to just move on. I let the other two buyers fight over it. The seller already showed that he does not honor a contract, so why bother. If you build great rapport and negotiate with the seller, this is less likely to happen.

Summary

These are the 5 things I feel you really must know when you are going to be marketing directly to home sellers. It’s important to also know that you will rarely ever have to do the hard sell in order to get a house under contract. When dealing with motivated sellers, if you treat them with respect, you won’t need to hard sell. If you follow the advice in this article, you should have sellers wanting to sell to you just as much as you want to buy from them.

Photo: prayitno

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About Author

Danny Johnson (G+) is a real estate investor in San Antonio, TX. Visit his blog: Flipping Junkie - A House Flipping Blog to follow along with him as he shows, in detail, the marketing he is doing, the leads being generated, the lead and deal analysis, the rehabs and really, just about everything. He also provides real estate investor websites at LeadPropeller.com.

23 Comments

  1. Awesome advice, Danny! There’s nothing more frustrating then dealing with someone who may not be motivated. These are great ideas for weeding out those people who are simply wasting both your and their time.

  2. Ingrid Hood on

    Cool advice for home buyers. Thanks, Danny! The very meat and must-haves when dealing with or shunning away from unmotivated sellers.

  3. How do I know I am making a good deal… I went as low as 40,000 below asking price, but then backed out when I found all the work needed in the house.
    Is it a good time to buy a shore home ? Vacation/ 2nd house ???
    thanks
    Lynn

    • Lynn – You need to learn how to evaluate an investment before making offers on one. I suggest using the search on the blog and on BiggerPockets for terms like “evaluate properties” “deal evaluation” “making offers” and so on. You’ll find tons of great content to help you out. Good luck!

  4. Thanks, Georgina and Trisha. I’m glad you found it informative.

    There really is art to talking with motivated sellers. At first, for most people it is a little awkward, but over time you develop your own style and way of doing things that seems most comfortable to you. I think that a lot of new investors struggle with thinking that they need to become a super salesman that uses the hard sell to get the deal, but it is just not necessary. People sell to people they like.

  5. Good job on getting people to filter through people quickly. I start to salivate when I get a seller telling me that ”there are 5 siblings looking to sell a property, someone stole the AC, and that they don’t want to pay the taxes on it”
    But sometimes people are talkers and I find it difficult to get off the phone with a chatter – I usually use the “I’m sorry to cut this short but I’ve got an appointment starting in 3 minutes”
    And I do – I’m hungry and have an appointment with my lunch!

  6. I really like your article. But I read it too late because I did all the things you recommended not to do.lol. i did all those things with my first few calls with motivated sellers….its a good learning experience though. We just have to go through it to truely grasp the ideas.
    Thanks for the great advices.

  7. Hi any pointers for the motivated seller? Me and hubby own a 3 bdrm 2 1/2 bath 2 car garage townhome … 1 bdrm is hubbys office! So i have no where to put the new baby we just found out we are pregnant with! Yeah id say we are motivated. Lol. We bout in 2009 and owe 99k boughtfor 106k. Things are selling for 95k-101k….not sure how to approach investors but i have no interest in giving my savings to a buyers real estate agent when we need it to turn around and buy asap. What do you investors think of families in this situation? Should we pay it down as much as possible before getting investors offers?

      • Danny,

        Obviously 2K is not enough equity to do the deal, but what if it was 10-15K? Will any of you consider a sandwich lease option in a appreciating market?

        Thanks,
        Adam

  8. Hi Devon,
    I’ll give you my opinion.
    I think that you should make the space work.
    An investor won’t be able to purchase your home with the number you gave, it just won’t make since.
    It will be hard enough to sell yourself — you will need to use FSBO.

    I would advise you to make it work.
    Can your husband move his office elsewhere?
    Do you have other children? What’s the other bedroom used for?
    Since the child will be young, can they share space with another?

    Only the American Way says that you need a large house, plenty of space for everyone, etc.
    But it doesn’t have to be that way.
    Sometimes smaller space is more intimate for your family dynamics.

    Good luck!

    • Danny,have you ever tested getting sellers to go to a website and answer your questions you normally ask on the phone to sort and filter?
      Seems like better use of your time… Thanks

      • Good question, Darren.

        No. I have not. The reason is that it only takes a couple minutes to ask the questions and gives me a chance to build a little rapport. Also it allows me to determine motivation.

        I also couldn’t imagine telling people that call to go to my website to answer the questions. Just feel that they would say ‘forget it’ and call someone else.

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