As a new or budding investor, breaking into the world of real estate investing can be a daunting process. But you’ve taken the first few steps, gotten cards, started networking, and perhaps have even done some advertising. And then it happens…..the phone rings.
You’re jubilant and nervous as the voice on the other side of the phone confesses “I saw your sign that says you buy houses..” . Scrounging for a pen or rushing to your computer, you enthusiastically bark “Yes, I DO!”
Congrats! But just as much as the alliteration in the title of this blog may have you tongue-tied, so might speaking with a homeowner that reaches out to you for help.
One thing that needs to be prefaced is, not all leads are good leads. You may be going through 10 calls to get one that ends up being an actual money-making deal. This is normal!
So, let’s go through a general script of talking with a distressed seller, under the assumption that you are an investor that fix and flips, but know other investors that like to buy and hold, seller financing, etc.
1) How did you hear about me/us?
If they didn’t already state this, make sure to ask. You want to be able to track where your leads are coming from, to better allocate marketing funds to the techniques that are actually getting the phone to ring with serious sellers, and away from those that aren’t.
2) Just in case the call gets dropped, what is your preferred phone and email?
Some sellers may call from blocked numbers, some might not pick up the phone after this call (or it may get disconnected). Either way, you want to make sure you get their contact information to follow up with them, and in some cases it may take 3-5 “touches” before they ever decide to sign a deal with you. Be persistent, but not pesky.
3) What address are you calling about?
Believe it or not, some sellers might get a little snappy and reply “Well you sent ME the mailer, you should know!” but that’s few and far between. If they do say something of the sort, kindly reply “Well (their name), we buy houses all over that area so we mail to many people. Mind refreshing my memory and I can look up your info now?” If you’re in front of a computer, you can also get a more in depth picture of where the house is, foreclosure information, etc (of course depending on what is available to you).
4) What’s the situation with the house?
I like to pose the question like this, or “what’s the situation I can help with?” so it defers any shame they might feel on them personally. This also gives them the opportunity to tell you about the job loss, divorce, or any number of factors that have contributed to them needing to sell.
Make sure to listen more than you speak; people want to work with people they like so while they are sharing, be respectful and likable by being an active listener. In doing so, you’ll also pick up on “clues to close”. Clues to close are things you may hear from them that later you can propose to help them sell to you solve their problem. For instance, they may say, “I need a couple thousand dollars to move, and I need to be out next weekend. I don’t want to do any of the repairs”, in which you could propose, “Well Jim, if I can give you the two thousand dollars you need to move, buy the house at $X, I’ll take care of all the repairs, and you can move as soon as you want, do we have a deal?” Overall, the purpose of this question is to get insight to their challenges and formulate a solution as to how or if you can help.
5) How much do you owe?
This is a straightforward question, but make sure to follow up once they’ve disclosed what they owe on their first mortgage by asking “What do you owe on any subsequent mortgages? Do you have any tax liens, or other liens that would need to be paid off that are tied to the house?” In some cases they might not know of a lien (which would come up on the preliminary title report), but the $1,000 in back HOA dues, for instance, is something they typically are aware of.
6) What type of condition is the house in?
For example, a 1 means it need to be torn down, and 10 is brand new and impeccable.
Although condition can be subjective to the seller, at least getting them to discuss the overall condition will give you a grasp of what to expect. I like to propose the 1-10 scale, as it gives them something more concrete to work with then just generally going through the state of the home. Also probe about the condition of the A/C, roof, and other major systems, if they’re aware of them.
7) What would you like to do with the house?
Again, listen to what they’re needing. They may just want to sell quickly, but they also may want to lease the property back, may sell with seller financing, etc. And if it doesn’t meet your criteria, it may meet another investors’ in your network.
8) Set expectations
Some sellers may set an unrealistically high sales price, some may have no clue about the price range, and some might need a short sale so it really won’t matter to them. However, I like to preface any face to face meeting by explaining to them that I/we can show and/or tell them about what they can expect to sell their home for, and how as an investor we can solve their problem in a more timely fashion then if they just listed it with an agent or try to sell it themselves. If there’s any comments towards “Well, I’m not just going to let you STEAL my house from me!”, I also explain that I will give them a fair deal, but like any other business, I have to buy and sell at prices that make sense. Most Sellers understand, and want their problem to go away, but it’s important to discuss their needs and your solutions upfront. That way there’s no misconception, wasted time, or wasted efforts on either part.
9) Set a meeting/follow up
This is when I refer back to the fact that not all leads are good leads, and if the numbers, sellers expectations, or other criteria don’t and can’t match up, save yourself the wasted trip. In some cases you won’t know until you see the home or title report, but I implore you to not hop in the car to look at homes where the numbers simply aren’t going to work, or the sellers aren’t truly motivated. Simply thank them for their time, and let them know this deal will not work as it stands, but you appreciate them calling.
However, if this looks like a promising lead, be assertive when scheduling; you have a motivated seller that may be calling other people in your area too. Make sure to repeat back their contact info and date/time of when you’re meeting (aren’t you just going to be a customer service pro?!), or planning to follow up with them.
Although there may be more specific questions you develop towards your business model, either way, the bottom line is you want to be qualifying the house AND homeowner when filtering through Seller leads.
Once you get more comfortable, you won’t sound as scripted, but I also suggest having your script handy so you don’t leave any of these questions out.
What do you find helpful to ask or discuss when talking to Sellers? Thanks for sharing, and Happy Hunting!