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Motivated Sellers: How To Get Them To Say Yes When Normally They’d Say No

by Jimmy Moncrief on May 21, 2014 · 10 comments

  
Motivated Sellers

Everybody tells you something to the effect of: “If you want to establish a competitive advantage you have to have an edge.”  The problem with this, of course, is how do I “get an edge” while still staying legal?

Today, I am going to give you one small mindset shift that will give you an extremely competitive advantage when it comes to talking with sellers.  But you are going to have to read this article in it’s entirety to truly understand the impact of what I am about to tell you.

Related: 5 Ways You May Need to Change Your Real Estate Mindset

I’m about to tell you how this very mindset led into my latest triplex deal, but before we get into that, let me tell you about another way you can adjust your thinking for non-real estate transactions.

The Reason Jon Didn’t Sell His Bronco For Top Dollar

You see, my neighbor Jon and I are great friends. We share an alley together in the middle of the city and it’s on a very steep hill.  Therefore, together we occupy a little kingdom and we do our best to have as much fun as possible.

We are both self-described rednecks who enjoy urban living.  I have a burning barrel and some animal traps where I catch squirrels, possums, (any kind of wild animal I can really) and  He has a collection of Ford Bronco’s.  We also are in the middle of building a zip-line, which of course is an insane amount of fun!

Anyway, we are outside this cold Sunday morning and he’s telling me he is selling one of old Bronco’s that isn’t running.

Full Disclosure: I’m not a car guy at all, but Jon is a Ford Bronco nut, so I’ve learned a lot about this.  In-case you didn’t know Ford Bronco’s (especially the big-box style) are in very high demand.

I said, “Out of all the people who wanted it did you just choose the highest bidder?” and  he responded (with evil eyes), “Hell no! Most of the jerks just wanted to scrap it for parts.  Hell I couldn’t do that!  I sold it to a kid in high school who is going to rebuild the old thing back to its former glory!”

Now that’s what I’m talking about!

As a banker and real estate investor it’s easy for me to just focus on whatever the spreadsheet is telling me in terms of analyzing a deal.  All the while, sellers (especially motivated sellers) have an intrinsic desire for whatever type of property they are selling, and usually money is not the highest priority, despite what they are telling you.

Related: Investors: Be Careful of Misplaced Motivation!

How You Can Leverage This For Real Estate

Find out the true intent on why they are selling!  This is very hard when dealing with real estate agents…but not impossible.  I suspect this is one of the reasons Ben Leybovich requires that he meets face to face with his sellers.

My latest triplex deals was a great deal (I think) and I’m very excited about it.  It was a very cordial conversation without dealing with third-parties.  Everything went fine and smooth until closing time…

I’m not the best reader of people’s minds but I could tell something was bothering this lady and she was about to tear-up.  Instead of asking her to gush out her feelings I simply told her she was welcome to visit the property anytime, just give me 24-hours notice.  Her eyes shot-up and she smiled and said, “Thank you.”

You see, this property had been in her family’s possession for multiple generations.  She needed to sell for reasons I’m not going to get into, but the important part is that there was a non-financial reason that was potentially blocking this sale.

Do Not Be Ignorant To This!

It’s way too easy to get locked into spreadsheets and jump in the BP forums and start debating on that 2% rule. (Note: I disagree with the 2% rule because I rarely see people calculating their returns correctly using this rule.  The vast majority of people who talk about the 2% rule forget maintenance expenses.  I’ll just be up-front and honest and say I think the “rule” is meaningless)

Instead of just focusing on the cheapest price and wearing down sellers – focus on their non-financial goals.  Focus on their goals as a person.  By doing this, you will win over their trust which is far more powerful when negotiating than arguing or intimidation.

Do you see it now?

Share your thoughts and comments below!

 

 

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{ 10 comments… read them below or add one }

Giovanni May 21, 2014 at 10:10 am

Great post Jimmy, it’s very easy for me to fall down the spreadsheet well and so this is a great reminder.

Your OJmobile loving neighbor sounds pretty ‘interesting’. Don’t forget to post pics of the zip-line when it’s done!

Reply

Jimmy May 22, 2014 at 12:17 pm

Thanks for the kind words! Will post pictures later this summer.

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John Elmenhe May 21, 2014 at 10:25 am

Thanks for the article Jimmy, I think you highlighted a big point and that is, there is a “people” component of this business that needs to be addressed, and especially when dealing with a motivated seller in emotional turmoil. As much as we’d all like to (well, it would be easier) we can’t just sit back in a desk chair and laugh heartily at the huge amounts were about to make according to the spreadsheet.

We’ve got to have that ability to connect, understand, and deal with people~ without it I think what ever success you enjoy will only be short lived!

“Focus on their goals as a PERSON”~ I like it!

Talk to you soon~ John

Reply

Jimmy May 22, 2014 at 12:17 pm

Absolutely!

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Michael Wilson May 21, 2014 at 11:29 am

I remember reading about a widow in a university town wanted to move to FL but would not sell for less than top dollar. The buyer finally bought the property for her price after finding out that her late husband made her promise to sell for no less than this price. The buyer realized that he could make money renting to university students, even when buying at full price, and did. The widow was happy, and so was the buyer.

Reply

Jimmy May 22, 2014 at 12:18 pm

Michael

Great comment!

Repurposing is a great strategy!

Reply

Patrick Flanagan May 21, 2014 at 2:38 pm

Hello,
Great article for all to see! Yes, there is the property in question, but also there is the human factor. Be mindful of the individual and the rest, will beat down your door to do business with you! Always remember, “It could be you, on the other side of the conversation one day?!?”

Reply

Jimmy May 22, 2014 at 12:20 pm

Agreed!

Reply

Denny Robert May 22, 2014 at 11:52 am

My first multifamily was a nearly a dead deal. The FHA appraisal came in way low, and an investor could have come in and snatched it up with huge ROI. I skipped past our agents, broke the rule, and knocked on the old lady’s door. We sat at her kitchen table, came to terms that worked for both of us, and told the agents how the deal was gonna go down. Now I live in one unit and cashflow off the other two.

Reply

Jimmy May 22, 2014 at 12:19 pm

Amen brother!

There are so many benefits with just talking directly with the seller!

Reply

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