Real Estate Investing Basics

Helping Your Motivated – but Not Desparate – Sellers to See the Light

Expertise: Personal Development, Real Estate Investing Basics, Business Management, Mobile Homes, Real Estate News & Commentary, Landlording & Rental Properties, Mortgages & Creative Financing, Real Estate Marketing
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Today we are going to cover three very effective methods to help convince our prospective sellers to sell their properties to you for a great price or great sale terms.  Let us first assume that the sellers you are talking to have equity in their homes; equity that you are trying to capture and profit from.

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There are two main types of sellers (REOs not included) that you will be crossing paths with while investing in real estate.   So many investors incorrectly think that we are only after desperate sellers; sellers that are on the verge of lunacy over their unwanted home and will deed the property to the first passerby with a smile.  These sellers are for one reason or another, emotionally beat-up concerning their property for sale.  You will know these sellers immediately over the phone by the desperation in their voices and if you are the first investor to speak with these individuals, you will typically create a verbal deal over the phone with very little effort. Let us call this seller type #1.

The second type of seller is still motivated to sell their unwanted home, but unlike the type #1 seller, this type #2 seller can hold out (for a little while) for a better offer.  A type #2 seller is logical and lucid about their reality; these sellers want a fair price, fast closing and some kind of reassurance they are doing the right thing by selling to you.

The bulk of your deal and leads will be concerning this type #2 sellers.  Now let’s talk about how to persuade these sellers to sell to you!

T-Tables: While with the seller, rip out any piece of clean notebook paper and draw a large letter “T” across the entire page.  On the top of the ‘T’ to the left side write the word “Pros,” on the top-right side of the ‘T’ write the word “Cons.”  One after the other write down the all the advantages the seller and you can think of for the seller selling his/her property to you in the Pros column.  Seller benefits may include: speed of sale, fair price, terms benefits, mortgage payment relief, cash today, take time to move, improve condition of property, credit help, etc.

On the opposite side of the ‘T’, write down all the Cons of the seller selling to you today.  These may include: must pack and move, will not receive full market price compared to waiting to sell to a ‘non-investor’, etc. There should be considerably fewer items in the Cons column than written in the Pros column.  Leave this T table with the sellers when you leave the home.

The Pawn Star Method: I find myself being fascinated with the television show ‘Pawn Stars.’  If you have never seen this reality show it is about an active pawn shop in Las Vegas.  What I love about this show is that it demonstrates that you do not need to be shady, a liar, or corrupt to make money buying and reselling personal property.  The same is true with real estate!

When the shop employees do not know enough about a particular item being pawned they bring in an expert to evaluate and price the object before the shop buys what is being pawned.  We as investor should be bringing real world comparable home sales for our prospective seller’s property for sale.  Once the owner of the item and the shop employees know the value of the personal property, the two parties (seller and buyer) go back and forth in price until both parties meet at an acceptable price/terms for the property.

Be honest and bring comparable sales for the seller’s area.  If you are greedy you may not make the deal because the seller will not sell for too low of a price.  However if you offer a fair price, let the seller know of their options, and offer the seller a mid-range price for their home you can get more deal accepted than you thought possible.

Letters of Intent: If you are not making written offers to every single home you visit you are doing yourself a great disservice.  With every seller you visit leave a ‘Letter of Intent to Purchase Real Estate’ (one page long form) or similar form telling the sellers in plain English (or another language) writing that you can purchase his/her home for X price and X terms.  This gives the seller a verbal and written offer to mull over after you leave.  Most sellers will not throw this offer away because it may be the only written offer (be it a low offer) they have received for their property.

The main goal when talking to type #2 sellers is to present your offers in a clear and friendly manner.  Disclosing the fact that you intend to make some money on the home goes a long way to develop trust with your seller.  A seller must like you in order to sell to you; otherwise you are wasting your time.

Happy investing,
– John

Investing since 2002, John started in real estate accidentally with a 4-bedroom mobile home inside of a pre-existing mobile home park. Over the next 11 months, John added 10 more mobile homes to his cash-flowing portfolio. Since these early years, John has gone on to help 150+ sellers and buyers sell their unwanted mobile homes and obtain a safe and affordable manufactured home of their own. Years later, John keeps to what has been successful—buying, fixing, renting, and reselling affordable housing known as mobile homes. John shares his stories, experiences, lessons, and some of the stories of other successful mobile home investors he helps on his blog and YouTube channeland has written over 300 articles concerning mobile homes and mobile home investing for the BiggerPockets Blog. He has also been a featured podcast guest here and on other prominent real estate podcasts, authored a highly-rated book aimed at increasing the happiness/satisfaction of average real estate investors, and spoken to national and international audiences concerning the opportunities and practicality of successfully investing in mobile homes.

    Karlos Knox
    Replied almost 9 years ago
    “Disclosing the fact that you intend to make some money on the home goes a long way to develop trust with your seller.” Full disclosure is the key when the talking with seller, give them all their options, but as with the T model used in this article make sure the option you want them to take has more pros than cons. If they ask about a loan modification I use the glass half empty approach because I want them to sell me the home or at least let me help the seller owner finance their home to a new buyer who can make the payments.
    John Fedro
    Replied almost 9 years ago
    Karlos, Its important to utilize any tool that personally helps you. We are all different in how we relate and interact with sellers. Great advice! The glass half full approach is a powerful YET subtle way to help convince a seller to lien towards your side of thinking. Keep it going! Thanks for reading. – John
    John Fedro
    Replied almost 9 years ago
    Karlos, Its important to utilize any tool that personally helps you. We are all different in how we relate and interact with sellers. Great advice! The glass half full approach is a powerful YET subtle way to help convince a seller to lien towards your side of thinking. Keep it going! Thanks for reading. – John
    John Fedro
    Replied almost 9 years ago
    Karlos, Its important to utilize any tool that personally helps you. We are all different in how we relate and interact with sellers. Great advice! The glass half full approach is a powerful YET subtle way to help convince a seller to lien towards your side of thinking. Keep it going! Thanks for reading. – John Reply Report comment
    Shae Bynes
    Replied almost 9 years ago
    This is a great post, J-Fed! 🙂 I do #2 and #3 right now, but I’ve never done #1….not on a piece of paper anyway. I used those as talking points with a seller, but I like the idea of drawing it out and making it really plain. And….like you said, seller #2 has to like you! Thanks John.
    Julie Broad
    Replied almost 9 years ago
    Wow – what a fabulous post! I have never thought to do a pro and con table for the sellers. Laying it out like that is a great idea. I suspect when you put that table together you are also making it easier to create a better solution to the deal for you and for the seller because just as you’re about to write something into the con side you might think of a way you can solve that drawback for them. We did that recently on an estate sale. The two sisters handling their late brothers estate were from out of town. His house is packed with old war memorabilia plus his furniture, dishes, clothes etc. It’s a daunting job going through someone’s belongings after they pass so we offered to deal with whatever they didn’t want to take. We’re going to have a dumpster there for the reno anyway so it’s only $500 or so more cost for us to get $5,000 more off the price. But for them it was worth every penny just to not deal with it.
    John Fedro
    Replied almost 9 years ago
    Shae, I love doing this “T’ tables. I’m so forgetful when it comes to remembering that sellers’ are not always as educated or knowledgeable about real estate to the extent we 9as investors) may be. In reality most sellers are from from it. But this is a good way to leave keywords advantages and disadvantages while selling to us. thanks for commenting – J. Fed 🙂 Julie, Thanks for the ‘Wow’! I stole that idea from a Peter Fortunato’s seminar so I can’t take the credit but its amazing when you see the results of the “T” chart comparison. That is so smart about the dumpster. That is a fantastic way to increase your value and your person-ability to the seller. Sounds like you’re going over and above what the ‘typical’ investor would do. Add that to the “Pro’s” column! lol – John