How to Close More Deals by Educating Your Sellers
A few months ago, I wrote an article about engaging sellers on the phone.
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I must say that I did not address another component of the conversation. I omitted this component because I wanted newbies to focus on the importance of gathering information from the seller. If you have a handle on gathering information, the rebuttal to some of the sellers’ responses are critical in structuring your offer.
If you do not know by now, marketing is the source of lead generation in real estate investing; if you are sending post cards, yellow letters, form letters, pay per click marketing or some other form of advertisement, this is the area where an investor must be consistent. After your seller responds to the marketing material, you will have to be able to educate the seller to convert leads to deals.
If you have spent any time on the phone with a seller, you know that your rebuttal is centered around educating the seller on the market and market forces that dictate price volatility. Many sellers believe they are informed on what their house is worth, but they are highly misinformed.
There are a number of responses that I normally hear when speaking to sellers about their property.
Common Seller Responses to Inquiries About Property
- I’m willing to sell if the price is right
- The house down the street sold for “X”
- My house is in excellent condition and does not need any updates
- My friend is a Realtor, and they said they can list my house for “X”
- Zillow says my house is worth “X”
These are some of the typical responses from sellers.
If your strategy is wholesaling, you are aware this is a huge obstacle and that you will need to educate your seller that their house will not command a retail offer. This is where you have to be informed about your market and be able to communicate effectively what is occurring in the market, including average days on market, difference between list price and close price, cost of selling traditionally (fees), and what retail buyers are looking for in a retail sell (condition/concessions).
The Importance of Educating the Seller
It is difficult to educate a seller on the value of their house, but it is important to educate them even if you believe their is no opportunity for a deal. You have to provide some value to the seller. It should be your goal to ensure that you have provided your seller with some value during your conversation.
Michael Quarles exemplified this well. Mike discussed the importance of making sure your seller can communicate with a friend or a neighbor the reason they accepted such a low offer and why it was beneficial to them. If you haven’t, you should definitely check out Mike’s BiggerPockets Podcast episode for more information on this topic.
Providing Value to the Seller
By educating your seller, you are informing them that even though you will not be able to purchase the house, you are still willing to help. This can be done by telling them some things that can be done to help them get their desired price. By providing this value, you are leaving the door of opportunity open for follow up.
Follow up is key; I make it a point of emphasis to never discard a lead unless the seller asks not to be contacted anymore. Even for sellers who say they are listing their house on the MLS, it is good to still follow up after 60-90 days to see how the listing is going. This is done because some Realtors are aggressive on the list price, and the seller becomes discouraged as time lapses and after numerous price reductions.
My question to a seller in this instance is, “Did the Realtor give you any explanation of why they believe the house is not selling?” Normally, the answer is “NO.”
This provides additional conversation and rapport building. I have closed a few deals that were expired or cancelled listings because of the follow up, courtesy and consideration, as well as the value add of educating my seller.
What value adds do you provide your sellers? How do you go about educating them about the market?
We’d love to hear from you below!