How to Close More Deals by Educating Your Sellers

How to Close More Deals by Educating Your Sellers

3 min read
Marcus Maloney

Marcus Maloney is a value investor and portfolio holder of residential and commercial units. Marcus has been named the “Equity King” for his impressive ability to find real estate opportunities with massive amounts of equity.

Experience
Marcus, a high school dropout, went from G.E.D. to M.B.A. Although his education has a major impact on his investment philosophy, the real impact came from his upbringing.

Marcus thrives on completing successful transactions. As a young kid, his parents and grandparents faced many challenges; as a result, it made him think of ways he could help. His mother and grandmother were avid investors—not in the market but in people. Marcus was a recipient of those investments. And his early years were hard work growing up on a farm.

Marcus was a strategist at an early age. To relieve the burden of his family buying him clothes when it was time to return to school, he decided to make a small investment that paid big dividends. Marcus decided to purchase a small piglet at the beginning of summer, feed it until it became fat, and then sell it to a local farmers’ auction before the school year started. This was one of his first transactions and the beginning of his adventure of finding equity in every opportunity.

Marcus’ hard work continues today: He has completed over $3.3 million in wholesale transactions. Currently, Marcus is a licensed agent who wholesales virtually in multiple states while building his investment portfolio. Although wholesaling provides great money, he saw the opportunity to buy some of the deals he found and convert them into cash flowing rentals.

Marcus currently holds seven rentals, two of which are commercial units. He’s also done the unimaginable and purchased a school, which was converted to a daycare center. Again, he turns what is a marginal profit into a significant equity position. He leverages the equity by using the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) strategy to increase his portfolio without any money out of pocket.

Marcus has been featured on numerous podcasts, such as the Louisville Gal Podcast, the Best Real Estate Investing Advice Ever podcast, FlippingJunkie, and many others. He’s currently a featured blogger for BiggerPockets, the largest community of real estate investors in the world.

Along with completing transactions and working to build his portfolio, he provides mentorship to aspiring investors. This is done through one-on-one interactions and through his successful YouTube channel and blog.

Marcus does utilize his M.B.A. for more than real estate. As a consultant for a successful non-profit institution south of Chicago, he uses his expertise in the development of human capital. His philanthropic efforts help existing stakeholders develop in their capacity to serve those in need of assistance.

Education
Marcus completed his M.B.A. in 2011 from Olivet Nazarene University.

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A few months ago, I wrote an article about engaging sellers on the phone.

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!