Buying & Selling Houses

5 Mistakes Investors Make When Dealing With Sellers

Expertise: Commercial Real Estate, Personal Finance, Real Estate Marketing, Business Management, Landlording & Rental Properties, Real Estate Investing Basics, Personal Development, Real Estate News & Commentary, Mortgages & Creative Financing
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Today, let's go through a few mistakes you, as a real estate investor looking to buy, want to avoid when dealing with sellers.

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1. Focusing on a Non-Seller

The first one is focusing too much effort on a seller who is not actually a seller. And this goes back to one of my favorite principles, which is the 80/20 Rule or Pareto principle. In terms of the real estate space or when you’re acquiring deals, hone in 80 percent of your time on the 20 percent that will actually give you the results. That’s just an example.

You want to focus on someone whose property is in distress and the owner is actually motivated to sell it. Maybe they just inherited it, or they’ve recently relocated and they’re tired of managing it, or they need the cash to be able to pay some unforeseen expense, or other instances of that nature. Another one would be an owner where there is a timeline to sell for some reason—whether it’s now or within the next couple of months.

2. Using the Same Pitch

The second mistake is following up with the same pitch. In general, an absolute game changer for myself is to always follow up. That is where the money is made. But when you are following up, if you’re just constantly using the same message in your call, saying: “Now are you interested in selling? Now are you? Now are you interested?” You will easily be put on the block list and that person will not want to speak to you again.

Related: Real Estate Leads: How Much Do You Really Need to Follow Up?

So if you’re able to be creative with the ways that you follow up, that goes so much further. I’ll give you some examples:

  • I love using the Rubik’s Cube, a small itty bitty one, with a note that says: “Hey, let’s figure this out.”
  • Another one that I’ve recently been implementing as a follow up is to send birthday cards.
  • And another method is being value-based, saying to the seller “Have you considered a 1031 exchange?" (A 1031 exchange is just a way to defer taxes.)

The follow up is just a way to stay top of mind, because it comes down to timing when someone may or may not be interested. Anything can change. And if you’re at the forefront of their mind, then you’re going to be their go-to contact.

3. Not Letting the Seller Talk

Sometimes sellers like to ramble on and on; generally, people love to hear themselves talk. So if you’re constantly cutting them off, that is not allowing you to build that rapport.

Plus, when people ramble on, it can be beneficial to you. You're able to get more details about the property that maybe you can leverage at a later point in negotiations. It can help you determine if that person on the other end has a problem you can help solve.

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If there is no problem, then there's really not a solution for you to offer. Then, you can just move on to the next individual who does have a problem for you to solve, which goes back to focusing your time where it's most worthwhile and you might be able to get a great deal.

4. Making It All About Price

If the person knows that price is all that you’re in it for, they will sense that. Of course, you want to get a good deal on it. But just making it all about price, you’re not able to build that rapport.

So if you’re having conversations about the property and trying to understand if there is a problem to be solved, but you’re constantly hitting on, “OK, what is the price that you would want to sell it for?” Then they will end up going with someone else.

Related: How to Build Rapport with Motivated Sellers

A lot of times it’s not really about price. The property I’m speaking in front of in the video above, I was not the highest bidder in terms of the actual offer that I provided. But I was able to build that rapport and that relationship with the owner, and then I was able to get the upper hand over all of the other bidders that were in place.

Actually, there were no other bidders just due to building that relationship. It cut all of the other ones out, even though they had higher offers.

5. Having a Small Deal Pipeline

If you have a small pipeline, it means that you don’t have enough leads or owners/sellers that you’re prospecting. So you’re just focusing too much time on ones that will not give you the most results.

Maybe you fell in love with one property but that owner is not trying to sell. It seems desperate when you’re trying to do your negotiations and buy that property. In contrast, if you have a large enough pipeline, then that allows you to just move on to the next one.

That’s it! Those are the five mistakes that you want to avoid. And myself, I still make mistakes to this day, and I’m still learning myself. And that’s why I generally just love sharing my experiences as an entrepreneur/investor and my journey in this industry.

Questions about the tips above? Tips of your own to add?

Leave a comment below!

Sterling is an multifamily investor specializing in value-add apartments in Indianapolis and other Midwestern markets. With just under a decade of experience in the real estate industry, Sterling w...
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    Barry H. Investor from Scottsdale, AZ
    Replied 7 months ago
    STERLING - Excellent article. I was NOT going to read the article because I have been a Seller of Turnkey tenant-occupied homes in Kansas City MO, not a Buyer, for the past couple years. Curiosity got the best of me and you were spot on with your 5 points. The most obvious one to me is the focusing on price. Because I personally handled the remodels on all the homes I have been selling, averaging about $35,000 per remodel, I have great confidence in the lasting value of the asset and therefore I offer Seller-Financing, because if I get the asset back due to a non-paying Borrower, I know the asset is solid. That said, 90% of the Buyers who come to me get focused on PRICE, citing lower Comps in the neighborhood (the homes which have not been remodeled and/or are receiving 60-80% of the rent I am getting). If a Buyer pivoted to discussing a lower down payment or lower interest rate on my Seller-Financing, or perhaps buying more than one (1) of the homes I have available, the dialogue would continue. However, most of them don't even get to that 2nd or 3rd step in the discussion. I presume them to be what I call "Posers," just seeking info but not really having any funds to make a purchase. Perhaps I am wrong, but readers of your article should take your recommendations to heart if they want to get into the Midwestern rental market earning over 20% annual ROI, even with all repair costs, property management costs, loan and holding costs included.
    Mark F. Rental Property Investor from Bergen County, NJ
    Replied 7 months ago
    Great article. As a youngish investor,everyone on my team and contractors are all older than me. Subsequently, they love to talk by giving me advice or war stories. I just listen, soaking it in. Not only do I gain knowledge but their respect. Also its hilarious when you hear sales people do #2. You can tell they use the same pitch for everyone and it comes across as awkward.
    Katie Rogers from Santa Barbara, California
    Replied 7 months ago
    Please do not send birthday cards. It is such an obvious schmooze attempt that it is insulting.