5 Mistakes Investors Make When Dealing With Sellers

5 Mistakes Investors Make When Dealing With Sellers

3 min read
Sterling White

Sterling White is a 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 was involved with the management of over $10MM in capital, which is deployed across a $18.9MM real estate portfolio made up of multifamily apartments. Through the company he founded, Sonder Investment Group, he owns just under 400 units.

Experience
Sterling is a seasoned real estate investor, philanthropist, speaker, host, mentor, and former world record attemptee, who was born and raised in Indianapolis. He is the author of the renowned book From Zero to 400 Units and the host of a phenomenal podcast, which hit the No. 1 spot on The Real Estate Experience Podcast‘s list of best shows in the investing category.

Living and breathing real estate since 2009, Sterling currently owns multiple businesses related to real estate, including Sterling White Enterprises, Sonder Investment Group, and other investment partnerships. Throughout the span of a decade, he has contributed to helping others become successful in the real estate industry. In addition, he has been directly involved with both buying and selling over 100 single family homes.

Sterling’s primary specialities include sales, marketing, crowdfunding, buy and hold investing, investment properties, and many more.

He was featured on the BiggerPockets Podcast episode #308 and has been contributing content to BiggerPockets since 2014, with over 200 posts on topics ranging from single family investing and apartment investing to mindset and scaling a business online. He has been featured on multiple other podcasts, too.

When he isn’t immersed in the real world, Sterling likes reading motivational books, including Maverick Mindset by Doug Hall, As a Man Thinketh by James Allen, and Sell or Be Sold by Grant Cardone.

As a thrill-seeker with an evident fear of heights, he somehow managed to jump off of a 65-foot cliff into deep water without flinching. (Okay, maybe a little bit…) Sterling is also an avid kale-eating traveller, but nothing is more important to him than family. His unusual habit is bird-watching, which he discovered he truly enjoyed during an Ornithology class from his college days.

Education
Sterling attended the University of Indianapolis.

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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.

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.

Secret concept. Beautiful European female in eyewear, makes shush gesture, asks to keep voice down as suffers from headache, wears spectacles and striped t shirt, isolated over white background

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!