Negotiating with Motivated Sellers and Wholesaling Houses
Have you ever thought to yourself "I really love making money wholesaling houses, but I hate all the darn negotiations!" Why doesn't the seller just take my offer price right away? You know sometimes that actually does happen. You will give an offer price and the seller will take it right away! But you know what the problem with that is? Lol...You offered too much! If the seller takes your first offer without any objections, that means they would have taken lower. I know it seems like an uphill battle everytime but this is just the name of the game. Negotiating with motivated sellers is an invaluable skill that will make you a ton of money in this business. So you better get good at it!
I am thinking about doing a series of posts on the blog about seller negotiations and what I think are some key points to reaching a win win situation with the seller every time. This would be the first of a mini series if you will :) I am not sure if they will all be posted in succession but I will do my best.
Remeber this key phrase: Motivated sellers will sell to people that they like. So be likeable, darn it! I have seen a seller actually sell to me for a LOWER price than the competition because they just happened to think that the other investor was a jerk! If you are not the best at being a people person, get better at it. You may have to fake it until it comes naturally to you. You have heard the old addage "Fake it till ya make it" Well it definitely applies to this situation.
What does that mean? That means you have to convince your own mind that YOU are a great real estate investor and negotiatior BEFORE you become one. Listen, you can be greener than the fresh spring grass outside and still learn to wholesale houses successfully. It is really all a mental game and before you can conquer the mental games of negotiating you need to conquer your own mind and convince yourself that you ROCK! This may seem like a bunch of mumbo jumbo but it is true. You have no idea how powerful your mind really is!
What are some ways that you can build rapport or make the seller like you? You have to understand what makes a motivated seller tick. There is one main reason why you are sitting in their living room in the first place; the reason is because they have a problem. People who have problems like to be heard. They like to be listened to. Listening is hypnotism. If you can sit and listen to a motivated seller in distress they will listen intently to what you have to say and more often than not go along with it. The reason they will be more receptive to your ideas is a principle called reciprocation but we will get a little more into that later.
You see a lot of investors get into the house or on the phone or whatever the case may be and just start talking. They start talking about how long they have been in business, how much money they have to buy houses, how much they know about the business, and they just don't SHUT UP! These are the investors that lose deals because the fail to listen to what the seller needs and wants. This is so important when it comes to closing a motivated seller on why they should sell their house to you.
Remember the last time you had a problem or maybe you have something in your life right now that you are working through. Sometimes that listening ear even if it is from a complete stranger can mean the world to you. I am sure you have sat on a plane before next to a complete stranger and after the flight was over you knew their entire life story! They had you as a captive audience. You werent goin no where! Lol
Now don't just sit there and nod your head thoughtlessly. My mind goes a million miles a minute and sometimes I find myself thinking about everything under the sun but what that seller is actually saying. I guess you can say I have ADD:) You really have to listen in and identify with their problem. The main reason to listen to their situation is so that you are fully equipped to provide a solution to it. So when it comes time to close the deal you can actually present your offer as the solution to their problem.
For an example of a close, Mr. Seller I can offer you 56K for your house so that you will never have to deal with that terrible tenant again. Wouldn't it be nice not to chase after him for that payment every month? 56K and you will never have to worry about your house again and I can close in a couple weeks. How does that sound? That is a line right there that I have used many times when it comes to closing out a deal.
Another way that you can build rapport is asking questions. Keep in mind these questions are geared towards the seller. As you listen and glean some information ask them more about what they have already told you. You want to expound on their statements. For example, the may be telling you about their problem tenants. You could say "So what did you do when you knew that tenant was not going to pay you and you were going to have to come up with the payment for that month?" You want them to talk more about their current situation so that the more they think about it the more they want out of it!
So remember that you need to be liked if you are going to be a succesful wholesaler or negotiator with motivated sellers. Stop talking and listen to what the seller needs so that when the time comes to close them you will know exactly what to do, because they will have already told you.