Negotiating with Motivated Sellers and Wholesaling Houses Part 2

Last week we talked about learning how to build rapport with sellers and talked about how critical that is to learning how to negotiate with them. If you build rapport with a motivated seller you will put yourself in a very strong negotiating position. You will be in a position to where they will like and trust you and start to tell you exactly what is going on in their personal lives. This is key because you have to be able to understand EXACTLY where the seller is coming from. Remember people do business with people that they like and trust. YOU have to be that person.

There are some investors that believe you should look at the hard numbers and just throw an offer out the window as you drive by the house.  Lol...The theory is that if you make enough offers somebody is bound to take one. While playing the numbers game is defintely part of  learning to wholesale houses, this is not the type of business model that I follow. I am not  a big fan of the "throw enough against the wall and see what sticks" approach.

Don't get me wrong, I don't spend this type of time with every motivated seller that calls me. Shoot, I get like 500+ calls a month. I consider myself a people person but if I was talking to that many people I would be out of the business very quickly. In fact before a seller gets to me they have to go through my Virtual Assistant. You should get one they really don't cost that much money :) They make sure that the sellers I do talk to are definitely qualifified. I will talk about qualifying sellers in another post but in this case if they have enough equity in the house and are asking  a reaonable price they are worth  the time investment.

Asking the Right Questions

Once you have taken the time to build some rapport with the seller you can then move to the next step of the negotating process--asking questions. If you have noticed a little bit of a recurring theme here--it is all about the seller. You are going to make them feel important and that they can trust you. Then you are going to ask them questions directly related to their situation. If you have built rapport correctly, they will answer pretty much whatever questions you ask them. These are a three different questions that you can ask a motivated seller to help you negotiate the deal.

The reason they will answer the questions is because you have earned the right to the answers. There is a principal of reciprocity that comes into play here. Because you have taken the time to listen to them and give them full and direct attention, they feel that it is only right to answer your questions.

1. Why Are You Selling?

There are different types of questions that you are going to be asking. First you will be asking You are going to be asking questions about their situation. When you build rapport correctly the reason they are selling their house will naturally surface. This is THE most important fact that you need to get ahold of. WHY are they selling the dang house? However, if for whatever reason this does not come up, you need to ask this question. You will need this information in order to organize your close. Thats right, I said the word "close."  But Alex, I did not know I would actually have to CLOSE somebody! Listen, sometimes people will just agree to your first blind offer, but most of the time you are going to have to follow the steps of negotiation. Trust me, when you think you have a slam dunk of a deal and you skip some of these steps, you can lose deals. We will talk about closing in detail in a future post so stay tuned :)

2. What Will You Do if You Don't Sell the House?

The answer to this question will give you an idea of just how motivated the seller really is. If they answer you this question with a whole ton of options the chances are you will not have a deal. I was talking to a seller yesterday and she said," You know Alex, I am really just not in a rush to sell the house and I am even thinking about keeping it." Right then and there I knew i was talking to an unmotivated seller. She even asked me to go by in my spare time and take a look to give my opinion. Will I go? Maybe, if I happen to be on that exact street in the near future! Lol I am not trying to be a jerk but when you realize the most valuable commodity you own is your time, you learn that it needs to be spent in money making activities.

3. How Much Money Were You looking to put In your Pocket from this Deal?

The reason you ask this question is to find out what your seller is truly expecting. They may have a number fixed in their head of what they are trying to walk away with after the dust settles. You need to know that number because it is a lot easier than working with the total purchase price of the house. For example, if somebody has a house worth 100K and owes 20K, you don't want to necessarily ask what they are asking for the house. If you can get them to start speaking in smaller numbers you will be in better shape.

You: If I could buy your house today, how much money were you looking to walk away with?

Seller: Well I know this house needs some work so I was hoping to walk away with 20K. (You see, know we know that they want 40K for the house but because we are talking the smaller equity number it will be a lot easier to negotiatie that down if need be).  Always talk equity with a seller and NOT purchase price. They must understand what they will NET not what they will GROSS. We will talk more about that in future posts as well.

There are a lot of questions that you could potentially ask a seller but if you stick with this line of questioning you will put yourself in the position of becoming a master negotiator and putting some serious CASH in your pocket!

Have a Great Weekend!!