Yellow Letters - What to say when lead calls?

Question

This may be a fantastically stupid question, but hey - we're all strangers here, right? I'm getting ready to send out a batch of yellow letters to owners of small multifamily units I'm interested in purchasing, and it occurs to me that I have no idea what to say to them when/if my phone rings.

"Hey, I got your letter about buying my property."

"Yes! That's great."

Crickets from caller.

Crickets from me.

Obviously (well, "obviously" *I think*) I don't want to make an offer sight-unseen to every Tom, Dick and Harry that might call me. What do you guys recommend as a "script" for taking these calls? How do I answer, what do I say, what process should I follow moving forward from the initial phone call?

Thanks in advance for your input.

Jonathan Greene · Answer

@Andrew Taylor - your first question is "How can I help you?" Every seller who calls back at least has a faint interest in selling and if you are mailing the right lists, they have a reason for calling you back. This reason will be different for each seller - out of state landlord doesn't want to manage anymore, empty nester ready to move, the absentee owner doesn't take care of the property. Before moving into cash offer mode, ask them questions about them and why they are calling back. When you know their why and when you invest in learning about them, even for 3-5 minutes, you will be far ahead of all the investors trying for a quick sale, cash deal that is the "best deal you are going to get." Of course, your goal is an appointment and a buy, but who do you think these people are more likely to have over - the guy who asked them questions about WHY they need to move or the guy who told them they would give them 100k right now?

Andrew Taylor · Answer

@William Hochstedler, I appreciate your input, but I think you're skipping over the steps I'm asking about. How do I get from, "Hi, I'm calling you about the letter you sent inquiring about my property," to actually making an offer? I assume it's not, "Great, thanks for calling, I'm offering $35k per door" (or whatever the going rate is). There's some qualification, some probing, etc., right?

Maybe it's as simple as, "Thanks for calling. Can you tell me a little about your property?" and then Googling furiously in the background while they're talking. I like Account Closed's warning not to come right out and ask "Why do you want to sell?", since the seller might realize you're an investor and expect a lowball offer - but knowing why they're considering selling seems like a pretty important piece of the puzzle.

Do you ask for any kind of supporting data before putting together a preliminary offer - i.e. T12 financials, rent roll, etc? Or do you wait until later in the process to ask for those? I understand the first pass is sort of a rough qualification, and the fine-tooth comb part will come later, but what's reasonable to ask for up-front?

Most of the properties we're targeting are in a specific area, so we'll know (roughly) what the cap rate is. Is it as simple as chatting with the owner until they volunteer (or you're comfortable asking for) the NOI, and then doing a quick calculation and saying something like, "At an NOI of [whatever they said], our offer would be something in the neighborhood of [stated NOI / cap rate]," and then whoever speaks next loses?

I've never done any phone sales, and in fact I hate talking on the phone, so I'm just trying to sort of systematize this process so I don't screw it up from the get-go. I appreciate everyone's input.

William Hochstedler · Answer

Why not?  Some folks advocate doing exactly that.  Even if you and the seller are far apart, there's something about an offer and a check in front of them that makes people think differently about what they are trying to do.   As a matter of fact, it is common to make two offers: a cash offer and a terms offer (seller financing).  I can pay just about any asking price that a seller can give to me if they allow me to pay it in installments of equal payments over 30 years.

You have a due diligence contingency to back out if the property, upon more research, isn't what you thought it would be.  Often, at this point, sellers have made the psychological commitment that they are selling the house to you, so a $5000 concession because of the roof might not be a deal killer.

The people who are shooting offers out as soon as they get off the phone are playing the large numbers game.  Most people try to get an appointment and visit them in person to look at the house.  Your chances of making a connection and building trust are much higher if you meet in person.  So getting to the property would be a higher quality touch.

Good luck.

Yellow Letters - What to say when lead calls?

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