When to Negotiate with Direct Mail Sellers

31 Replies

Hi folks,

I'm getting call backs from my direct mail campaign and I've been following a script that I believe brandon turner posted. I get theri basic info, the unit details and when and how much they're looking to sell it for. However, when I hit that question, I feel the seller is always asking for too much. So far, I've been saying "ah man I don't know how I can pay that much for this property"  or some variation. At that point, the sellers "think about it and call me back." 

My question is, should I be asking about how much they're looking to sell before I go look at the property and evaluate it further? 

What are the natural transitions you guys make? 

@John Moon - Every seller will want too much.  We go look at every house that is interested in selling and then give them a written offer.  We may or may not negotiate from there.

Originally posted by @Elizabeth Wilson :

@John Moon - Every seller will want too much.  We go look at every house that is interested in selling and then give them a written offer.  We may or may not negotiate from there.

 You go see every house?  I recently sent out my first 1200 letters and got calls from around 60 people.  I'm preparing to send out double that number of letters.  Going to see the house of every person that calls in would be a full time job in itself.  I'm just a beginner, but I'm generally not going to see a house unless they give me a sale price number that is at least in the ballpark of what I would pay.

@Eric James   - Yes.  Every house with a motivated seller.  We do have others who work for us, which helps. Also I'm not getting the positive response like you did.  We sent out about 2500 and probably made 15 appointments from that so far.  Most of my calls are very angry people who can't handle the stress of junk mail.. :)

@John Moon How much more are they asking? More than you'd pay or more than it's worth? 

My team that answers the phone will usually get a range or an asking price. If they don't give an asking price, they don't make the appointment. If a seller isn't ready to give an asking price, I usually don't expect to the be motivated. 

If the asking price is under what the actual ARV is, they'll set the appointment. Generally speaking, every seller has their ideal number and then when I visit the home, I can give my professional opinion and outline the options. Then, I'll give them a number that would make sense for me along with the benefits of selling to me. From there, they can make an educated decision on how they want to handle things.

I say all that to say... it's very difficult to build rapport over the phone. You have to be face to face with sellers in order to get to know them, their problems and how you can solve them. If you're doing it correctly, you'll watch sellers be somewhat reserved and robotic on the phone to friendly and open once they realize you're the real deal. 

My suggestion, if they are under ARV, set the appointment and build some rapport. It won't work every time but I've found that it beats trying to win sellers over on the phone.

I hope that helps.   

@Elizabeth Wilson That isn't a bad idea as i'm only sending out couple hundred per month and I don't get a crazy amount of calls back. 

@Joe H. Most of the sellers did have a asking price. However, it was almost always above ARV imo. These are multi-family units so I'm looking strictly for cash flow. Because it's MFH I think sellers are harder to negotiate with due to us looking at how to price differently. But I do agree building rapport over the phone is difficult and building rapport is one of the most important aspect to get a deal to close.

Originally posted by @John Moon :

@Elizabeth Wilson That isn't a bad idea as i'm only sending out couple hundred per month and I don't get a crazy amount of calls back. 

@Joe H. Most of the sellers did have a asking price. However, it was almost always above ARV imo. These are multi-family units so I'm looking strictly for cash flow. Because it's MFH I think sellers are harder to negotiate with due to us looking at how to price differently. But I do agree building rapport over the phone is difficult and building rapport is one of the most important aspect to get a deal to close.

 I've gotten some similar calls from non-resident owners of properties they rent out.  Mostly they weren't motivated sellers.  They just seem to be 'kicking the tires' to see how much someone might be willing to pay for their place.  If you're only sending out a couple hundred letters a month I guess that won't be a problem.  Sending out a bit more letters, I'm actually trying to tweak my letter to get fewer calls from non-motivated sellers.

Originally posted by @John Moon :

Hi folks,

I'm getting call backs from my direct mail campaign and I've been following a script that I believe brandon turner posted. I get theri basic info, the unit details and when and how much they're looking to sell it for. However, when I hit that question, I feel the seller is always asking for too much. So far, I've been saying "ah man I don't know how I can pay that much for this property"  or some variation. At that point, the sellers "think about it and call me back." 

My question is, should I be asking about how much they're looking to sell before I go look at the property and evaluate it further? 

What are the natural transitions you guys make? 

Your next step shouldn't be to try and negotiate over the phone, but rather go and look at the place. Then you might want to let people know that you will get back to them in 24 hrs with an offer.  Prepare an offer, even if its informal, showing the savings they will have by working with you (closing costs, realtor savings etc). Also have separate line items for all the proposed repairs that would be necessary to get the property in ship shape.   Also you need to emphasize that you will save in short time.. No financial contingency etc

No appointment means no transaction. As simple as that. 

Convert the question from how much you want to sell for to how much do you want to walk away with... And the walk away question is always the 4th question...

Here are the questions... Keep in mind that the use of embedded commands and positive and negative words is crucial.

Seller Script

Originally posted by @Michael Quarles :

Convert the question from how much you want to sell for to how much do you want to walk away with... And the walk away question is always the 4th question...

Here are the questions... Keep in mind that the use of embedded commands and positive and negative words is crucial.

Seller Script

Thanks for chiming in.  As the purchase contract will list a 'sale price' (not walk away money), how do you deal with not knowing for certain how much may a seller may owe (liens, back taxes, etc.) that they may not tell you about?  Do you just base the sale price on what the seller tells you, and if there are other costs then they actually walk away with less than expected?  I'd also think it would be difficult to precisely estimate all costs that will be paid at closing (e.g. prorated taxes) so that seller literally walks away with exactly the amount you discuss with them.  Look forward to your thoughts.

Originally posted by @Eric James :
Originally posted by @Michael Quarles:

Convert the question from how much you want to sell for to how much do you want to walk away with... And the walk away question is always the 4th question...

Here are the questions... Keep in mind that the use of embedded commands and positive and negative words is crucial.

Seller Script

Thanks for chiming in.  As the purchase contract will list a 'sale price' (not walk away money), how do you deal with not knowing for certain how much may a seller may owe (liens, back taxes, etc.) that they may not tell you about?  Do you just base the sale price on what the seller tells you, and if there are other costs then they actually walk away with less than expected?  I'd also think it would be difficult to precisely estimate all costs that will be paid at closing (e.g. prorated taxes) so that seller literally walks away with exactly the amount you discuss with them.  Look forward to your thoughts.

Since buyers ALWAYS pay the closing cost they are not part of the agreed price. During the process you'll find out that the seller has liens or mortgages tied to the property..  Add those amounts to the walk away and there is your value. we won't negotiate unless the value is less than 85% of the appraised value number. 

BTW here is the 3 page agreement we use. 

Purchase Agreement

@Michael Quarles thanks for the answering, this is what I wanted to know! That script is awesome and I'm excited to try it out. 

Here's my reasoning in wanting to negotiate before seeing the property. It's similar to making offers sight unseen. I don't want to go there and do all the work knowing the seller and i are off 100k and they have no desire to come lower. 

How do you handle these cases? 

btw yellow letters saves me so many hours. Thank you for that! 

Originally posted by @Michael Quarles :
Originally posted by @Eric James:
Originally posted by @Michael Quarles:

BTW here is the 3 page agreement we use. 

Purchase Agreement

 Thanks for making this available, I recently used it to make a purchase.

Originally posted by @John Moon :

@Michael Quarles thanks for the answering, this is what I wanted to know! That script is awesome and I'm excited to try it out. 

Here's my reasoning in wanting to negotiate before seeing the property. It's similar to making offers sight unseen. I don't want to go there and do all the work knowing the seller and i are off 100k and they have no desire to come lower. 

How do you handle these cases? 

btw yellow letters saves me so many hours. Thank you for that! 

We haven't met a seller in forever... All of our negotiation is via the telephone. Works well... Motivated sellers dont need to and dont want to see us...

Originally posted by @Elizabeth Wilson :

@John Moon - Every seller will want too much.  We go look at every house that is interested in selling and then give them a written offer.  We may or may not negotiate from there.

 Not telling you how to run your business, but I really think you shouldn't go to every seller.

You really SHOULD determine first if it is a good lead.

We get leads from our site, meaning my leads are WAY better than yours (if you do DMM), and even so we don't go to every house. It is a waste of time, gas,  effort.

Most leads think their house is worth way too much. Some fill in our form and say stuff like...

"I want 319K for my house and not a penny less... while their house is worth 230K. Again I have a website that gives them the opportunity to say these things, which is great as this gives me a heads up. With DMM, you never know.

Can you negotiate the price down  from 319K to 90K? Maybe, but not likely!

You need to device a system where you interview them first and then place them into a category. "Hi Priority Lead": Drop everything , stop bumping uglies,  stop eating jump in your car and drive, after you are on the highway, call them and tell them I am on my way, where am I going?

"Good Lead": They owe little mortgage, desperate or not doesnt matter, IF they are selling, a good deal can be made.

"Time wasters": Rude, unrealistic, owe way too much to make a deal. These deals are a waste of time. Period. 

You will hear the gurus say "let NO deal get away. I HAVE NO TIME FOR THIS. I get 8 leads a day. If one deal is difficult I wait a few hours and I have 2 more new deals to check out.

You really shouldn't go to every deal. Your time is WAY more valuable doing SEO for example.

Originally posted by @Michael Quarles :

Convert the question from how much you want to sell for to how much do you want to walk away with... And the walk away question is always the 4th question...

Here are the questions... Keep in mind that the use of embedded commands and positive and negative words is crucial.

Seller Script

I know you are super successful, so with all due respect how do you know the accurate figure to make an offer. or are you offering the lowest possible dollar that you can offer. If I get a phone call from a stranger, I would first invite him over to my house to walk the place so he can see the good... the bad.. and the ugly... before we ever talked numbers. 

If person doesn't want to come over and look at the property or have someone come for him (even if he doesn't come himself), to me that's just not a serious buyer, or is seriously trying to LOWBALL me.  

Originally posted by @Chinmay J. :
Originally posted by @Michael Quarles:

Convert the question from how much you want to sell for to how much do you want to walk away with... And the walk away question is always the 4th question...

Here are the questions... Keep in mind that the use of embedded commands and positive and negative words is crucial.

Seller Script

I know you are super successful, so with all due respect how do you know the accurate figure to make an offer. or are you offering the lowest possible dollar that you can offer. If I get a phone call from a stranger, I would first invite him over to my house to walk the place so he can see the good... the bad.. and the ugly... before we ever talked numbers. 

If person doesn't want to come over and look at the property or have someone come for him (even if he doesn't come himself), to me that's just not a serious buyer, or is seriously trying to LOWBALL me.  

 Good to meet you.  

Anytime when negotiating you can negotiate your ideas as ideas owned by the seller you win.  

We never low ball and frankly that term should be considered a curse word to our industry.  

We always accept the sellers value.  If they’re wrong the renegotiation is so much easier. 

We always order a BPO, appraisal and have the home inspected to confirm the sellers Communication of value and condition.  

Take a peek at the purchase agreement.  There is a paragraph referring to appraised value. 

It also says I will make a HUGE profit.  

@Jerryll Noorden - Totally understand your position.  For us we go see every lead interested in selling.  So far that extra contact and relationship building has paid off.  

And I might not have explained my point well on this: If they say that want 319k and not a penny less and it's ARV is 230k, that is not a seller who is truly interested in selling. Probably wouldn't go see that one. Or I might. :)

After this many years of talking with sellers, it has become a bit easier to gauge those truly interested in selling and not just tire-kicking. 

One of the beautiful things about REI is there are multiple ways to do it.

Originally posted by @Chinmay J. :
Originally posted by @Michael Quarles:

Convert the question from how much you want to sell for to how much do you want to walk away with... And the walk away question is always the 4th question...

Here are the questions... Keep in mind that the use of embedded commands and positive and negative words is crucial.

Seller Script

I know you are super successful, so with all due respect how do you know the accurate figure to make an offer. or are you offering the lowest possible dollar that you can offer. If I get a phone call from a stranger, I would first invite him over to my house to walk the place so he can see the good... the bad.. and the ugly... before we ever talked numbers. 

If person doesn't want to come over and look at the property or have someone come for him (even if he doesn't come himself), to me that's just not a serious buyer, or is seriously trying to LOWBALL me.  

Check out his website....it seems he uses broker price opinions and has inspections done. 

@Michael Quarles What do you mean by accepting sellers value? What form do you use for the BPO?

@Elizabeth Wilson Thank you for clarifying that.. i was going to go look at every seller's home. :) 

A seller says their home is worth 300,000 we accept it.   

Keep in mind we will prove or disprove it however it a solid approach.  

Also I do believe that creating relationships in person helps. We just can’t fly across country on every opportunity.  

Originally posted by @Michael Quarles :
Originally posted by @Chinmay J.:
Originally posted by @Michael Quarles:

Convert the question from how much you want to sell for to how much do you want to walk away with... And the walk away question is always the 4th question...

Here are the questions... Keep in mind that the use of embedded commands and positive and negative words is crucial.

Seller Script

I know you are super successful, so with all due respect how do you know the accurate figure to make an offer. or are you offering the lowest possible dollar that you can offer. If I get a phone call from a stranger, I would first invite him over to my house to walk the place so he can see the good... the bad.. and the ugly... before we ever talked numbers. 

If person doesn't want to come over and look at the property or have someone come for him (even if he doesn't come himself), to me that's just not a serious buyer, or is seriously trying to LOWBALL me.  

 Good to meet you.  

Anytime when negotiating you can negotiate your ideas as ideas owned by the seller you win.  

We never low ball and frankly that term should be considered a curse word to our industry.  

We always accept the sellers value.  If they’re wrong the renegotiation is so much easier. 

We always order a BPO, appraisal and have the home inspected to confirm the sellers Communication of value and condition.  

Take a peek at the purchase agreement.  There is a paragraph referring to appraised value. 

It also says I will make a HUGE profit.  

Again.. I don't think my question is being answered here.. 

How do you get the accurate assessment of the repair without either you or one of your guys stepping on the property? If you are using the worst possible scenario, and making offers as if the renovation was a full gut, then you are by default making an extremely lowball offer -whether you like the word or not... More power to you if it works for you.  Its business and this is capitalism.  Buy it for free if you can.. 

When you say you accept seller's value, what does that mean? If the seller says his house is valued at $200K, and he wants not a penny less, how can you have a deal there - especially if the true ARV of the house is $180, or even if it is $200K. What good is your accepting of his value is here? I am not saying you tell the seller he is an idiot, but we are not on same page here, and move on... Trying to make a deal work where there is no deal can be super expensive has been my experience.

I could not find the document that you were referring to. 

Originally posted by @Jerryll Noorden :
Originally posted by @Elizabeth Wilson:

@John Moon - Every seller will want too much.  We go look at every house that is interested in selling and then give them a written offer.  We may or may not negotiate from there.

 Not telling you how to run your business, but I really think you shouldn't go to every seller.

You really SHOULD determine first if it is a good lead.

We get leads from our site, meaning my leads are WAY better than yours (if you do DMM), and even so we don't go to every house. It is a waste of time, gas,  effort.

Most leads think their house is worth way too much. Some fill in our form and say stuff like...

"I want 319K for my house and not a penny less... while their house is worth 230K. Again I have a website that gives them the opportunity to say these things, which is great as this gives me a heads up. With DMM, you never know.

Can you negotiate the price down  from 319K to 90K? Maybe, but not likely!

You need to device a system where you interview them first and then place them into a category. "Hi Priority Lead": Drop everything , stop bumping uglies,  stop eating jump in your car and drive, after you are on the highway, call them and tell them I am on my way, where am I going?

"Good Lead": They owe little mortgage, desperate or not doesnt matter, IF they are selling, a good deal can be made.

"Time wasters": Rude, unrealistic, owe way too much to make a deal. These deals are a waste of time. Period. 

You will hear the gurus say "let NO deal get away. I HAVE NO TIME FOR THIS. I get 8 leads a day. If one deal is difficult I wait a few hours and I have 2 more new deals to check out.

You really shouldn't go to every deal. Your time is WAY more valuable doing SEO for example.

 Understand your position, but I like to go and look at every single lead myself.. If I won't buy it from the guy, I can always list the property, since I am a licensed Realtor, so I can get business that way. 

Originally posted by @Chinmay J. :
Originally posted by @Michael Quarles:
Originally posted by @Chinmay J.:
Originally posted by @Michael Quarles:

Convert the question from how much you want to sell for to how much do you want to walk away with... And the walk away question is always the 4th question...

Here are the questions... Keep in mind that the use of embedded commands and positive and negative words is crucial.

Seller Script

I know you are super successful, so with all due respect how do you know the accurate figure to make an offer. or are you offering the lowest possible dollar that you can offer. If I get a phone call from a stranger, I would first invite him over to my house to walk the place so he can see the good... the bad.. and the ugly... before we ever talked numbers. 

If person doesn't want to come over and look at the property or have someone come for him (even if he doesn't come himself), to me that's just not a serious buyer, or is seriously trying to LOWBALL me.  

 Good to meet you.  

Anytime when negotiating you can negotiate your ideas as ideas owned by the seller you win.  

We never low ball and frankly that term should be considered a curse word to our industry.  

We always accept the sellers value.  If they’re wrong the renegotiation is so much easier. 

We always order a BPO, appraisal and have the home inspected to confirm the sellers Communication of value and condition.  

Take a peek at the purchase agreement.  There is a paragraph referring to appraised value. 

It also says I will make a HUGE profit.  

Again.. I don't think my question is being answered here.. 

How do you get the accurate assessment of the repair without either you or one of your guys stepping on the property? If you are using the worst possible scenario, and making offers as if the renovation was a full gut, then you are by default making an extremely lowball offer -whether you like the word or not... More power to you if it works for you.  Its business and this is capitalism.  Buy it for free if you can.. 

When you say you accept seller's value, what does that mean? If the seller says his house is valued at $200K, and he wants not a penny less, how can you have a deal there - especially if the true ARV of the house is $180, or even if it is $200K. What good is your accepting of his value is here? I am not saying you tell the seller he is an idiot, but we are not on same page here, and move on... Trying to make a deal work where there is no deal can be super expensive has been my experience.

I could not find the document that you were referring to. 

We never by at value... And will never negotiate lower than 50% of value. Our number tends to be the 60% to 65% of value.  

In your example if the seller believes value is 200k then in order for a buyer to start the negotiation process the seller has to be willing to sell for a maximum of 85% of value (170k), If not we will put the seller in a follow up pattern and move on to the next seller. We wont buy above 70% of value unless there are very favorable terms offered. Example: single payment 15 year zero interest note. 

We never consider ARV in valuation. We always focus on the As IS value. Besides BPOs and Appraisals are based upon current conditions. Certainly they can tell us the estimated repair cost and future possible value however I am not fixing the darn thing I am reselling it.

As for being a Realtor, I am a Broker in California however will never list an opportunity I dont buy.. Talk about a waste of resource. Why anyone would work for 1.5% to 6% when you can earn 30%+ buying and selling is beyond me. Heck I dont even list my own properties. 

@John Moon  

First you have to find motivation. After you find that you can negotiate 100x better. If they have no motivation and are just calling because they received mail and say something like "I'll sell to you for $600k" when its a $200k house (or whatever the case may be) don't bother talking them ever again and hang up ASAP bc that is not a good use of your time.

Make sure the seller knows you pay cash, close fast, pay all closing costs, wont have hundreds of people walking through the house, and no renovations needed because you buy as is. "Obviously being an investor I do look to make a FAIR profit so I can't pay market value" "knowing that I pay cash... blah blah blah would you be willing to take a lower price to move on faster (try to use the motivation you found earlier here ie "so you can quit making those mortgage payments faster") 

This isn't verbatim just an idea of some things to say. Hope it helps. Another thing I would do is explain how I buy and look to make a fair profit, then ask "does that sound fair" and wait for a response. 

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