Today we are going to cover three very effective methods to help convince our prospective sellers to sell their properties to you for a great price or great sale terms. Let us first assume that the sellers you are talking to have equity in their homes; equity that you are trying to capture and profit from.
There are two main types of sellers (REOs not included) that you will be crossing paths with while investing in real estate. So many investors incorrectly think that we are only after desperate sellers; sellers that are on the verge of lunacy over their unwanted home and will deed the property to the first passerby with a smile. These sellers are for one reason or another, emotionally beat-up concerning their property for sale. You will know these sellers immediately over the phone by the desperation in their voices and if you are the first investor to speak with these individuals, you will typically create a verbal deal over the phone with very little effort. Let us call this seller type #1.
The second type of seller is still motivated to sell their unwanted home, but unlike the type #1 seller, this type #2 seller can hold out (for a little while) for a better offer. A type #2 seller is logical and lucid about their reality; these sellers want a fair price, fast closing and some kind of reassurance they are doing the right thing by selling to you.
The bulk of your deal and leads will be concerning this type #2 sellers. Now let’s talk about how to persuade these sellers to sell to you!
T-Tables: While with the seller, rip out any piece of clean notebook paper and draw a large letter “T” across the entire page. On the top of the ‘T’ to the left side write the word “Pros,” on the top-right side of the ‘T’ write the word “Cons.” One after the other write down the all the advantages the seller and you can think of for the seller selling his/her property to you in the Pros column. Seller benefits may include: speed of sale, fair price, terms benefits, mortgage payment relief, cash today, take time to move, improve condition of property, credit help, etc.
On the opposite side of the ‘T’, write down all the Cons of the seller selling to you today. These may include: must pack and move, will not receive full market price compared to waiting to sell to a ‘non-investor’, etc. There should be considerably fewer items in the Cons column than written in the Pros column. Leave this T table with the sellers when you leave the home.
The Pawn Star Method: I find myself being fascinated with the television show ‘Pawn Stars.’ If you have never seen this reality show it is about an active pawn shop in Las Vegas. What I love about this show is that it demonstrates that you do not need to be shady, a liar, or corrupt to make money buying and reselling personal property. The same is true with real estate!
When the shop employees do not know enough about a particular item being pawned they bring in an expert to evaluate and price the object before the shop buys what is being pawned. We as investor should be bringing real world comparable home sales for our prospective seller’s property for sale. Once the owner of the item and the shop employees know the value of the personal property, the two parties (seller and buyer) go back and forth in price until both parties meet at an acceptable price/terms for the property.
Be honest and bring comparable sales for the seller’s area. If you are greedy you may not make the deal because the seller will not sell for too low of a price. However if you offer a fair price, let the seller know of their options, and offer the seller a mid-range price for their home you can get more deal accepted than you thought possible.
Letters of Intent: If you are not making written offers to every single home you visit you are doing yourself a great disservice. With every seller you visit leave a ‘Letter of Intent to Purchase Real Estate’ (one page long form) or similar form telling the sellers in plain English (or another language) writing that you can purchase his/her home for X price and X terms. This gives the seller a verbal and written offer to mull over after you leave. Most sellers will not throw this offer away because it may be the only written offer (be it a low offer) they have received for their property.
The main goal when talking to type #2 sellers is to present your offers in a clear and friendly manner. Disclosing the fact that you intend to make some money on the home goes a long way to develop trust with your seller. A seller must like you in order to sell to you; otherwise you are wasting your time.