I have found time and time again, that negotiating with sellers is more of a process than an event. Many times when we meet sellers at their house, they will just throw out an asking price that is nowhere in the ballpark. They tell us what “their expectations are”. And more often than not, they just pull this dollar amount out of thin air. If you ask them how they determined the asking price, they will just simply say “that’s what I decided I want for the house”. It then becomes our job to change the sellers’ expectations.
Go Ahead. Bring Up the “Bad Stuff”
You may as well just get it out into the open; the massive amount of work this house needs.
By this time, I have always asked the sellers not only on the phone interview but also at the property what repairs need to be done on the house. They will give you a list pretty quickly. My next question is always, “what repairs and upgrades would you do if you were going to live in the property?” At this point, they will give you a much longer list. It’s funny how the kitchen and bath didn’t need to be updated until they were going to live in the house. This is the perfect time to bring up just how much all of this work will cost.
It’s also a good remind them that they have the option to do all of these things themselves and then sell the house to a retail buyer. Let’s face it; they already know that. They don’t want to spend the money even if they have it, and they don’t want to do the work. Even though they understand what you are saying intellectually, in most cases their emotions have taken over.
Give Them Time to Process the Information
For some folks, this happens pretty quickly. With these sellers you can walk around the house for a while, and they will have already decided to accept your offer. At other times, we need to leave our offer with them and go back to the office. They may need to process what we have told them overnight or even for a couple of days. It’s not unusual to hear back from these sellers after a few days have passed. We all want to get as much as possible for our properties as we can, and these sellers are no different. When I leave a house without an accepted offer, I always let the seller know that I will be checking in with them in a few days. This leaves the door open to a further conversation about the property.
What to Do When the Answer is “No”
One thing you need to remember is that just because they aren’t a motivated seller today, that doesn’t mean they won’t become a motivated seller in the future. Circumstances change for everyone over time.
Leave these folks on your list, and continue to market to them. It’s also a good idea to pick up the phone periodically and check in with the seller. If they heard the same low offer from several real estate investors, chances are that one day they will finally be motivated to sell. There’s a really good chance that you will be the only one still following up with them.
Photo: Yew Tree House