There is one area of wholesaling that I believe is the true beginning of your journey — talking with sellers. Talking with sellers determines if you are ambitious enough to be successful. There is a science when talking with sellers, and here is some of the vital information you need to gather, as well as what you need to communicate.
How to Analyze a Real Estate Deal
Deal analysis is one of the best ways to learn real estate investing and it comes down to fundamental comfort in estimating expenses, rents, and cash flow. This guide will give you the knowledge you need to begin analyzing properties with confidence.
The majority of people like to do business with people they like. Most people try and find commonalities between each other. These commonalities may be sports teams, social groups, hobbies, or something else.
Here is something that recently happened to me to help me secure a deal. I used this simple thing the sellers and I had in common — we both recently took our families to Disney World. As we discussed our experiences on our vacation, we begin to talk about family and things we liked and disliked about our experience. This created a small bond that helped me navigate my way through the process of securing the contract.
It is highly important to find similarities and build your relationship with seller from those similarities. Some sellers’ personalities do not allow rapport building to occur. It is important to distinguish between the four different personality types in order to use this technique.
In order to build rapport, you have to be very astute and observant. Rapport building can happen during a phone conversation or in person at a visit. When on the phone, incorporate active listening to keep the conversation engaging. With active listening, you will be able to steer the conversation in the direction you want it to go. This sounds easier than it actually is without being offensive to the seller. Sometimes it’s difficult to steer the conversation, especially when you have someone who likes to dominant the conversation. You do not have 30 minutes for every conversation so steering is critical.
Steer the Conversation
Steering the conversation will help you get more information about the seller and their situation a lot faster. Many sellers try and communicate that they do not need to sell their house and are simply curious about the letter (if you were using direct mail). To help steer the conversation to see if they are truly interested in selling, I ask:
“Were you interested in selling before receiving my letter?” This is the first question in helping me validate the lead. If they are just curious, then I ask, “What are you curious about? Maybe I can help you by answering some questions.” Phrasing it this way helps me frame the rest of the conversation.
One mistake that many people make is by pre-judging the lead. Sellers will not just say, “Hey, I need to sell this house. Come and take it.” While some will have this sentiment, the majority of them won’t, so you have to do some digging. By asking open-ended questions, you will get a lot of information. But be careful — some sellers can elaborate too much. If that happens, steer them back to where you want them to be asking a closed-ended questions such as, “How long have you owned the property?”
Find the Pain Point
“Why did they call you?”
Ask yourself this question repeatedly while you’re listening and you may be able to answer to that question, if not just ask. Remember, 95 percent of all real estate transactions are facilitated by real estate agents, so why are they willing to call you? Really — WHY? This is basically the process of finding the pain point. During this time, you need to ask very pointed questions:
- “So give me a little insight about the property. Why are you trying to sell?”
- “Is the property rented or vacant?”
- “How is renting in that area?” (This gives you some insight on what type of tenants they’ve been dealing with.)
- “What exactly would you like to see happen? What is you ideal solution?”
- “Why haven’t you tried to list the property with a real estate agent?” (This should be your last question. You don’t want to give them any ideas, but at the same time, this can give you info on the condition of the property.)
Finding the pain point is not always easy. Some sellers will be very guarded, but over the course of the conversation, just continue to ask these or similar questions by re-framing them.
Get the Property Description
This is normally one of the easier things to get. Sellers love to talk about their property, so I will not elaborate on this very much. This line of questioning needs to be a collaboration of both pointed and open-ended questions.
- “Tell me a little about the condition of the house.”
- “How old or new is the furnace? Is it 5 years old, 10 years old, or 20 years old?”
- “Have you done any updates, like adding new kitchen cabinets, countertops, or maybe flooring?”
- “The roof looks a little older. Is it leaking?”
- “Are you current on your mortgage? I have to ask because there is a different process for short sales, and by the way, do you know roughly what you owe?”
Related: How to Build Trust & Reputation as a Real Estate Investor (to Land More Deals!)
These are just an example of a few questions. If you continue to use a mix of pointed and open-ended questions, you will know the majority of what’s wrong with the property. Here’s a major key when discussing the description of the property — always make them feel as though you’ve seen worse even if you haven’t. Let them know you’re capable of buying the property just as it is.
Provide Options/Solve Their Problem
Make sure you reiterate what’s in it for them, and let the conversation be focused on what you can do for them. Address the problem. If you took your time and asked the right questions and let them elaborate, you will know what they need. Reassure them you can provide what they need. Make them feel comfortable — they should know the problem is solved once they hung the phone up.
You must be able to provide options. You cannot take a one-size-fits-all approach or you will be missing out on some great opportunities. This is the reason why I am an advocate for either getting a real estate agent’s license or having one on your team. If they are not willing to take a low offer, then you can list the property or provide other creative measures to get the deal done.
Explain the Process
To finalize and close the deal, explain the process. Do not take for granted that the process is self explanatory. Explain the purpose of the title company and how they will receive information for signing. Where does the earnest money go, and when do they get their money?
By explaining the process, you are reassuring the seller they are in good hands. You want to always exemplify professionalism, and this is done by answering their questions before they ask. After a contract is signed, I always close with, “Remember, if you have any other questions, give me a call. My most important job is to help you through this transaction.”
Navigating some of the conversations with sellers can be difficult.
Do you ask creative questions that I may not have touched on?
Please share — we are all looking for ways to improve!