Purchasing real estate directly from a motivated seller is not a one-night stand in the back of a Buick. It is a courting process. Understand that.
These five steps will set you up so that your “Investor Offer” (often referred to, and miscategorized, as a lo-ball offer) is given serious consideration. But! If you skip these steps, you’ll rarely… if ever… make it to the closing table – and your job as a real estate investor is to buy low and close deals.
Once that lead comes in and you’ve made an appointment to visit the property, the courting process begins.
Here are the 5 Steps that set you up to close that humdinger of a deal. Commit them to memory.
Step 1 – Build Rapport.
I’ve talked about building rapport before, but I can’t stress it enough, if there’s no trust, there’s no deal.
When the motivated seller answers the door, the very first thing you say to them is:
Thank you for inviting me over, Mr/Mrs Seller (use their name). Can you show me around?
Then, you walk through the house looking for things you might have in common, taking an active interest, and complimenting the seller wherever appropriate.
This step is about focusing on the seller, NOT the house.
Step 2 – The Upfront Agreement.
The purpose of an upfront agreement is to agree that, at the end of the meeting, the seller will give you a yes or no answer as to whether they’re interested in pursuing the sale – and you agree to do the same. Basically you and the seller consent not to waste each other’s time.
Your leading question is:
Where is a good place for us to sit so we can discuss this through?
Then you pull up a couple wicker chairs, or wherever else the seller wants to sit you, and talk over glistening glasses of lemonade.
Sit down and present the agreement like this (there are three parts, listen up):
Mr. Seller, I don’t know if what we discuss is going to make sense for either one of us, but if we talk things through and you determine it’s not a good fit for you, will you please be straight with me and just let me know before I leave?
They always say yes. Then, part two:
Great! On the other hand, though, if what we talk about does make sense to you, and it’s a good fit, will you let me know that as well?
Again, they almost always say yes. Then, part three:
Just so you know, I’ll extend you the same courtesy. I promise to let you know when we’re done today if I want to move forward or not. All I ask is that you do the same. Is that fair?
The goal is to get a yes or a no at the end of the visit; you are not collecting maybes. That is your mindset, okay?
Step 3 – Establish the Seller’s Motivation.
You’ve got to know what the seller truly needs. Are they a motivated seller that NEEDS to sell? Or, are they just a seller that WANTS to sell?
To discover the seller’s motivation start by asking:
So what were you hoping I could do for you here today?
9 times out of 10, they’re going to say: “Buy my house.”
When they give you that answer, you pull out your seller questionnaire.
You pull out the questionnaire and say:
Great, in order for me to do that for you, I have a series of standard questions I need to ask you. I read them right off this paper to make sure I don’t miss anything. I don’t want to forget something that might cost you an opportunity or cost you some money. Is that okay?
Now you’ve gotten their permission to ask some potentially intimate questions about them, their finances and their property (Collectively, the answers to these questions will reveal the seller’s motivation). However, don’t act like an outsourced call center robot when you go over these questions. This is another chance to build rapport, so take your time.
Step 4 – Money.
Oh boy, you’re in it now!
The leading question here is:
So, what do you want for your property again?
Very casual, very nonchalant.
Got it. So what were you realistically expecting to get?
Then shut up and listen. 90% of the time you’re awarded a price reduction without even asking for it.
Step 5 – Terms.
Understand that the price doesn’t matter as much as the terms. You want the seller to be open to your terms.
I don’t know if this is going to make sense to you or not…
This is a release statement, all it does is give the other person the option to say no so that they will feel more comfortable in saying yes.
Then you might continue with something like:
Quite honestly I don’t even know if I could do it, but what if I were to make payments for a period of time and at some point down the road I completely cash you out of the property? Is that something we should even talk about or probably not?
Then CLOSE YOUR MOUTH. Do not speak. If you speak first here, you lose. The aim is to get a verbal commitment from the seller that they like what you’ve proposed without formally presenting them with an offer.
If you get an acceptance to that, then the party really begins.
Now you’re in a position of power. Now you have options. Now you can begin to pin down the terms and price of the deal.
Has the importance of courting the seller hit home yet? If you skip these steps, you will never get the terms, price, or deal you could have gotten.
You might not get any deal at all.
Remember, real estate investing is about people. It’s not a clinical science. Now go out and dance with some motivated sellers.