The Most Common Roadblock When Negotiating With Sellers

Consider These 4 Points Before You Buy and Hold
March 21, 2016
The 70k That Got Away
April 4, 2016

“What is your offer?” “How much are you going to offer me?” “You were the one that contacted me saying you want to buy my house, so what is your offer?”

 

How many times have you spoken with a seller over the phone and the conversation sounded just like that one?

 

If you have been speaking directly with sellers over the phone, which called in response to one of your direct mailers, I am absolutely sure that you have encountered this scenario.

 

One of the most widely known rules of negotiating is “he who says a number first loses”. Many sellers are very aware of this and will try as best as they can to keep from telling you a number.

 

The big hurdle is that if they do not give you some kind of an idea of how much they want for their property you may be wasting a great deal of time by doing your due diligence and coming back with your offer.

 

You may put a good 30 minutes to an hour into analyzing a property and coming up with an offer that works for you only to find out it is about $50,000 off of what was acceptable to the seller. Not only that, the seller is now livid that you just insulted him/her with such a low offer.

 

Since this scenario is one of the most common ones that takes place when speaking with sellers on the phone, I decided to dedicate this entire post to tips on how to overcome it.

 

You Solicited Me. Tell Me What Your Offer Is

Many sellers just want to know what your offer is and that is it. They do not want to mess around with talking about the characteristics of the property and answering your questions. All that they want to know is how much you are going to offer them.

 

The best thing to do in this case is really to put the breaks on. You must slow this conversation down and change the direction of it. Do this by first acknowledging their desire for you offer.

 

Say something like this:

 

“I would absolutely love to give you an offer on your home but the last thing that I would want to do is insult you with a blind offer, not knowing anything about your home”. “You can understand that right?”

Next, I would let them know how your process works. I typically let them know that the first step for us is to find out a little more about the property and their situation. Then, we will do a market analysis and within about 24-48 hours we are able to give them an all cash offer.

 

By stating that it typically takes you 24-48 hours to determine what your cash offer is, you are basically letting them know that you do not know how much you want to offer them yet.

 

Get the Seller To Open Up

Our job when speaking with sellers over the phone is to get them to let their guard down a little and open up.

 

The best way to get a seller to open up is by being conversational and asking great open-ended questions. Make sure that your questions begin with “Who, What, When, Why or How”.

If you ask a seller closed ended questions you are most likely going to get a simple yes or no with out any elaboration. This will end up more like an interrogation/interview than a conversation.

 

You must find a way to build some rapport. If they mention anything that may be a “hot point” to them, find a way to revisit it or keep the conversation there for at least a few minutes.

 

F.O.R.M- Family, Occupation, Recreation, Motivation

Remember this acronym. This will help you to remember the most important aspects to focus on when building rapport.

 

It may be difficult for you to bring these topics up first but if the seller mentions first then you tailor some of your questions around those topics.

 

The Unbreakable Guard

Let’s just face it. There will be a percentage of sellers that have an impenetrable wall placed in front of them. We can try until we are blue in the face, but they just will not open up and give you any information. All they want is your offer.

 

When this happens you still have a few choices. The first route is along the lines of what I mentioned earlier. Doing your due diligence then coming back and giving a verbal offer to the seller. The success rate of this method is very small.

 

If you are going to make a verbal offer without having a clue of how much they are looking for (or if you know and your offer is going to be way off of their asking price), it is important to soften the blow.

 

In my earliest years of investing I angered a good deal of sellers with my offers and received quite a few hang-ups. To avoid this, I say something along the lines of “I really think that my offer is just going to be too far off of what you are looking, and you may even hang up on me when I tell you”. By stating it this way it really helps to soften the initial shock.

 

Sometimes I will even give a quick breakdown of how we determine our offers. “We figure out what the home can sell for once looking brand new, then we subtract out all of our costs, which include: real estate commission when we resell, closing costs, repair costs, the costs of our private money used and factor in our profit as well”.

 

What may help to increase your success rate if going this route would be to send an email that supports your reasoning for the offer. Include recent comps, the breakdown of your numbers and even information to show that your company is credible.

 

If you are in a position where you just do not have very many leads, it may be worth putting the effort in to analyze the deal and create a supporting email with your offer.

 

If you are swamped with leads and low on time, you may just want to put this lead to the way side and concentrate on others where the sellers are opening up a bit.

 

 

Getting the Seller To Mention a Number

Arming yourself with great questions and statements that you can use when speaking to sellers is key.

 

If you know that the biggest obstacle is getting the seller to mention a number, prepare for that ahead of time. Have a few tactics in your investor’s tool belt that you can use throughout a call.

 

Ask in one way early in the call and if it fails, come back later after getting them a bit more comfortable with you and ask again in a different manner.

 

Here are a few methods of getting an idea of what is acceptable to the seller:

 

Market Value

Start off with asking them if they have a rough idea or ballpark idea of how much the home is worth as it sits. You are not asking directly how much they want for the house yet. You are just trying to see if they have rough idea of what it is worth.

 

Listed Property Method

Use this if they didn’t want to tell you how much they want for the home the first time. “Mr Seller, If I was to pull up any home right now listed on the market there would be an asking price”. “The reason for that is to have a starting point at which to begin negotiations”. “Does that make sense?”

 

The Prophecy

Let the seller know that withholding how much they would like to get for their home they are not helping the situation. “Mrs. Seller, you know your house and your situation much better than I do”. “If you are not able to give me an idea of how much you are looking for, I am just going to shoot low which is only going to make you angry”. “So, rather than that happening, why don’t you at least give me a rough idea of how much you are looking to get out of it to save us both time?”

 

The 180

If the seller will not budge on telling you how much they want you may be able to find out what is not acceptable to them.

“Mrs. Seller, the last thing that I would want to do is waste your time or my time by doing a market analysis and coming back with an offer that is too low for you”. “That being said, what price would you not accept?”

Many times the seller will actually state a number, which is too low for them, and this is often close to their bottom line.

 

Make sure to practice these questions and statements so that you are prepared the next time this scenario comes up.

 

Don’t get discouraged if you just can’t get them to open up. Some will. Some won’t. So, what! Move on, and keep practicing.

 

I hope that this post was very helpful to you. If it was, please share with someone who you think may benefit from it. 

Here’s to your success!!!


 

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