Deal Control
by Tod Snodgrass
If you are an experienced Real Estate Investor (REIer for lack of a better term), i.e. rehabber, wholesaler, flipper, etc. you know all too well how important it is to keep a constant flow of deals coming your way in order to survive. That means meeting with property owners, either on a direct basis, or through an agent/broker.
For those who are new to REI, it is really important to learn early what works (and what doesn’t) when it comes to trying to influence the homeowners who you come in contact with. The truth is, many if not most do not really want to sell the home they have lived in for many years. But the fact that they must move is a situation that probably existed well before you found yourself at their door.
Mixed Reputations
The way that previous REIers conducted themselves (the reputation of those who came before you) can be problematic. For example, there’s a REASON that many used car dealers, have a dicey reputation. Many have justifiably earned all the negative press they’ve received as a result of previous bad behavior.
The same can be said of at least some REIers. Unlike real estate agents & brokers, title insurance companies, escrow officers and appraisers who are regulated by state agencies, REIers are an unregulated bunch. It does not take many bad apples to impugn the integrity of a whole barrel. You better believe that those with mal-intent and bad actions can poison the well for those who follow, for a long time.
So, how to make it better for yourself and your reputation? Start by differentiating yourself from the “other players” and instead put on the semblance of a guy wearing a “white” hat and be as honest and forthright as you can. For example, draw comparisons between yourself and bad actors out there by calling THEM out, and telling your seller that you are not like them. YOU do things differently. YOU offer assurances, money back guarantees, etc.
Some cynics call this an “honesty pitch”, the implication being that it is somehow disingenuous to “tell it like it is” by being transparent, as opposed to “what is it going to take for me to fool this owner into selling me his property cheap”. Homeowners who need to sell often find themselves in that position through no fault of their own. They did not ask to be laid off, or get injured, or sick or. But the fact remains that they ARE distressed and need help.
Here are nine things to consider as you venture forth to help those who need it
1. Be prepared to listen to whatever the seller has to say. Could be a few minutes, might be over an hour. If you are prepared to hear them out, they will eventually see you as an ally, someone who really wants to help. Once you achieve that magic breakthrough, the real deal often can and will flow after that.
2. Find out what they REALLY NEED as opposed to what they say they want. Invariably there is always SOMETHING, that they need more than anything else.
It may be cash for keys, or a bigger EMD (Earnest Money Deposit), or a higher price, or bigger monthly payments, or? Your job is to essentially play detective and keep digging until you find out exactly what it is they need.
3. Don’t make promises you can’t keep. If you come up short on even a minor commitment, your credibility could very likely get trashed; and in terms of getting a deal to happen after that…well as they say in New Jersey: just forgetaboutit!
4. Have a common-sense set of options available for them to choose from. Avoid asking questions that require black and white, all or nothing answers. Instead try to offer a range of options for them to choose from: Not…do you want to do this deal or not? Instead: Would you like more money down or more income per month? Would you prefer escrow to close in 10 days or would 20 days be better?
5. Minor point closing. Smart closers ask the homeowner a series of questions that can easily be answered with a yes. The end result should equal a closed sale. This baby step process has to be carefully nurtured and cared for over the span of time with the potential seller. Move from minor point to minor point, getting tiny but significant commitments along the way. After a series of 27 yeses, it is unusual for them to suddenly spring a big “NO” on you.
6. Sell through the “No’s”. Amateurs see an objection from a seller as bad. Professional closers recognize that a No is when the sales process can begin. Be prepared to work through a series of issues. Your job is to remove those problems one by one. Once all the objections have been dealt with, THAT is the time to start/resume minor point closing the seller in order to move towards closing the deal.
7. Remove any remaining problems that still exist. There are often problems with the condition of the house, the state of the seller’s marriage (divorce), the owner’s physical condition, etc. Each problem cries out for a solution. Until each of the problems is resolved, the sale cannot occur. Keep probing to discover what is causing the seller to not say yes. Eventually, through a process of discovery, you will find out what is really at the core of the issue and you can deal with it once and for all.
8. Anticipate objections, as much as you can. Rehearse answers to standard questions. If you have done your homework, you can often get a head start on what is really on the sellers mind. This information may come from public records, the MLS, through a friendly agent or broker, other sources, including neighbors. The more info you can garner in advance as to what the seller’s real problems are, the better prepared you will be to offer solutions.
9. Last but certainly not least, there is an old business saying: Control the deal or the deal will control you. By being friendly but assumptive, using minor point closing, finding out what the seller needs, listening to their complaints, etc…all of these things are positive indications that you are in control of the deal. Whenever you feel that control slipping, resume asking (minor point) questions until you have dealt with all their objections, and gotten to the core of the issue, thereby again reasserting control over the sale. After that, a successful purchase contract agreement should not be far off.
