IC E Lesson: Top Tips for Negotiating with Sellers
Negotiating with Sellers
Beginning investors have a tendency to get stressed out by the very thought of “negotiation”.
They put off calling sellers (or calling them BACK) for days and days. They worry about what the seller might say and what they should say back to the seller.
It’s as if they believe that something they could say to the seller—or fail to say—would make that seller motivated or not motivated.
The truth is, sellers come to you already motivated or not motivated, and what YOU say doesn’t change that one way or another. And since that very important fact is completely out of your control, that means that the only thing you actually need to worry about in a “negotiation” is
- Building rapport
- Getting the information you need
- Protecting your time
To that end, there ARE some things that experienced real estate entrepreneurs do, and do consistently, to maximize that chances that any given seller negotiation will be a successful one.
- Balance your need to get the information quickly with some emotional intelligence. If you really want to make deals, your need to separate the prospects from the suspects quickly and effectively must be balanced by an ability to listen and really HEAR what the potential seller is saying.
Remember, Many folks who have ugly junker properties have also had ugly things happen to them. Being so anxious to get to the price that you aren’t polite or sympathetic or human will engender immediate distrust in your seller. I’ve watched many, many deals crash and burn because the investor was too focused on the data and not paying attention to the person, and a conversations like this resulted:
Wholesaler: “Why are you selling the property?”
Seller: “It was my son’s, and he died of cancer last week”
Wholesaler:“And how much would you take for all cash and a quick closing?”
- Do what you can to make the seller comfortable and start to build some trust. Although YOU know you’re a nice person who isn’t out to rip anyone off, and although YOU know how the process of buying the seller’s house is going to work, the SELLER has no idea who you are or what you’re going to do. And although being businesslike is good, many of your sellers will be intimidated by a very aggressive, let’s-get-to-the-point attitude. Therefore, it helps to: a) exchange pleasantries and, b) explain a little about what’s going to happen. For instance:
Seller: “Yes, I’m calling about an ad I saw that says you buy houses.”
You: “Yes! Thanks for calling. What can I do for you today?”
Seller: “Well, I have a house I want to sell.”
You: “Great! If it’s OK with you, I’m going to need to ask you some questions about the house, and if it sounds like we can work together, I’ll come out to see it today or tomorrow. Does that sound alright?”
- Internalize this philosopshy: “I’m here to help”. If you really believe that, and really strive to make sure that every seller who calls you ends up better off than if he hadn’t, your entire approach to “negotiation” will change. Instead of being primarily focused on how you can get the seller to accept your price, you’ll be primarily focused on how to help the seller reach his goal.
What does this look like in the context of a real conversation with a seller? Well, with unmotivated sellers, you’ll quickly discover that their goal is to sell for full price and all cash. Help him do that by suggesting that he list with a good agent, and then help him by ceasing to waste his time by talking to him.
With motivated sellers, the primary goal is to get the property sold fast and easily. Tell him exactly—with numbers attached—how he can do that, and why he SHOULD do that.
You’ll be amazed at how often this attitude MAKES deals for you.
Sellers who are disappointed by what they hear will still thank you for the information you’ve shared with them.
Sellers who’ve already thought of and tried, or discarded, these options will often just agree to take the price you can pay when they hear it all laid out for them.
And still more will come back to you in a few weeks saying, “I got a bunch of other offers in the same price range as yours, but I want to work with you, because you were the most helpful person I talked to.”
- Don’t play with hostile sellers. Occasionally, you’ll get a call from a seller who doesn’t want to answer ANY of your questions—he just wants you to “come out and make an offer.” In fact, about twice a year, I talk to a seller who’s actually HOSTILE about this—who gets mad and says something to the effect that, “I’m not gonna answer all these B___S___ questions. If you’re interested, you’ll come out and make me an offer.” Never, never, never fall prey to the temptation to do this. I guarantee you that a seller like this isn’t motivated enough to take your offer, and will be even more angry when he hears what it is. The last thing you need in your life and your business is to deal with hostile, negative people anyway. When you get a call from someone who’s awful like this, just get off the phone, assume their problem has nothing to do with you, let it roll off your back, and move on.
All the reading about seller negotiation in world isn’t going to help you master it, though. You know what will? Practice. And right now is as good a time as any.