One of the common complaints investors across the country share with me is that they talk with a seller who sounds motivated on the phone but turns out to be a dud when they go meet with this seller.
Let’s look at the ways you can make sure the sellers you meet are the best use of your time.
Screen, but don’t over-screen
First, understand that you will never GUARANTEE yourself that you will only meet with motivated sellers unless you are willing to make a whole lot LESS money. Does this seem contradictory to all the strong pushes I have made in the past to only work with motivated sellers?
Here is what I mean. You will always be more effective negotiating deals face to face than you will be over the telephone. In person you have the ability to create rapport and an emotional connection with the seller which is a hundred times harder when talking over the phone.
I sincerely believe that you must qualify sellers carefully, but not so carefully that you screen out everyone who isn’t an ABSOLUTE deal. It’s because 50% to 70% of the people you talk with that might be ready to sell to you at very good price and/or terms WON’T be 100% visible to you over the phone.
For example, in a moment I will share with you a script for qualifying sellers over the phone. One of the questions will be, “What is it that you owe against the property?”
Usually if the sellers are motivated, they will be more than willing to share the answer with you. If they are unwilling to open up and answer, this often indicates that they aren’t as motivated. BUT this is NOT a hard and fast rule.
On one rental property I called the seller (from a “for rent” ad the seller had placed in the paper), and I asked this question. The seller said he didn’t feel comfortable telling me that on the phone.
I could have taken this to mean I should cancel my appointment with him. I am glad I didn’t. I ended up with a ten-year lease option on the condo for a price of $110,000. Three years later, that same condo is worth $165,000 and climbing!
The bottom line is that you should screen, but not so harshly that you screen out all of your possible deals. It is a fantasy to believe that in a ten-minute phone conversation you can ever KNOW with absolute certainty who is ready to sell at the right price and terms and who isn’t. My belief is that you would do well to error on the side of seeing more sellers than fewer.
All that said here is exactly how I re-qualify sellers I plan on meeting with to make sure they really are ripe for me to meet with them. I like to re-qualify on a second phone call versus completely qualify on the first phone call.
I typically do a quick sort of people who have properties for sale or rent working through them quickly to set several appointments for later in the week. Then, in a second phone call, I spend focused time with the few sellers I have appointments with doing my final screening.
I like doing it this way because on OUTBOUND calls I make to people with for sale or for rent properties I work VERY quick to do my initial sort. It slows me down too much to try to do this initial sort AND to catch myself to slow down and do a deeper qualification with the 5-10% that merit a closer look.
Two quick points
ONE: My partner, Peter, prefers to do everything I do in one phone call. He feels comfortable BOTH quickly sorting through sellers/landlords and then taking the time to go deeper with the ones he sees as worthy of spending time with.
If this is how you prefer doing things, then you should use the ideas I will share on re-qualifying sellers at the end of your first call with the seller rather on a separate second call. Both work fine, I am merely sharing with you how I like to do it.
TWO: On calls I make to sellers who have called me off of my ads and other marketing campaigns, I almost always do my deeper qualification on my first call to them.
I use the re-qualifying call idea when working with sellers/landlords I am calling straight from THEIR ads they have in the paper or signs they have around the neighborhood.
Sample re-qualifying call script
[Note: This script assumes that you already have spoken to the sellers on an earlier phone call, talked with them for at least three to five minutes, and set up an appointment to meet with them.]
Hi, this is ____, I was just calling back to double-check my directions to meeting with you tomorrow. It sounds like I caught you in the middle of something?
Oh, okay, well if you can just give me the zip code of the property, I am sure I’ll be able to look it up in my map book.
While I have you on the phone may I ask you a couple of questions?
What’s the square footage of the house [or some other harmless question that gets the seller comfortable answering questions and warmed up to talking with you about the house.] How many bathrooms did it have again?
And what was it that you owed against the house, roughly?
And your payments are? Best guess?
Does that include the real estate taxes and insurance?
Now I know you told me on the phone before, but why was it again that you were selling the property? [scrunching up your face over your brow and under the inside corner under your eyes to get the right tonality–called “scrunchy face”]
And when did you want the property handled, six months? Twelve months? Ideally when did you want the property handled?
Oh Okay, that makes sense. A question for you [scrunchy face and softer voice] what were you planning to do if you didn’t sell the house right away? What was your back-up plan?
Had you ever thought about just renting it out?
If they answer yes–
What do you think it would rent for?
If they answer no–
I know you don’t plan on renting it out, but if you did rent it what do you think it would rent for? This just gives me a better idea of the value of the property.
[At this point go back and make sure you build some more rapport with the sellers. Ask them about their families or hobbies or anything else you can get them to talk about that they genuinely enjoy and you can sincerely be interested in them for.]
Now go back and ask the following questions:
Now who else besides you is on title to the property?
[If they are the only ones skip the next questions about getting all the legal decision-makers to the property for the appointment.]
Obviously, we’ll need to have ALL of us meeting ___[day you have appointment]___ at the property just in case we find it’s a fit, and I decide I want it. I just want to make absolutely certain that you and ___[other people on title] are all going to be there. Are you all?
[Ask a few rapport questions again, even trying to include the other owners, so you can gather some information about them that will help you connect faster when you meet with them at the property.]
Great I’ll see you (and ___[other people on title]___) on _____ at _____am/pm. Have a great day.
Is it time to meet the sellers face-to-face?
From the answers to these questions you should be able to determine whether or not the seller is BOTH motivated and has the right situation where you can help them and make a profit.
Motivation means two things:
A compelling reason to sell
Time pressure to do it fast (usually 60 days or less)
Situation means one of two things:
Enough equity for you to get a great cash price
Seller NOT needing their equity (or at least all of it) out when you buy it from them. This means they could be flexible on the TERMS of the sale.
If the seller shows both a fit in motivation and situation, I would recommend that you meet with them. If you are left with a sense that they really aren’t motivated, then either cancel or delay your appointment OR throw them a trial offer right there over the phone to gauge their reaction.
For example say:
Mr. Seller, I don’t know if I could do this, but what if I was able to cover your $1,400 per month payment for a while and down the road the road I cashed you out of the house at say, $177,000-178,000 is that something that we should even talk over when I come out to meet with you and see the house, or maybe not?
If the sellers say yes, follow up that question with:
I’m curious. What about me covering your payment of $1,400 per month and cashing you out at the $177,000-178,000. Would that even be a fit for you?
By this point you should know if they are worth investing your time to go and meet with them.
I hope this game plan for re-qualifying sellers helps you best use your time and close more deals.
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