Here is a great tool that works for buying and selling, but we’ll concentrate on just the buying side.
First, you must realize that all sellers have a problem. They need to sell a property to get something they want or to get away from something they can’t afford. You can create motivation–not always, but a good bit of the time–by acting as a counselor on their behalf.
You do not need to bedazzle them with your knowledge of creative real estate terminology. They are not well-versed in this field, nor do they wish to be.
Instead of saying, “We would like to do a wraparound mortgage,” or “We will buy your home subject to,” you would say, “We will create another paper to make sure you get all your money,” or “We will take the burden of those monthly payments away from you.” Instead of saying, “We will pay off you arrearages,” you would say, “We will make up all the late pays.”
If you have sellers with bad credit, and they are behind on their payments and facing foreclosure, which sounds better? “Mr. Client, we will do a ‘subject to,’ the loan will stay in your name, and sometime down the line, if the new buyer doesn’t screw up like you did, the mortgage will get refinanced.”
Or, “Mr. Client, we will pay up your late payments and make sure the payments are made on time. Not only will that stop the bank from harassing you, that record of on time payments before the new buyer refinances will look very good on YOUR credit.”
Use benefits to convince the sellers
Remember to always be closing and always use words that show the benefits to the sellers. What are the benefits to the sellers?
- Speed: The problem can be solved now. No waiting for an agent to bring (or not bring) offers.
- Peace of mind: The property is sold, and now they can move on with their lives.
- Credit: A timely record of payments always looks good, especially one the size of a mortgage.
- Capital gains: This is especially true for older sellers. They only pay the gain, as they receive it.
- Interest: They get additional interest instead of getting 2% at the bank. (Apply to their greed factor.)
- Better price: Terms always net the sellers more than an all cash offer. (Show them a cash offer.)
- No agents to pay
- No landlord headaches
- No holding costs: If they hold the property for six months for a better offer, what will they net? How far will the mortgage balance come down? How much better will the offer be? How much in monthly payments, insurance, and taxes? How about that big fat commission? Will that house they want now, still be available?
- You are here now. What happens in six months if you decide to take my offer, but I already have enough properties to keep me busy for now?
Handling the sellers’ objections
We are trained as consumers to hate any type of sales presentation, and as a society, we have developed some pretty sophisticated defense mechanisms. It is our job as investors to break down these barriers and get the seller to say yes.
There will be objections. If there aren’t, you better watch out because something is wrong. When the sellers voice an objection, stop whatever you are doing and address the issue. It will not go away.
I almost always address objections in this manner: “That’s a great question; we get asked that a lot. I always get worried when someone doesn’t bring that up. That means you are paying attention. The reason why we do things this way is…” or “This allows us to do business now.”
Notice that you are complimenting the sellers for being intelligent. Flattery, if not abused, will get you everywhere you want to go. Flattery is the velvet over the handle of the hammer.
With objections, always be honest and up front. It is not a deal killer if a sellers object. I always ask the sellers if they understand before I continue. I will also ask if they want me to go on because if their objections are insurmountable, I need to know as quickly as possible, so I can go on to the next deal.
Here are some very important words to close a deal. If the sellers have a small objection that you know you can handle ask (memorize this): “If I could would you?” These are the five most powerful words in negotiating. They do not offer an out if you concede to their point. They create a win/win situation.
Finally, when you finish the presentation with an offer, end with an open-ended question: “When would you like to close, two weeks or the first of the month?” Don’t ask a yes or no question. Don’t ask, “Is this OK?” Always assume the close, and you will close more deals.