Getting Deals Under Contract

Transcription

1 Getting Deals Under Contract We are looking for motivated sellers. Motivated sellers are property owners who simply want to get rid of their property and are willing to do just about anything to make that happen. The outward expression of their inward motivation can be expressed in many different ways. If the seller has little or no equity, a sign of a motivated seller is someone who is willing to walk away from their property with no money in their pocket. If the seller owns the property free and clear, one sign of motivation is if he/she is willing to sell their property for a fraction of the value, or another is if they are willing to allow owner financing. In some cases, a simple sign of motivation is simply a person who is very open about their situation and is ready to make a decision immediately. Motivated sellers use phrases like, I just want to get rid of this thing, and other comments which indicate that they just want out of the property and are willing to do whatever it takes to make that happen. The next chapter will describe in much greater detail how to distinguish a motivated seller from an unmotivated one. We Cannot Create Motivation It is very important to understand that we cannot create motivation in a property seller. Our goal is not to create motivation in someone, but instead, to locate already motivated sellers. You will be relieved to learn that success in qualifying sellers is not determined by your superior selling skills. In fact, selling an owner on why they need to sell their property to us a waste of our time. As soon as the excellent sales pitch wears off, the seller will want out of the contract anyway. Your goal, then, is to determine which sellers are motivated and which ones are not. The Right Type of Motivation Once you sense that a seller may be motivated, you must then determine the source of that motivation. Is is coming from something external to the property itself? For example, if a property owner is going through a divorce and the property must be sold as part of the divorce decree, the motivation to sell has nothing to do with the property and is therefore external. On the other hand, if a property owner is frantically trying to sell his property because they are building a public dump across the street, the source of motivation is the property itself. Motivation external to the property is usually a personal problem that is forcing the owner to sell. When the source of an owner s motivation is originating from personal issues, this allows us to both help the person while also picking up a great real estate deal. The best type of motivation has nothing to do with the marketability of the property and has everything to do with the seller s personal issues. Here are a few examples of circumstances that can create the right type of motivation in a property owner.

2 a. Divorce: When a couple separates, part of many divorce decrees stipulate that the real estate that is owned jointly must be sold. However, some divorces do not require an immediate sale but since a two income household is usually reduced to one, it usually forces one party to cover the entire mortgage payment and all utility bills. In this scenario, the payments usually begin to fall behind forcing both owners to either sell the property quickly or risk foreclosure. b. Relocation: Job opportunities tend to emerge with very short notice forcing many owners to sell immediately or jeopardize losing a great new job. Many owners are willing to walk away from their property for less because they may be earning a substantial amount more in income with their new job. c. Financial Problems: Financial problems can affect individual owners as well as large organizations such as banks or other lending institutions. Job loss, medical bills or excessive debt can flatten an individual and force them to sell their assets in order to stay afloat. When a person lives paycheck to paycheck, one large medical bill or one month off of work can force an owner to fall behind on payments without the capacity to catch back up. For larger organizations such as banks and other lending institutions, if their internal financial picture begins to implode, they may accept lower than usual offers just to get their real estate off their books. d. Purchased Another Property: When an owner contracts to buy a new built property, he/she is typically required to put down a non-refundable down payment to a builder. If their current property does not sell before the scheduled new built property closing date, many times the owners have no choice but to follow through with purchasing their new property or risk losing a sizable non-refundable down payment. Then, they are forced to make double payments. Eventually, one of those payments may begin to fall behind and this situation can trigger an owner to become extremely motivated.

3 Talking to Sellers Every time you speak with a seller, you want to handle the call using the same process. Here is an audio training that gives an overview of how to talk to sellers. How to Talk to Sellers Audio Training Listening Online: Download Link: Talking to Sellers Rules of Thumb Ask Questions and Listen: Your primary role on any call with a seller is to ask questions and listen carefully. You want to be a reporter, not a broadcaster. Speak as little as possible, avoid answering a caller s question with a long answer and end everything you say with a question to maintain control of the conversation. When answering a caller s question, avoid going into detail and use I don t know instead of giving out potentially incorrect information. Do Not S ound Scripted: Let the conversation flow naturally, Certainly you have a call process, a set of questions you need answers to, but you don t have to force a caller to follow your exact order. Let the person talk and in many cases, they will answer some of the much needed information without you even having to ask. You want the seller to feel like he/she is talking with a human being, not a scripted robot. This includes allowing the seller to talk at his/her own pace, not interrupting a seller in mid sentence and overall, letting the conversation flow based on what the seller is saying. If the seller begins talking about his/her mortgage information at the beginning of the call (even though mortgage information is at the end of the standard set of questions), ask as many additional mortgage questions as you can. Allow the call to diverge from your standard order of questions if the caller takes the conversation in a new direction. Use the order of the questions as a guideline in which to base the flow of the conversation, but do not feel you must maintain a strict adherence to it. Let the conversation flow naturally. Interview Posture: Many sellers will call with the goal of getting you to offer them a price for their property, as if they are interviewing us to see whether or not our offer is going to work for them. In fact, many sellers assume that the way we operate our daily business is to drive around all day looking at properties and making offers to sellers. Perhaps other investors do that. We don t. We are interviewing the seller to see if they are going to be a fit for us. Further, many sellers are used to working with real estate agents and typically real estate agents sell themselves to their

4 clients. They will come over to the person s house, bring a presentation folder and then proceed to try to sell the person on why they are the greatest Realtor in town and why that seller needs to work with them. We don t do that either. The seller needs to sell us on why we should try to help them out. Always B e Assessi ng Motivation: Why a person is selling their property is far more important than the number of bedrooms or the size of the land. Sometimes the caller may be unwilling to tell you why they are selling early in the call, and you will have to build rapport over the course of the call for them to feel comfortable enough to divulge their true motivation. In other situations, the caller will tell you why they are selling before you even ask. In addition to following the call process, asking soft questions in the beginning and then building up to harder questions like Why are you selling, during the call, you should also always be listening for certain motivational cues that will reveal what that seller is thinking. The following are the most common cues: o The caller says, I just want out, I don t care about making any money, or, At this point, I don t even want to make anything from this, I just want it gone. o They allow you to ask the questions without frequent interruptions or back talk and they answer those questions without an attitude. o You can literally hear the pain that the property is causing them in their voice. o The caller says, I don t care how, so long as I can get out of this property now. o The caller asks, How long does this take? or How long will I have to move?

5 Seller Qualification Call Step by Step As has already been introduced, as opposed to having a word for word script, instead, you will have certain questions that need to be answered. They can be answered in order, or in some cases, the seller may answer some or many of the questions without you having to ask them. There is a rhyme and reason to the order of questions though. They start off soft and simple so that you can establish control and authority on the call as well as build rapport with the person. Then, as you get the person talking, answering your questions and talking about their situation, then you begin to layer in more personal questions. The way to work this is to think in terms of sections of information. Each section can be launched in the conversation by a single question. For example, when launching into the Listed section, ask the question, Do you currently have your property listed with a real estate agent? If they say, No, you can move to the next section. If they say YES,, then you can drill down with more questions from that section. The flow of sections are as follows: ADDRESS: Can you tell me where the property is located? OWNERSHIP: Are you the only owner of the property or is it owned by you and another person? LISTED: Do you currently have your property listed with a real estate agent? - List Price - Listing Expiration - Relationship with Agent OCCUPANCY: Are you currently living in the property? - If tenant occupied, how much is the rent? PROPERTY: Could you tell me a little bit about the property itself? - Property Type (Single Family Home, Condo) - Beds, baths, square feet - Condition (perfect, needs a few things, needs some work, etc) MOTIVATION: Sounds like a nice property, why would you ever consider selling it? - When do you need to have this sold by? Why? - What happens if they don t sell it? WANTS: What are you hoping to accomplish as a result of our help? LOAN: How much do you owe on the property? - What is the total monthly payment? - If two mortgages, what is each loan amount & monthly payment - Are they current or behind on payments?if behind, how many months? - Any HOA monthly fees?

6 Anatomy of a Call Now that you have a broad overview, let s go into the inner workings and details of a call. The Beginning This is going to vary greatly depending on where the lead is coming from, how much time has elapsed since the lead was originated as well as what type of lead it is, but here are some general guidelines on starting the call. Inbound Call When a seller calls in, here s a good way to answer and start the call: YOU: Good morning/afternoon, this is (your name). pause, let the person introduce themselves. Caller: Hi, I was calling about selling my house YOU: Great, what is the address of the property you are looking to sell. or Caller: Hi, I was calling to see how your program works YOU: Are you looking to sell you property? Caller: Yes. YOU: Great, what s the address? Caller: 123 Elm St YOU: By the way, in case we get disconnected, what is the best number to reach you back at? Is that a home or cell? Outbound Call When you are either returning someone s voic message or responding back to a webform submission, here s a good way to start the call: YOU: Hi, this is (your name); I m getting back to you (returning your call) about your property over on Elm Street. Have you already found a buyer or are you still looking for someone to purchase your property? Caller: No, not yet. Who is this? YOU: This is (your name), you had (gone online or saw a sign or responded to a letter) and was looking to sell your property. Is the address, (dictate the address on the lead)? YOU: And did I call you on a home phone or cell phone? NOTE: If the seller won t give you the address, politely let them know that you will be unable to assist them without one. If they still won t give, they probably aren t a seller. It s the first indicator that this isn t an authentic lead. If they legitimately wanted to sell their home, they would be readily give their address. Instead, they may be a competitor, family member of another seller we are working with, or who know who? Getting an address is a great initial screen.

7 OWNERSHIP Are you the only owner of the property or is it owned by you and another person? If the seller is the only owner, you have covered upfront a very important piece of the puzzle. Talking at great length to someone who is not the owner is almost always a huge waste of time. You d be shocked how many investors eat up large chunks of time communicating with non-owners. On the other hand, if there is more than one owner, it is here that you can dig down and learn who all the partial owners are and where they stand on the sale of the property. LISTED So, do you have the property listed with a real estate agent right now? This is a very non-threatening question that really opens up the conversation. It is absolutely critical for us to know upfront if the property is listed because it can completely change the potential exit strategies we can employ. Further, if the house is listed, you can learn how much it is currently listed for, when the listing expires, why it hasn t sold and what the seller plans to do with the agent. If it is for rent, you can find out how much they are asking for per month and why a tenant hasn t moved in yet. Regardless of the answer to the first question, follow up with this question, How is that going for you? Obviously if it was working they wouldn t be reaching out to us. This is a great way to get them thinking rationally about what is NOT working. If it is listed, you can ask what it is listed for, how long it has been listed, when the listing agreement expires and why they think they haven t found a buyer yet. OCCUPANCY Are you currently living in the property? Vacant properties create excellent opportunities in many different ways. If it is still occupied, asking the seller about their move out plans can be a big indicator as to their motivation. Someone who has already begun searching for an apartment is usually more motivated than the person who hasn t even begun to think about moving. If the property is occupied by tenants, you can then ask more questions about how much they are paying each month and when their lease(s) run out. PROPERTY

8 Could you tell me a little bit about the property itself? This will usually be the question that sets the seller on a long diatribe about how great their property is. Take great notes but make sure you at least get the following: Property Type (Single Family, Condo, etc), Number of Bedrooms and Bathrooms as well as the Square Footage as well as what they perceive the condition of the property to be. You can get a more accurate answer to the condition question by asking, If you were walking into your property for the first time and considering buying it to move into, what things in the property would jump out at you that need to be fixed before you would move in? MOTIVATION Sounds like a nice property, why would you ever consider selling it? This question is the most critical of all. The reason why this question should be a few questions deep into your conversation is because asking a number of nonthreatening questions softens up the seller to express this highly sensitive question in greater detail for you. In fact, you may have to ask this question more than once to finally get the real reason why they are selling. Plus, understanding not only WHY they are selling, but also when they need to sell it by and what they plan to do if the property doesn t sell, really helps you determine what you can do for the seller. A motivated seller who has to sell immediately and wants us to take the property off their hands prior to a foreclosure opens up our options tremendously. A seller who is in no hurry, is selling so that in the future they can upgrade to a larger property and wants a minimum of $40,000 in their pocket from the sale of their no equity property tells us everything we need to know. Be aware that you may have to really drill down to get to the bottom as to why they are really selling. You may have to ask, why is that? a few times in a row to finally get to the bottom and the real reason why they are selling. WANTS What are you hoping to accomplish as a result of our help? The seller usually asks to clarify when you ask such a question but then after a brief pause, usually fills the silence with something like, I guess I just need this off my hands and at least enough money to move into a new place, or I want to sell my property. Then you can follow up with, What s the least amount you would be willing to take to get rid of it? The standard way of figuring out how much a person wants for their property is to ask, How much do you want for this property? The problem with that question is that it asks a question that we really

9 don t want the answer to. The seller could tell you a number that is typically far more than the bottom line of what they are willing to take because we asked them what they were asking for the property. Instead, what we want to know is what they need to have happen, such as get out from underneath their property, break even or even, in some cases, they may pay us to take over their problem. In some cases, the person has no loan, or a very little of a loan against the property and therefore has significant equity. In such cases, you may want to follow up your original question with, What is the absolute least you would be willing to take to get rid of this thing? Then you want to find out how they came up with that amount and/or why? So if the seller says they will not be able to sell the property for less than $30,000 in their pocket, the next question is, why? Do they need that money to use for a down payment on another property they are purchasing? Are they trying to pay off all credit card debt with those funds? Learn why the funds are needed and when. NOTE: We do not give a figure first on what we are willing to pay someone for their property. If a seller will not tell you what they will sell the property for, instruct them very politely to call back when they have determined that amount. LOAN How much do you owe on the property? Sometimes conversations jump to this section nearly right away if the seller lets you know how much they owe as soon as the talk starts. But for those sellers who may not be quite as open to talking about their loan(s), this will open up the entire mortgage details set of questions. What is your total monthly payment? It is much easier to ask this question later in the conversation because many callers will simply have no idea why you are asking it. Also verify if the taxes, insurance and homeowner association dues are included in that payment number. Are you current on behind on those payments? Again, a lot easier to ask this once you have established some rapport. Do you have just one loan on the property or do you have a 1 st & 2 nd? If they have two loans, get the loan amount and monthly payment of both loans. Keep in mind that many sellers do not consider their second mortgage HELOC to be a second mortgage at all. If they say there is only one loan on their property, then ask if they have a home equity line of credit. The seller may not know all of the answers, but get as much as information about the mortgages as possible.

10 Typical Seller Call You: Good morning, this is John. Seller: Yes, I saw your sign about you buy houses, how does that work? You: Well, we buy real estate here in Middle Tennessee; do you have a property right now you are looking to sell? Seller: Yes You: By the way, where did you see our sign? Seller: Over off Murfreesboro Rd in Antioch You: And if we get disconnected, what is the best number to reach you back at? Seller: You: Is that your cell? Seller: That s my cell. If you can t reach me on that, call my home at You: I m sorry ma am; I never caught your name. Seller: I m LaQuisha You: It s great to meet you LaQuisha, What is the address of the property you are looking to sell? Seller: 1407 Forest Ridge You: Is that in LaVergne? Seller: Yes, now how do you buy houses, how does this work? You: Well, if you are able to give me a better understanding of your situation, hopefully we can help you and if not, at least I can probably point you in the right direction. Do currently have the property up for sale? Seller: No, I thought about calling a real estate agent but I don t want to go through the hassle. You: What hassles are you referring to? Seller: Well, I know the agent is going to want me to fix up some things and I don t have the time or the money to do that. Also, I don t have the time to wait for an agent to find a buyer. Are you an agent? You: I am, but I buy real estate as an investor as well so I m not interested in putting you through the hassles you just described. I may want to buy your property quick and hassle free. By the way, is there a reason why you are so short on time? Seller: I m behind on payments right now. You: I see. Do you know which months are behind? Seller: No, but it has been at least two months, maybe three. You: Is it just you who is on the loan and owns the house? Seller: Just me. You see, I lost my job about 6 months ago, I have fallen behind now and also my credit score is too low to refinance so I m headed toward foreclosure. You: I understand. So are you interested in selling the property or do you really want to keep it but just can t? Seller: Well, I can t afford it so there is no use in trying to keep it. You: OK, well, let me ask you this, what are you hoping to accomplish as a result of our help?

11 Seller: At this point, I don t even want to make anything from this, I just want it gone. You: Could you tell me a little about the property itself? Bedrooms, Bathrooms, Year Built, etc? Seller: It s 3 bedrooms, 2 full bathrooms, 1 level, I think it s about 1300 sq ft, I think. It was built in It s a nice home, I like it, but at this point I know I can t afford it. You: You mentioned it needs some repairs, what specific repairs did you anticipate a typical real estate agent would recommend you complete prior to putting it on the market? Seller: It needs new carpet, new paint on the inside, the dishwasher leaked a while back and now the kitchen floors need replacing. Everything else is fine. You: I see, now you mentioned you would sell this house for the amount you owe, how much is that? Seller: I think it s around $150,000. It maybe more, I can get the exact number, I ll have to call you back. You: That s OK, ballpark is fine. Who is your mortgage company? Seller: It s actually two loans, they call it an 80/20. The 1st is with Wells Fargo and the 2nd is with CitiFinancial, I think. It just changed to CitiFinancial. It was with Chase before. You: CitiFinancial, they can be the worst to deal with, I m sure you have experienced that. Are they both fixed rate loans? Seller: I believe so. You: Are both loans behind by the same months? Seller: No, the second mortgage is current because they direct draft payments out of my checking account. You: Based on what I am hearing, there may be something we could do to help. I don t know exactly, but we help a lot of people in your situation. Would this afternoon at 2PM or 4PM work better for you to meet to take a look at the property and get a chance to meet with you? Seller: Today is pretty hectic; can we do tomorrow afternoon at 4PM? You: OK, let s try 4PM tomorrow, which is Tuesday. Now one thing that will also make the appointment more beneficial for you and me is for you to locate that big folder that has all of your loan and property documents in it, as well as any recent correspondence from your lender(s), any monthly statements or late statements. Have that ready so that we can better assess the situation and be able to provide the best solution. By the way, I ll call you 1 hour prior to our meeting to make sure we are still on. What is the best number to contact you an hour before our meeting? Seller: Probably my work number, You: Got it. Thank you for calling and I look forward to meeting you tomorrow afternoon. Sample Calls with Sellers Audio Training Listening Online: Download Link:

12 Common Motivated Seller Call Objections Most objections a motivated seller will ask over the phone can be easily answered. The most important technique to employ when you are confronted with an objection is to answer it quickly and briefly and then immediately follow your statement with a question. The following are some of the more common objections you will hear and how to handle them: What Do You Do? Caller: I saw your sign that says you buy houses; I was just calling to see what it is that you do? You: We buy real estate in this area. Do you have a property right now you are looking to sell? How Does Your Program Work Caller: I see your signs everywhere and I was just wondering how does your program work? You: We don t have a specific program, instead, we try to figure out a way to both help the property owner and make a fit for us as well. Do you have your property up for sale right now? I Don t Feel Comfortable Sharing That Information. You: What is the address of the property you are looking to sell? Caller: I don t know if I am going to go with you yet, I don t feel comfortable sharing that information. You: The only way I can help determine if we would be interested in buying your property is to know the address. You may not be interested in selling your property right now. I understand. Feel free to call me back if you change your mind. If a caller won t give you the key information you need, it usually means they are not motivated. Also, if the caller will give the information but it is becoming increasingly difficult, use phrases like, I m still confused, I need your help with understanding this, so how much do you owe, in total, on the property? So Do You Buy the House for the Amount That I Owe? Caller: So do you buy my property for what I owe? You: At this point, I don t know what we can do, I haven t seen the property. Would you like to sell for the amount that you owe? Caller: Yes BINGO, they are motivated Caller: No You: OK, well since I don t even know the address, let s start there. What s the address of the house? So Do You Buy Properties for a Certain Percentage of the Value? Caller: So do you buy properties for a certain percentage of the value?

13 You: Not always, each situation is different are you looking to sell your property right now? Who is This? Caller: Who is this? You: My name is John, I m sorry, who am I speaking with? How Much Will You Give Me for My Property? Caller: I haven t determined how much I am asking, I just want to know how much you will offer me. You: Ma am, I am unable to determine that for you. In order for us to help you, we will need to know your asking price. If you haven t been able to come up with an exact amount, then feel free to get back to us once you have determined that. He who says a number first typically loses. You want to hold out and wait for the seller to tell you how much they are willing to take. One exception to this rule is when you are making an outbound call to a seller. In those cases, they may say, Well, you call me, so much you gonna give me for my property? I Have Final Word on This. You: Are you the sole owner of the property? Caller: Well, it s actually me and my sister, our mother died and we inherited the property. But whatever I say goes. My sister doesn t really care; she ll go with whatever I decide. I have the final word on this. You: Great, I need to jot down your sister s contact info as well; do you have her cell phone on you? What about a work or home number? What is your understanding as to the least amount of cash she is willing to away with in her pocket? Communicate with all title holders prior to attending the sign up meeting. Avoid believing someone when they say, They ll go with whatever I say. It s almost never true. When it comes to money, everybody cares and rest assured, each person will make their own decision. Do You Only Buy Houses From People in Foreclosure? Caller: Do you just buy houses from people who are in distress, foreclosure, things like that? You: No, not always, every situation is different. Is your property currently in foreclosure? When it comes to the initial conversation with a motivated seller, less is more. You want to speak as little as possible, ask powerful, exploratory questions, and then listen carefully to their answers. You want to be a reporter, not a broadcaster.