In the world of real estate, it is essential to close the deals that are teed up in front of you. With the recent increase in competition there are many more investors looking for the low hanging fruit. When a deal from a motivated seller comes your way, you must capitalize on it.
A motivated seller can be anyone going through foreclosure, divorce, probate or several other issues where a sale is time sensitive. They are going the sell in the coming months; the only question is with who. As much as they may want, or need, to sell they aren’t going to just give the property away. If they feel you are taking advantage of them, or the situation, they can easily find five other investors who they can work with. Closing motivated sellers is not as easy as presenting a contract and waiting for the closing. Here are five tips to help secure more motivated seller deals.
- Build Rapport. The best investors are those who have a genuine interest in the people they work with. As much as they love to make money, they always do so with a clear conscience. Instead of blindly diving into a situation, they always start by building a rapport. You should never be all business all the time. Before you start asking questions about the property and the numbers, ask a few personal questions. Not only will this give you insight on how they got there but it will help build a rapport. Regardless of the business, people are more likely to work with those they know and like. By making small talk about their kids, the local sports team or a pop culture event you seem more relatable, and ultimately more likable. The extra twenty minutes spent at the property shouldn’t be viewed as a chore, but a way to help build a relationship and secure a deal.
- Present Everything, All The Way Through. Working with motivated sellers is a delicate balance. You want to show just how bad their situation may be by not selling, but you don’t want to go overboard. It is always best to know, understand and present everything all the way through. By only giving one side you can waste weeks, even months, with a seller only to find they have a change of heart at the 11th You should explain all the negatives of a foreclosure but tell them they may have loan modification options with their lender. Even if you lose a deal or two this way you will not only have done the right thing, but you can bet the homeowner will refer you to everyone they know. It is better to do the right thing and lose a deal early than to wait months and have the borrower walk the week before the closing. Make it clear that you are not an attorney and cannot provide legal advice, but always educate the seller as much as you can.
- Don’t Oversell. As we stated, you want to present the reasons for selling, but you can’t beat the seller over the head with it. You may think you are prompting action, but you are really creating speculation. At some point the seller will start to question why you are telling them to sign the contract asap. Even if your intentions are good, you come off as a bit of a used car salesman. Yes, you need to always push to get the seller to commit but you need to do it in a way that doesn’t hit them over the head. They know the situation and don’t want to be reminded of it the entire meeting. You can state the facts and prompt action, without overselling and sounding cheesy. If there is true motivation to sell and you don’t leave the property with the deal, there is a good chance they don’t trust or like you and you oversold the deal.
- It’s Ok To Say, “I Don’t Know.” It is ok to say “I don’t know” if you are presented with a question that stumps you. Where most investors go wrong is trying to talk their way out of a situation. You not only sound terrible but you instantly lose credibility. Never bend the truth on an answer you don’t know to be true. A homeowner can easily fact check your answer in five minutes after you leave the house. By simply saying “I don’t know, but I will find out” you avoid long rambling answers and still save face. If you can find out within a few hours you gain credibility and greatly increase the chances of the seller wanting to work with you.
- Address Concerns. There is always a bit of mystery as to what a real estate investor does. The more concerns you address upfront, the more likely you will secure the deal. Don’t be afraid to address what you plan on doing with the property. If they ask how much you stand to profit, explain the risk you are taking before getting to the bottom line. Address the best- and worst-case scenario for the seller and what would need for those to happen. If they have questions, be open and honest regardless of how it impacts the deal. As we said several times, it is better to lose a deal at the first meeting than spend money and waste time on a deal that doesn’t end up closing.
Motived seller deals need to be converted. If not, you should examine what you are doing wrong and how you can improve.