Because you’d better be, if you want to get deals.
The place you MUST be when talking to sellers is out of YOUR mind, and in THEIRS. Every single day, I correspond with investors who say something like:
“So, I was looking at craigslist yesterday, and there’s this seller, and she has a house for sale. She wants $220,000 for it, but I think it’s only worth about $170,000. So I want to do a creative finance deal. How do I write that up?”
If you don’t understand what’s funny about this line of thought, look again, because you may have the same problem. The investor is so focused on what the INVESTOR wants that he apparently hasn’t even bothered to find out what the SELLER wants.
It’s somewhat endemic to our business that we get so focused on our strategies and our goals and our desire to get a deal done that we completely forget that unless what our strategy has to offer meets the needs of our sellers, THERE IS NO DEAL. Jumping ahead to “How do I write up a creative deal” before you know what the seller owes, and why she’s selling, and whether taking payments would meet her goals is putting the proverbial cart before the proverbial horse. Worrying about finding a buyer for property x before you know that the seller will take a wholesale price for property x is torturing yourself for no reason.
And it’s easy to make assumptions about seller motivation—that a seller in foreclosure will always want to sell; that a seller who inherited a house doesn’t want it; that a seller with building orders will take a discounted price. None of these things are necessarily true, or even true the majority of the time.
Try to approach discussions with sellers as interviews without expectations. Really ask the questions, and really listen to the answers. Then, if necessary, you can step back and review the information before deciding what, if anything, you can offer that will meet the seller’s real needs.
Questions you MUST ask to really get inside a seller’s head include:
- Why are you selling?
- What have you tried already? How has that worked?
- By what date do you need to sell? What happens if you don’t sell by then?
- What will you take? How did you come up with that number?
- So if I can’t pay you $X, there’s no reason to
- Would you consider taking payments to get to that price?
- How much do you owe? What are the payments? Do those include taxes and insurance? What’s the rate? Is it fixed, or adjustable? How many more years does that mortgage run?
With these answers in hand, you’ll know things like whether the payments you’d like to make will cover the payments that the seller HAS to make—or whether he’s motivated enough to pay the difference. You’ll know whether he CAN accept your lowball cash offer, and what might make him decide to do that.
Only THEN can you make the deal you’re looking for!
~ Vena Jones-Cox
Please note that Vena Jones-Cox, 3rd generation real estate investor with more than 800 transaction to her name as a principle, current president of COREE, past president of OREIA, past president of National REIA and Host of the Real Life Real Estate Investing Radio Show is coming to Kansas City in March. She will be at our monthly meeting on the 10th to explain How Wholesaling Really Works, so if the article above hit a nerve with you, you need to be at this meeting. She is then sticking around to teach a full day workshop on Building A Wholesaling Business and Your Own Marketing Machine. If you want to wholesale, or maybe you don’t want to wholesale, but you want to generate a lot of good deals, then you need to be at this workshop. Be sure to click the links to get the details and to get pre-registered.
Learn More about Vena: click here