The Problem Is… - Posted by B.L.Renfrow
Posted by B.L.Renfrow on March 31, 2000 at 11:02:02:
…you are an unknown stranger out of the blue suggesting something with which the seller is unfamiliar OVER THE PHONE…in which case, the answer 99.87% of the time will be “NO” regardless of the seller’s level of motivation. You are absolutely correct that the confused person will always answer “no.”
The key is to use the telephone to figure out the liklihood a deal even exists. Things like where the property is located, repairs needed, how much is owed, what is the existing financing, and most importantly, why are they selling? Now usually you won’t get the “real” answer if you just come out and ask. So, you have to work it into the conversation. Something like, “So, Ms. Seller, are you buying another house, or are you leaving the area?” will usually get you a much more accurate answer than, “So why are you selling?”
Then, if you determine a deal might exist, your next step is to get yourself at the seller’s kitchen table.
Of course, you tour the property, make small talk, look at the water heater, all the while discretely asking questions and listening carefully to the answers, for clues about the seller’s motivation and what the seller NEEDS - not what they WANT. For example, most of them will WANT all cash. Many of them don’t NEED all cash, however. They might NEED debt relief, money to buy a car, to leave the area, etc.
Then, once you are sitting across from the seller at their kitchen table, you are in a better position to structure an offer which will meet their needs. For instance, if they need $20,000 next week for Grandma’s brain surgery, a lease-option proposal will be a waste of everyone’s time.
If you determine, for instance, that a lease option might solve their problem, you can approach it something like this:
You: “Ms. Seller, I am very interested in buying your house. However, as an investor, if I put my cash into every deal, it wouldn’t be long before I’d be out of cash. Does that make sense?”
Seller: “Yes, go on…”
You: “If I were able to give you your asking price, but we set it up so I will cover all your expenses, including your mortgage payment, for now, then pay you off down the road, would that be something that would work for you?”
Seller: “Welll…maybe. I’m not sure.”
You: “What I would like to do is set up a long-term rental agreement where I could buy the property a few years down the road. However, you would have none of the typical landlord problems, because I will guarantee your payments, I will maintain the house and I will deal with any problems that come up. All you have to do is cash the checks every month. Does that sound OK?”
Seller: “YES! Where do I sign?”
Obviously, that’s a bit simplified, and there are a thousand different approaches you can use, but I hope this gives you a couple ideas.