Questions to ask sellers? - Posted by Eric Graham

Posted by Jeff in MKE on February 13, 2001 at 19:48:25:

Hi Jim,
This may sound like a stupid question,but when you say 65% FMV do you mean before or after fix-up.
Do you deduct the cost of fix-up off the 65% FMV.
Thanks,
Jeff in MKE

Questions to ask sellers? - Posted by Eric Graham

Posted by Eric Graham on February 13, 2001 at 03:25:17:

What questions do you ask sellers when they call (or when you call them) to find out if they are motivated or if a deal is possible?

I have C. Sheets question sheet but that seems a little too canned to me.

What are the most important things you “pros” ask when a seller calls?

Eric

THANKS for all of the great suggestions! (nt) - Posted by Eric Graham

Posted by Eric Graham on February 13, 2001 at 22:27:55:

nt

I love Kaiser’s statement… - Posted by HR

Posted by HR on February 13, 2001 at 18:54:41:

I absolutely love Joe Kaiser’s line: “if we can work something out that makes sense for you and makes sense for me…” I find that’s such a non-threatening way of saying we have to negotiate, and implies fairness and consideration, that few folks bristle at it. Depending on the situation, I like throwing in: “…for you and for me, we can resolve this within 48 hours. Would that work for you? To have this taken care of in the next 48 hours?” Who is going to say No to that?

As far as Carlton’s questions, I started with that, too. I found they weren’t my style. I like a conversational style that gets to the point and politely points them in a direction that may help them if I can’t. Within 3 minutes.

Eric, once you’ve talked to a truly motivated seller, you will know the difference. It’s like the difference between a banana shake and Saddam Hussein. Nothin’ close.

We are finishing up a rehab on a property where the guy finally called me back, told me he wanted 15k for his house, I told him I’d never give him more than 5k and why, tried to hang up on the guy, and he kept saying, “But maybe we could do this? Maybe we could do that…” We ended up buying it owner finance for 12k: 3k at closing, 2k on June 1, 2001, and $1750 due each June 1st from 2002-2005. That’s a no interest loan with one annual payment. That’s motivation.

Then, get this: the guy next door sees my section 8 for rent sign and calls and wants to dump his place. I was going to give him $3800 and assume the balance on his 10 year loan. We were supposed to close like 3 weeks ago, and he’s been slow returning my calls…

Ok, this post is turning into stream of consciousness, but get this (this is motivated): he’s selling because he has a little honey on the side that his wife of 15 years found out about (his brother introduced him to the honey). She lives around the corner from this house. Everytime he goes to fix something at this house, his wife goes into a rage and won’t talk to him because she figures he’s getting a little sugar on the side (she ain’t dumb, right?). So, one day, he’s so fed up with her screaming, that he sees the renovation going on next door and decides to just dump it.

How do I know all this? He told me when I asked, “So why are you selling?” That’s motivation. Arguing for me to buy the house: that’s motivation. Truly motivated sellers don’t see the home sale process as a negotiation session; they see it as therapy. A chance to dump a major headache.

These turkeys who want to argue with you about the value of the house? That ain’t motivated. Folks that want to dicker about this or that? Dickering ain’t motivated.

How are questions related to motivated? The whole point of asking questions is to figure out if the person is motivated, and, if so, what you can do with the property to make money. That’s it. Screen over the phone; close in person. If you have to try to convince, in my experience, that ain’t motivated.

So, really, ask any questions you want. It really doesn’t matter. I don’t have a set patter any more. I’m just going to ask the natural questions that come to mind, press as much as I can without getting pushy, and then hit them with that great line: “If we can figure out something that makes sense for you and for me, we can have this taken care of in the next 2 days. Will that work?” It works great to separate the truly from the unruly.

Good luck, and let us know your experiences.

HR

PS. My closing agent called the honey man to see what was going on. He hadn’t returned my calls, so, I figured even though the house was under contract with me, he is removed from the heat of passion, and he doesn’t want to sell any more. No big deal (next!). Well, she calls him today, and he’s still working on cleaning up something off the title. He still wants to sell, even though we haven’t spoken in weeks. That’s motivated. And you know what I just thought of: what could be the best Valentines gift he could give his wife? A sold house! I’m going to have to try and get in touch with him again tonite. Talking with motivated people is fun. It’s the difference between arguing about stuff versus someone wanting to give you the house. Don’t let the questions get in the way. Good luck.

a favorite… - Posted by TRandle

Posted by TRandle on February 13, 2001 at 09:08:00:

Eric,
In addition to what Jim and Brian offered, one of my favorites is “What will you do if it doesn’t sell?”. In my market this question seems to wake some folks up that not everyone’s house sells in a matter of hours. I also throw in little lines about sellers being flexible or reasonable so we can work together to get this “situation” resolved. Seems everyone wants to be considered flexible and reasonable so this usually opens up communication, even on the toughies. I still make mistakes in my conversations daily, but it does get easier with practice. Hope that helps…

Re: Questions to ask sellers? - Posted by B.L.Renfrow

Posted by B.L.Renfrow on February 13, 2001 at 08:21:14:

I am no pro either, but Jim has given you some excellent suggestions. You are correct: a canned list of questions will turn sellers off in a hurry, because it will be obvious you’re going down a list and they will suspect you just went to some get-rich-quick Sheets seminar.

The most helpful thing is just to have a conversation with them and keep it non-threatening. I do that by asking them to “tell me about your situation.” If they launch right into a diatribe about how they can’t stand being a landlord for another day, or tell me right off they’re not able to make their payments – which they often will – it doesn’t take long to find out what I need to know.

Notice I don’t ask them to tell me about the house. If they do, that’s OK…I will listen, then steer the conversation back to what is their reason for selling.

Also, one of the first, if not THE first thing I’ll ask a caller, is, “How quickly do you need to sell?” If they say “YESTERDAY” then I suspect I’m dealing with a motivated seller. But if they’re just shopping around and playing games, it will become evident with their answer to this question.

I also ask them where they will go if they do sell the property (if they’re an owner-occupant). If they have no idea, I know they’re probably not ready to move. If they’re getting transferred out of state, or something similar, I’ll find out with this question.

Once I get to this point in the conversation, I will ask them about the financing. Of course, I don’t just come out and say, “Tell me about the financing on your home.” I’ll ask how much they think it’s worth, and then how much they owe, how many mortgages, etc.

By now, I’ve a pretty good idea whether the caller might be a candidate for either subject-to or a below-FMV cash offer. If it sounds worthwhile, I’ll then make an appointment to “come see if the property qualifies.”

As Jim noted, I seldom call sellers; it’s much easier all around when they call me. I have seller calls come right to my cell phone, although I do have my voice mail set up to take them also (different number). But I am in a small town, so I am not ever overwhelmed by calls. When I can speak directly to the sellers, I can usually determine within a minute or two whether it’s something worth pursuing.

Brian (NY)

Re: Questions to ask sellers? - Posted by Jim IL

Posted by Jim IL on February 13, 2001 at 06:28:41:

Eric,
First, I am not a pro.
But, since I am awake at this hour, I’ll try to answer you.
When a seller calls me, (I rarely call sellers any more), I let my machine take a message.
In my message I say something like this; "We buy homes in any area, price range or condition, after the tone please leave your name, number, a convenient time to call you back and the property address that you are thinking of selling…"
Then, when I call them back I have some info about the home, since I know my market and can pretty much tell you what homes sell for in certain areas.
When I return a call I…oh, lets try it like this.
Seller: Hello
Me: I am calling for John doe, he called about the home for sale at 123 elm street.
Seller: Yes, I am John.
Me: Great, well John, my name is Jim, can you tell me about the house?
Seller: Sure, it is a 3 bedroom, 2 bath house with a 2 car garage, and…blah, blah, blah…(We could really care less at this point about this stuff, but ti gets the seller to talk and open up to us.)
Me: Well John, it sounds like a nice house. Why are you selling it?
(SHUT UP HERE and listen, this is where they will in all likelyhood tell you some vital info as to why they are motivated if they are at all.)
Seller: Well Jim, my wife and I are divorcing and neither of us can afford the payments alone on this home. In fact, we are two payments behind on it now.
Me: Okay John, lets talk about your situation a bit. What can you tell me about the financing on your home?
What are the payments?
What is owed?
How old is the mortgage?

Any repairs needed on the home John?

Seller: answers them all, or says, "why do you need to know all that?"
Me: Well john, I need to gather some info to see if I can help you. Once I gather all that info we can then take a look at the house and see if it qualifies for any of our programs.
Seller: Well Jim, how are you going to buy my house?
Me: John, let me break it down for you.
I buy houses essentially one of two ways, eitehr ALL CASH for a SEVERE discount, or on terms.
(ALL sellers want to know about the cash)
Seller: Okay, how much are we talking for a cash deal?
Me: John, I use my own money as well as private investors, and in order to use their money and make smart business decisions with my own, we have a 65% rule. We will pay 65% of FMV on homes that qualify and close within 10 days.
Seller: Jim, that would not work for me, I owe more than that on my home now.
Me: Okay, lets take a look at some things, and see what else we can work out.
Seller: okay, what do you mean by terms?
Me: Well, you have already told me that you cannot make the mortgage payments now, and you are two payments behind. We have a program where we can take over your mortgage payments, and if the house qualifies, we may even be able to make up the back payments. This will allow you to move on and forget all about this headache. Does this sound like something that will work for you?
Seller: Yes it does.
Me: Great, I will need to come out and take a look at your home, and inspect it to see if it qualifies for our program. When would be a good time for you and your wife?

From there we set an appointment and go see the house.
If all looks good, we sign them up.

The KEY question for me is "why are you selling"
Everything else is just conversation to get the seller to open up.

Pardon any typos here, I am tired, it is early for me.
HTH,
Jim IL

LOL - Posted by Redline

Posted by Redline on February 14, 2001 at 15:38:32:

“It’s like the difference between a banana shake and Saddam Hussein. Nothin’ close.”

Man, I LMAO at that one.

RL

Excellent! [nt] - Posted by SusanL.–FL

Posted by SusanL.–FL on February 14, 2001 at 12:23:21:

nt

Excellent Post!!! (nm) - Posted by Vic

Posted by Vic on February 13, 2001 at 23:23:06:

nm

Re: Questions to ask sellers? - Posted by John STL

Posted by John STL on February 13, 2001 at 09:11:32:

Brian, just wondering how small of a town are you in? I live in a small town outside of St. Louis and I’m just wondering what your call response is like.

Favourite out clause - Posted by Mike

Posted by Mike on February 13, 2001 at 17:45:19:

… great post Jim, my question is what is your fav ‘out’ clause for the 65% all cash offer?
thnx - much successes

Re: Questions to ask sellers? - Posted by John STL

Posted by John STL on February 13, 2001 at 09:25:32:

What percentage of people do you think you do an all cash deal versus the other programs? Do you say 65% so you can do a hard money loan? I would assume that you would try to lease option this property after you’ve determined they need more than 65%. How does that work in a divorce situation? Sorry for all the questions but your posts really get me thinking. By the way, great informative post!! Thanks

Re: Questions to ask sellers? - Posted by JHyre in Ohio

Posted by JHyre in Ohio on February 13, 2001 at 08:40:24:

Jim,

When you tell a seller “I’ll pay 65% of its FMV in cash”, don’t they freak? Or does the motivation overcome dissapointment and outrage?

John Hyre

Re: Questions to ask sellers? - Posted by Thanks!

Posted by Thanks! on February 13, 2001 at 07:14:50:

As Usual Jim, you have provided another piece of truly outstanding info for a rank amateur like me.

Wayne

Re: Questions to ask sellers? - Posted by B.L.Renfrow

Posted by B.L.Renfrow on February 13, 2001 at 09:47:20:

8000 people. Nearest “metropolitan” area (>50,000) is an hour away. 50k population total in my county. I don’t get that many calls. I try to do one or two deals a month, but it varies considerably.

Brian (NY)

Re: Questions to ask sellers? - Posted by Jim IL

Posted by Jim IL on February 13, 2001 at 13:59:51:

John,
I do the 65% all cash offer because it is easy to find that kind of money, either from a true hard money lender or private investors that I have used before.
It is rather easy to get someone to loan you purchase money when you offer them a great return and a secured note with a low LTV.
As for offering a L/O to people like this instead of the 65%, (because face it, most will not or cannot go for this), I usually go for the deed first and use a L/O as a second offer IF “subject to” is something they are not comfortable doing.

As far as a divorce situation, it works the same as any other deal, both parties are needed to sign the docs, unless one spouse/ex-spouse quit claims the home to the other.

HTH,
Jim IL

Re: Questions to ask sellers? - Posted by Bud Branstetter

Posted by Bud Branstetter on February 13, 2001 at 10:09:44:

John,

What are you doing on the newsgroup when you surely have tax returns to work on. One of the responses I use to the discount question is to explain to them that as a rental property I can’t afford to pay more. Throw in a lower than house payment rent amount, subtract for maintenance, vacancy and management and it is not hard to discount. You can also subtract paint, carpet and what ever else needs fixed at retail contractor prices. Get them to agree that is a reasonable amount for each repair then add it up. I’m not going to live there and just can’t afford to pay what a homeowner might. If they want to keep making the payment until they find the right person to live there then I would understand. My offer is for cash now.

In most markets a seller with a nice house isn’t going to take a steep discount and that is easy to determine early. You then switch to questions concerning owner financing.

Those houses with defects and motivated sellers are the ones that understand they must accept a discount. They just wish it weren’t as bad. It is a way to test motivation.

Re: Questions to ask sellers? - Posted by Brad TX

Posted by Brad TX on February 16, 2001 at 08:58:53:

Do you do this full time? I live in a town of about 10,000 and wondering if it’s possible to do this full time in a town of this size.

Brad TX

Re: Questions to ask sellers? - Posted by John STL

Posted by John STL on February 13, 2001 at 15:06:16:

Jim, When you say go for the deed, do you mean you have them just sign the deed over to you?
Thanks,
John