Posted by Lonnie Turner on November 12, 2000 at 17:37:25:
Guys I have had a bunch of calls in the last year & only been able to put together a couple of L/O deals. I always prescreen calls & throw numbers at them over the phone. I know better now. I have an appointment at five so I have to go.
Lonnie Turner
what else can I do? - Posted by al
Posted by al on November 12, 2000 at 01:52:44:
Hi all,
Here’s the situation. Since my last post(about 1 month ago)I have found about 7 distressed properties for possible flips and about 5 nice homes for possible l/o in my area. All of the homes I have targeted have been on the market for at least 5 months each( I asked the sellers directly), so I know the owners are motivated.
For clarification, here’s my process:
I flood the area I’m targeting with bandit sings, flyers and posters(the ones with tabs containing my ph# on the bottom for easy tear-off) in all the grocery stores, laundry mats etc. stating I buy houses, I even call fsbo’s from my local paper. When I talk to a possible seller I tell them I do buy all cash for distressed property up to 70% of the fmv or up to the full asking price based on terms. The ones calling in w/distressed property are easy, I ask basic non-threatening questions to find out their motivation and their needs- I get the address, do a drive by and then follow-up with an all cash offer. Problem is they reject my offer. These are the fsbo’s who called me first asking me to see their house. The majority of the owners say the offer is way to low- even though I’m upfront with them on the first call as to what I pay. I don’t get it. Also for the record, I do give one counter-offer, which hasn’t worked yet so I’m left with my final option of leaving them my card just in case they change their minds.
The second half of my problem is when a seller calls in with a good house. This is when I pitch my l/o program, stressing that we can buy their house at full asking price if their home qualifies. These homes are between 150K to 400K range. All these possible l/o deals have been on the market for at least 5 months, and the owners are either relocating(job transfer), or buying another house. Problem is that after I schedule a meeting to qualify them, they always end up calling me in 24hrs cancelling the meeting, stating in retropect this program is not something they would like to try or they don’t want to wait for 3 yrs to get their money. I quickly but calmly counter-offer(changing the terms for example) or reassure them that this is from being risky, but they stick to their “no” answer.
What am I doing wrong here? I find good property and I know the owners are motivated(at least in the beginning), but I don’t get any takers…what else can I do?
All responses are greatly appreciated,
al
Plenty! - Posted by JoeKaiser
Posted by JoeKaiser on November 12, 2000 at 15:28:06:
You are oooooooooh so close, and it all comes down to this . . . stop making offers and start making money.
In case you missed it, here it is again in upper case:
STOP MAKING OFFERS AND START MAKING MONEY
We’ve signed up 9 properties this month already, and have yet to make an offer to anyone. It’s not difficult to do if you can get the phone to ring (and it looks like you can).
When sellers call, don’t “pitch” your program and don’t give them your percentages. That’s silly. Talk a little bit about the property (see my article on this site, "Get on the Same Page With the Seller), and then go meet with them. They won’t be tempted to cancel because they have no idea what you’re all about.
Now, here’s where the magic happens . . .
As you’re sitting across the kitchen table with the seller, in a friendly, nonthreatening manner, just talking about the price of tea in China, the seller soon begins to feel comfortable with you both as an investor, and a real person. You’re not just a voice on the telephone, but you’re someone they feel they can trust. Remember, people like to do business with people they like. In about 20 minutes (and yes, I’ve timed it), you can get onto the easier things about your deal and within the hour, you can have an agreement in hand, all signed off.
We don’t “submit offers” when we don’t have to. Instead, we talk with sellers and craft the agreement right there on the spot. Once we’ve agreed to everything that matters (and sometimes, that’s not much), then we just sign the thing and are done with it.
See the difference?
Submitting an offer is silly when you can instead sit down with a seller, work out an agreement, and get that thing down on paper and signed off. If you’re just mailing out offers, you’re not tapping into the power that a “belly to belly” meeting affords you. And believe me, it’s not like it increases your advantage by ten percent or something, it’s more like a thousand percent. That’s power!
Makes the drive home a whole lot nicer.
Joe
Plenty! - Posted by JoeKaiser
Posted by JoeKaiser on November 12, 2000 at 15:21:01:
You are oooooooooh so close, and it all comes down to this . . . stop making offers and start making money.
In case you missed it, here it is again in upper case:
STOP MAKING OFFERS AND START MAKING MONEY
We’ve signed up 9 properties this month already, and have yet to make an offer to anyone. It’s not difficult to do if you can get the phone to ring (and it looks like you can).
When sellers call, don’t “pitch” your program and don’t give them your percentages. That’s silly. Talk a little bit about the property (see my article on this site, "Get on the Same Page With the Seller), and then go meet with them. They won’t be tempted to cancel because they have no idea what you’re all about.
Now, here’s where the magic happens . . .
As you’re sitting across the kitchen table with the seller, in a friendly, nonthreatening manner, just talking about the price of tea in China, the seller soon begins to feel comfortable with you both as an investor, and a real person. You’re not just a voice on the telephone, but you’re someone they feel they can trust. Remember, people like to do business with people they like. In about 20 minutes (and yes, I’ve timed it), you can get onto the easier things about your deal and within the hour, you can have an agreement in hand, all signed off.
We don’t “submit offers” when we don’t have to. Instead, we talk with sellers and craft the agreement right there on the spot. Once we’ve agreed to everything that matters (and sometimes, that’s not much), then we just sign the thing and are done with it.
See the difference?
Submitting an offer is silly when you can instead sit down with a seller, work out an agreement, and get that thing down on paper and signed off. If you’re just mailing out offers, you’re not tapping into the power that a “belly to belly” meeting affords you. And believe me, it’s not like it increases your advantage by ten percent or something, it’s more like a thousand percent. That’s power!
Makes the drive home a whole lot nicer.
Joe
Re: what else can I do? - Posted by B.L.Renfrow
Posted by B.L.Renfrow on November 12, 2000 at 09:42:38:
Your “process” doesn’t sound bad, but likely needs a little fine-tuning.
First, I find – and I don’t think my experience is unique here – that very few sellers will accept my offers immediately. It’s not unusual for a seller to call back 2, 3 or more weeks after I’ve met with them. That has given them time to come to their own conclusion that I am offering them a viable solution to their problem, while no one else is. I have even had one seller call me almost a year after we first talked…and you can bet that by then, he was ready to do business.
It sounds as if you may be trying to do a bit too much “selling” over the phone before you meet with the sellers. While some do advocate lots of screening beforehand, I think when you start talking about programs and percentages of market value and such before even meeting the sellers, it turns people off. They hear things about which they have no understanding, and suspect they’re about to be sold a bill of goods. I rarely mention cash when I initially talk with a seller – unless I am truly prepared to pay cash – because then that’s all they want to hear about. That may be why you’re getting derailed up front when you start talking about how you can pay cash for 70% of value before you even find out what they really need. For more sellers than you might think, cash is not a big motivating factor in their need to sell.
I don’t recall ever having more than a couple sellers call and cancel before our meeting. Sure, not all of them have accepted my offers, but obviously there is something your sellers fear, or misunderstand, if they’re cancelling before you even get to their door.
Concentrate more in your initial phone conversations with sellers, on just developing a rapport, and finding out why they are selling. If you come across as friendly and a guy who can potentially make their life easier, they have no reason to cancel before you even show up. My goal in a phone conversation is to quickly figure out whether there’s a potential deal. I do this by just talking with them, letting them tell me about their house, and asking questions in a non-threatening manner to guide them in the direction I need them to go. I ask why they’re selling, what they think the house is worth, how much they owe, etc. I ask how quickly they need to do something, and I ask what they’re looking for out of the deal. If they say something like, “I just need to be rid of these payments,” or “I can’t stand being a landlord anymore,” I know they’re probably quite motivated. Then I make an immediate determination in my mind whether it’s worth pursuing, If not, I thank them for their time and wish them luck. If so, I get an appointment to meet with them. I don’t talk about subject-to, lease option, cash or anything else at this point. Instead, I wait until I am sitting down at their kitchen table and can look them in the eye and offer a solution for them. It’s much tougher for them to say “no” to someone sitting 3 feet from them, than to someone on the other end of the phone whom they’ve never met.
Also, take a good look at how you come across to people. While some are born salespeople, who can sell the proverbial freezer in thr Arctic, others (including myself) are not. You may find it helpful to study books and tapes from some of the sales gurus…people like Tom Hopkins, Zig Ziglar, Roger Dawson and the like. I cringe whenever I hear an investor using the word “pitch”. That reminds me of the salesman in the plaid suit selling vacuums door-to-door, or the guy working at the carnival. And that’s probably the way the sellers perceive it also. You’re not a pitchman, you’re a problem-solver, and that’s the way to present yourself.
Finally, sellers (and buyers) have an uncanny ability to detect fear or uncertainty a mile away. If you are the least bit unsure of yourself, or what you are saying, they will know. It’s important to act as if you’ve been doing this forever, even if you’ve never closed a deal. To do that, be sure of your facts, and even practice with a friend, or a tape recorder until you are sure you’re coming across as friendly, knowledgeable and non-threatening. Remember that for most people, their house is the single largest asset they’ve ever owned, so it’s natural for them to be very cautious about turning it over to someone they don’t know, especially someone who is proposing anything other than a conventional cash sale.
By the way, your marketing efforts sound reasonable. Are you running an ad where sellers are likely to see it? Is it short and simple? You are correct that it’s much easier when the seller calls you. Early on, you will probably benefit from calling FSBOs, but your goal should be to get to a point where THEY are calling YOU because they want YOU to solve their problem.
Brian (NY)
Re: what else can I do? - Posted by Ray
Posted by Ray on November 12, 2000 at 02:57:10:
Ask them to give you the opportunity to meet or beat any written offer they receive from another buyer. If you have figured all of your costs, you will know the absolute max you can give them. Explain that you need to make a profit and that some of the expenses you will get hit on in your wallet are going to add up. It is their problem if they want to wait this thing out and there is a reason this thing has not moved in five months. You know what the area comps out at; tell the sellers why your offer in in the ballpark and that you are curious as to how they arrived at their price.
Ask them if they would be willing to do a refinance to put cash in their pockets to tide them over at no cost to them-you handle all payments. On top of that you could offer to split an agreed upon percentage of appreciation with the seller when it is time for your renter to buy.
On these properties what is the current LTV? If it is small enough you could also get a small loan to give them the XXX amount of cash they need, plus they carry a 2nd for the remainder.
Let them get motivated,instead of the other way around. For some people five months isn’t enough for them to see the light. Give it a bit more time and while you wait for these sellers, continue on with new ones.
P.S. Check out some of Joe Kaiser’s articles such as his Get On The Same Page As The Seller found on this site. See the links on the left of the page.
-Good Luck,Ray