Yes, You Need To Talk With The Seller (Part 3)
On the last blog I talked about the importance of the first phone call we have with a seller and told you about the 5 main things we’re trying to accomplish on this call:
- Build Rapport- Establish Price
- Uncover “Why”- Set up Higher Authority
- Gather Data
Last time I went over “Building Rapport” and “Uncovering Why”, today I am going to cover the other 3!
This is probably the part of the phone call that we’re all most familiar with and would expect in this phone call. We need to build rapport and learn as much about the seller and their situation as possible, but at the end of the day we have to know about the property! The important thing to remember about gathering data is to be as thorough as possible and try to get the sellers to take you on a virtual tour of their property.
The most common information we need to get will be:
- Bed/Bathroom Count- Rent amount per month
- Square footage- Repairs Needed
- Occupancy (Vacant/Investment/Personal)
- What does the seller think the property is worth
- What do they want for the property
- Do they have a mortgage/lien on the property
When it comes to repairs, it’s important to remember that there’s a difference between “repairs” and “updates”. Asking a seller if their house needs repairs is very different than asking if it has been updated in the last 10 years, and depending on the area and what it calls for will dictate whether it’s important if it’s updated.
Some other great information to get: (possibly might be on a later phone call)
This can be trickier information to get on the first phone call but if you approach it later in the conversation and in the right way then you shouldn’t have any problems. If a seller has a reservation to give you any of the above information on this phone call that’s no problem! Just move on and either come back to it later or wait till another call.
I quickly hit on this in “Gathering Data” but I believe this is key because it begins to paint us a picture of where the seller is at. I typically begin by asking what the seller thinks their property is worth right now, quickly following that by asking how they arrived at that number. I ask how they arrived at that number because I want to know if they got it from Zillow, a realtor, they bought the house for a certain amount and just want to make some money on it, etc. Knowing where they are getting the value of their property from allows me to know how to position myself and my offer to increase my chance of getting a signed contract.
Typically we are talking to a motivated seller, which means they want to be out of the property ASAP. So after seeing what they think their property is worth and how they arrived at that number I will ask what price they would NEED to sell the property for since I am paying All-Cash, buying As-Is, covering closing costs, and can close quickly. These conditions make my offer much more appealing to a motivated seller and I want to make sure they know I’m not a “traditional” buyer who has a realtor that will cost them money, I won’t have to get approval and an appraisal from a bank, and I won’t be getting an inspection. I wait to discuss any type of price until later in our conversation but it is a key part I make sure to get because it sets me up for success later.
*Set Up Higher Authority
This one tip will get you HUNDREDS of deals over your competition. In business and especially in investment real estate I never want to be the end decision maker. If you are, it immediately drives a wedge between the buyer and me and now makes me the “bad guy”. We want to put ourselves on the same side of the table as the seller and work together to make the deal a win/win for both of us.
Now you may be wondering, “who’s going to be my higher authority? I own/run the business?”. Don’t worry! It can be anyone or anything. For me, I typically use my wife as my higher authority and anytime the seller asks me a question about coming up on price I say I have to talk to my wife first because she’s the final decision maker. Now your higher authority might be a “business partner”, “private lender”, or your dog Fido. (Now you obviously can’t tell the seller you have to run this by your dog J), but the principle stays the same that there has to be someone else who is the FINAL DECISION MAKER.
If you can become a master at accomplishing these 5 things on the first phone call you will put yourself well ahead of the game and set yourself up for success down the road in getting the deal done.In the next blog I will talk about when to meet the seller in person, what to bring, and how to conduct your walk through.