It is so much fun to be around friendly people. One of the best things about investing in real estate is that you get to meet wonderful people and help them out. In a recent webinar I shared some ideas on how to quickly make friends with sellers and get them to say “Yes!” to your creative offer.
I’ll describe a little known secret for making friends quickly which means that you’ll be able to get more sellers to feel good about selling you their house when they accept your creative offer.
One of the concerns that was brought up by many of the beginning investors that I met was this: “I’d really like to make a full time income as a real estate investor but I’m just not comfortable taking advantage of sellers who are in a desperate situation.”
This common misconception is believed to be true by beginning investors and also by much of the general public. How can you make money without “taking” money away from the seller of a home? One simple answer to this question comes to you through the magic of appreciation. Appreciation is where some of the biggest profits are made in real estate. By owning or controlling an asset like a nice home in a nice area, you get the benefit of any increase in value as the market moves up.
By using a lease with an option to gain an ownership interest in a nice piece of real estate, even if your purchase price is at today’s full market value you’ll be making a large chunk of money as real estate increases in value. Once you learn how simple it is to put together lease purchase deals and that sellers will actually thank you for helping them out, you’ll never worry about taking unfair advantage of sellers again. You really can help sellers out and make a bunch of money for your efforts.
For example, if you were to pick up five to ten properties over the next year using purchase option techniques like the lease purchase, you’d be in control of about a million dollars worth of real estate. If you structure your deals correctly, you won’t need much of your money and you can even get your tenant buyers to take care of the maintenance.
Once you control a million dollars of real estate, when the market for nice homes goes up just five percent in the next year – you’ve just made $50,000. If you need more than $50,000 to create a full time income then go out and use purchase option techniques to control five to ten more homes. You have now created a six figure income and also have the freedom to do whatever you want each day.
This is because you are creating passive investments which free you from the responsibilities of traditional real estate investing. Now you can enjoy more time with your family, go for a mountain bike ride, or drift lazily down a river on a raft if you want to.
Here’s how I learned a powerful secret and how you can use this idea too. A few weeks ago Darcy, our operations manager, said “Peter you really should smile more often, you have a beautiful smile and it’s a shame to keep it hidden away.” Oops! I know I should smile more. I thanked Darcy for her comment and then set a goal to beam a huge smile out to ten people before the day was over.
I discovered that people smile back! This was so much fun that I continued through the next weekend when I was out buying properties with several students. We had set up appointments non-stop all weekend long so I had a chance to beam a great big smile at close to a dozen sellers. I found that sellers were quickly warmed up by this newly re-discovered secret. Even the sellers that didn’t end up doing a deal with us were pleased to have met my students and intrigued to learn about the win – win purchase option offer we shared with them.
You can tap into the power of this simple little secret starting right now. Your objective is to get ten people to smile back at you in the next 24 hours. You can’t say anything to them. The only thing you can do is smile at them. You’ll discover as I did that anything you practice will soon become a habit. Practice enough and you’ll soon have sellers smiling back at you as they nod their head saying “yes” to your creative offer.
Little habits like this really do make a difference. Good Luck!
– How can you determine the real needs of the seller?
– How can you meet the seller’s needs and maximize your profits at the same
– Here’s how to get a quick decision from the seller-a decision that works
for you and works for the seller.
Most beginning investors walk in to meet with the seller and hand
them the completed, written offer and sit back and wait for the seller’s
response. The trouble is that most sellers will tell you they need to think it
over, or that they need to speak with a friend/spouse/relative/etc. before they
can agree with it. This puts the average investor in a very weak negotiating
position. They are in what I call “chase” mode-chasing after the deal.
You are going to do things different. Instead of laying your offer at
the seller’s feet and hoping they do you the favor of giving you the deal you
are going to qualify the owner before you do them the favor of presenting
them with an offer to solve their real and pressing real estate problems. I’m
sure that sounds pretty good to you, but you might be wondering just how
you are supposed to do that. Here’s how:
What you are going to do is leave your offer in your folder, or better
yet in the car. You are not going to present the actual offer until the seller
To qualify for your offer you and the seller both need to agree on four
key areas. The powerful thing is that when you finish with all four areas the
offer is basically all negotiated. And it is at that point that you can present
your pre-written offer, or get out a blank form and just fill it out on the spot.
Of course if you and the seller cannot come to agreement in each area
then you simply stand up, thank the seller for his time, and start to walk out.
Nine times out of ten the seller will plead with you to stay and present your
offer-their curiosity alone will get them to ask you to stay to finish working
through the four areas and to present your offer. This is the ultimate tool for
putting you in the role of the reluctant buyer. We have found it to be the
easiest, most effective way to help the seller feel good about talking us into
giving them an offer on the property. And this will help you to smoothly
transition the seller to say yes to your offer.
The first area is called the “Up-Front Agreement.” You simply
explain to the seller that you are a straight forward type of person and would
appreciate either a yes or a no answer from them. In return you will give
them your own yes or no decision. The key in this quadrant is to let the
seller understand that you will take any “think it over” answer as a NO.
The way that you do this is to tell the seller that you will respect his
and your time by giving a yes or no answer and you are asking for the same
courtesy in return.
Area two is where you are going to talk about the seller’s needs. Ask
the seller what they were hoping you could do for them. and then be quiet
and listen. As they bring up areas of concern the very best thing you can do
is to draw out those problems in an innocent and gentle way. For example, if
a seller’s problem is that he hates being a landlord you can say something
like, “The good thing is that you probably enjoy working with renters and
putting the time in to care for your rental property.” Because you say this in
a caring tone of voice the seller will most likely pour out his guts about how
he hates dealing with renters. This approach is radically different from most
investors where they will argue with the seller over all the problems the
seller faces. All that does is put the seller on the defensive.
Area three is about money. You are going to go over some specific
dollar amounts with the seller before you ever get your written offer out.
This could be the monthly payments (on a lease, or owner carry-back), and
the sale price. This way you know what the seller’s real financial needs are
and whether you can meet them and still make a profit for yourself.
Area four is the “What If?” step. Rather than give a seller your offer
and hope they will say yes, you are going to make sure they will accept your
offer before you ever officially give it to them. How can you do this? By
using the two magic words in all negotiations: WHAT IF.
“Mr. Seller, what if I were to cover your payments for two years and
then cash you out of the property? Would that work for you?”
“Mr. Seller, what if I were willing to give you $212,000 for the house,
would you be willing to carry back a second?”
These magic two words lets you make your offer in a completely
hypothetical manner. Then when you finally come up with the winning
“what if” scenario you simply write it up and get them to sign right there and
Now you know how to get a seller to say yes to your creative offer.
Good Luck with all of your investing, I hope you’ve found this helpful.
I don’t care if you’re buying a car or a house or a skyscraper, if you are buying for cash, always go back and ask for more off the price.
For example, today I bought a car (heather and I got rid of our last two cars before we moved to Virginia). I couldn’t resist going for one last nibble with the salesperson. Knowing that they wanted to control the commitment and environment by having me come in to the dealership I made sure to use this nibble over the phone.
I said, “Paul [pause and sigh] I know there is probably no way you can do this but I’m going to ask anyways because I’d hate to not be able to buy this car. I understand you can’t come down any more on the car, is there any way you can give me a token concession [notice the labeling going on here] by waiving the dealer processing fee [$500].
It’s embarrassing to share this, but I have to live with Heather for a long time, and this would let me save face and get to be a hero in her eyes. Can you make that happen for me?”
And guess what, Paul did… And when I told Heather she sweetly [read gently sarcastically] said I was her hero…
Who said there was no such thing as a happy ending when shopping for a car. You can apply the exact same principal when buying for cash.
The major reason investors don’t ask for a deeper discount on a cash deal is because they are scared to look cheap or of the other party blowing up. Notice how I used negative phrasing and powerful labeling to protect myself from that happening.
Try it in your next negotiation with a seller.
Hope this helps
This nice post was written by David and posted by Peter Conti