How To Build Rapport With Motivated Sellers

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First thing’s first…you need to be likeable

When it comes to purchasing directly from a seller, there is hardly any skill more important than being able to build a rapport with that seller. Yes, you need to find the right lists to sell and write good copy to market (check out Sharon Vornholt’s great articles on lists and what to write for tips). But one thing you know for sure is that no one is going to sell to someone they basically dislike.

Many people, perhaps most, will intentionally hurt themselves if it means they can avoid providing a benefit to someone they don’t like. There’s even a term for this, altruistic punishment. Besides, without a real estate agent, every seller knows that whatever reason you give to the seller why they should sell to you (especially at a lower price), it directly benefits you.

There is no neutral third party here. Because of this conflict of interest, you as a buyer are inherently unreliable. You have to earn the seller’s trust by doing what you say you say and not taking advantage of the seller. It will try. But trust me, it’s effort that’s worth putting into it.

But first and foremost, we should start with a not-to-do list that Tim Ferriss popularized.

to do list

1. Bark Out Any Proposal

They say that if you are not embarrassed by your first offer, then you have offered too much. Sometimes it is true. But if you’re dealing directly with a seller, an immediate and low offer will come across as arbitrary and potentially rude.

If you haven’t built rapport and/or made your case for why the discount should be there, no salesperson is going to give you the time of the day. If you’re just making offers on random REOs (real estate owned), sure, there’s no problem with just shooting one offer. But more subtlety is required when dealing with direct sellers.

2. Use High Pressure Sales Tactics

No one likes to be on the receiving end of a high-pressure sales tactic. Salesmen who use the “ticking clock” sales technique or always use leading questions are no fun to deal with. So don’t be one of them.

Not only are these tactics of questionable ethics, but they also harm the sellers. I have often said that “a confused mind says no.” But so does an overstressed mind. Furthermore, it is also these types of tactics that are most likely to cause remorse. Seller’s remorse exists in the same way as buyer’s remorse.

You might be able to get a property under contract with such high-pressure techniques, but don’t be surprised when the same seller tries to back out of contract the next day or week. And maybe you can go ahead and enforce the contract regardless. But that doesn’t stop the seller from leaving a bad review of your company or asking others not to do business with you. And remember, your reputation is more important than any single deal. Either way, who wants to deal with all those headaches?

3. Talk in the House

We want to make our case for why a property should sell for less than the seller is asking for, but the worst thing you can do is try to make the case by giving false information about the property. The problem is that when you say this criticism casually, it comes across as an insult. Many people identify themselves with their home. This is especially true if they live in it and it is not their rental or inherited property. And this is even more true if they did the work themselves. Most do-it-yourselfers are not good. But either way it is not wise to tell them this.

Connected, The 3 Types of Motivated Salespeople (And How to Win Deals by Solving Their Problems!)

Talking about the property is basically insulting the seller to their face. You could even say something like, “Why on earth would you want to be here? Do you like living in filth?” or “Wow, you rented this place! You will be a slum owner. or “So you must be broke and have no money to fix anything. Shame.” you get the idea.

As we’re transitioning to the to-do list, I’ll discuss the right way to make your case below.

to do list

1. Embrace the Small Talk

It may sound simple, but never underestimate the importance of making small talk. In one of them “Why did they pay money to study something that everyone already knows?” Across studies, researchers have found that people are more likely to trust people they like. As Big Think says, you “uplift them morally”. And nobody will like you until they talk to you. Then talk to them!

Indeed, as I noted for a 32-unit apartment he acquired a few years ago, “… anytime we got in the same room with him, we were there for at least two hours.” While buying a house this much conversation is perhaps unnecessary, but the more time we spend with that seller, the more he likes us and the more he begins to believe that one way or the other, he will eventually sell us the property.

If you don’t know how to start or keep a conversation going, there are lots of great books out there. I’ll start with Lil Lowndes how to talk to someone, That being said, the best place to start is simply to ask, “How was your day?” and see if things take off from there. Be sure to ask open-ended questions so the salesperson has a chance to elaborate.

Another great tip I got from Karishma on Command’s great YouTube channel is to be a “human Google”. As he says,[Take] All those questions for which maybe we turn to technology or maybe we don’t even raise our voice and [ask] The people around us, especially the people we don’t know…”

In this case, take whatever questions you have about the house or maybe have a picture of them on the wall or something they mentioned (that is not controversial) and ask the seller about it. There should be a conversation on that. Then, after five to 20 minutes, get down to business.

2. Take a genuine interest in the other person

Virtually everyone can smell false flatterers and hypocrites. So don’t bother making it fake. It’s important, as Dale Carnegie so famously put it in his excellent book, how to Win Friends and Influence People, “Take a genuine interest in other people.” If you think about it, there’s no reason not to be interested in them. We are a social species and talking to people is generally enjoyable.

Even if the person is unpleasant, there is something to be learned from him. As Ralph Waldo Emerson famously said: “In my walk, every man I meet is in some way my superior, and in this I learn from him.” The best investors I’ve met have all been avid learners.

Along with being interested in others, you must also have empathy. Many of these sellers are in difficult situations and you should empathize with them about this. After all, you are there to offer a possible solution. Sometimes, you can even help take the lead.

Back in 2009 and 2010 when we were buying great short sales from people who were behind on their mortgages, after the person said they were behind, I would say “Who isn’t these days?” (This was during the financial crisis.) I think this line took away a lot of the seller’s embarrassment and made it easier to talk openly.

3. Make Your Case Sincerely, But Please

negotiation

Most of the time, you’ll need to make your case for why the property should be sold for less than what the seller wanted. But how can you do this without offending them as mentioned in the not-to-do list? The answer, in my humble opinion, is to phrase everything positively. That is, describe what you would need to do to get the property where you want it, not what’s wrong with it.

For example, instead of saying “This carpet is out of date,” say something like, “To get full market value, I would need to upgrade the carpet.” The word “upgrade” is nice because it doesn’t mean that what exists is bad, just that it can be made better.

A billion dollars is an upgrade from $1 million, but are you going to complain about $1 million? Most of the time, the seller will be fully aware that, say in this example, the carpet is terrible. But just as someone would get offended if you say they’re bad at math right after admitting they’re bad at math, it’s not so harsh when you phrase things in the positive.

4. Don’t take offense

Most of the time, your offer will be well below what the seller wants. The salesperson may get angry at this, but is more likely to dismiss it and say something like, “Oh, I could never stoop that low.” Either way, don’t get angry or try to make excuses. Just say cheerfully “No worries. How low do you think you can go?” or something like that. If they’re pissed about it, it’s probably better not to even ask the counter. Just be pleasant in response and remember it’s a numbers game. There will be many talks that don’t work out and that’s okay.

Connected, 3 Ways to Respect Home Sellers When Negotiating a Deal

However, regarding this point, it is important to understand that most negotiations involve some back and forth. Many direct-to-seller negotiations go on long before the home is put under contract. A friend of mine actually noted that virtually none of the deals he buys from direct sellers come from their first conversation. Most of them come after a long time. This is why it is so important not to take offense when the seller says no and moreover…

5. Follow up

As mentioned above, often these negotiations are not settled on the first go. Perhaps the seller wants to try to get the home listed for sale by owner. Maybe they do and it doesn’t go well or they never get around to it. Most of the time the best way to do this is to ask if it’s okay to follow up in a few weeks after the salesperson has said “no.”

Usually they will say “yes” no matter how low your offer is. Then wait two or three weeks and call back. Perhaps nothing has changed, but sometimes the seller has a fresh perspective on the situation and will be more amenable to negotiation.

Before I finish, I’ll add one last point that can go on either the to-do or not-to-do list and that’s just to be open and honest about what you do for a living and not to screw anyone over. Let’s not try. Sometimes a real estate investor’s reputation can be tarnished because of a few bad apples. It is very easy to make someone believe that you are not one of them.

Being fair with people and telling the truth makes things easier. After all there is less to remember.

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What will you add to the to-do list and to-do list?

Share with a comment below!

Note by BiggerPockets: These are the views expressed by the author and do not necessarily represent the views of BigPockets.

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