Staying committed and checking in with the customer can pay off after more than a year. Which is why it’s worth staying in it for the long haul.
Getting to know the property owners and learning about their experience with the real estate market is an important aspect of understanding their motivation for selling without a real estate agent. In fact, one of our successful affiliates learned early on that listening to and working with a potential customer can yield a high return on investment.
This is especially true considering the three payment days my company makes on most deals. With this in mind, you will start to realize the huge profits left on the table if no follow up is done.
How to establish relationships with potential vendors
Here’s a story about a colleague of mine who started laying the groundwork for a deal with one of his first phone leads. Every 90 days he would check in and see how the owner was feeling about the market and his property.
After a few conversations on the phone, she and Sellers began to establish an ongoing relationship. By doing this, he got a better feel for why the salesperson was selling or not selling – just by listening.
After about six months, the seller assured that, while he was not ready to sell yet, he had decided to get in touch with us when he was ready. He further explained that circumstances (such as one of his children returning home to live with him) had delayed the sale.
Unfortunately, that was not something we could help with. But he also revealed that his previous experience with the home on the market was also a reason for his hesitation.
He had spent a year with his property on the market. And after dealing with the realtor in that process, it all felt like a waste of time and money.
We simply explained that we have different ways of buying the property. We also discussed why we have been able to sell this on our end, given the expanded pool of buyers when one considers those who are renters as opposed to traditional.
How to undo past sales mistakes
We recognized that one of our biggest challenges when selling a property was that the Realtor’s final listed selling price is often still out there somewhere on the internet.
Thus, we asked the owner to list the dream price on Zillow, which would ultimately accomplish two things:
- The more recent value of the home will be readily visible online and will affect the perceptions of potential buyers.
- This will give the owner a taste of the current market. Wouldn’t be likely to sell at the dream price. But if the seller gets that amount, we will be happy for them and move on.
The deal languished for 18 or 19 months, with the home listed online for $689K, which generated a few calls but no offers. That price was not unreasonable; It’s just that the specific field was full of some other listing.
how patience pays off
When the owner was finally ready to sell, we got the house for $580,000. We have it listed for sale for $679,00, which will be recognized as a discount for the pool of interested parties.
It also showed the seller that the market didn’t jump at that high price and gave him more confidence in working with us.
Nurturing that relationship and assuring each other that we were on the way to a deal paved the way for a great experience with the seller. We negotiated terms with them for monthly payments that were contingent on finding a tenant-buyer. It will start 30 days after they secure their placement.
deal structure
Most of our deals are dependent on a buyer, unless we’re taking on some serious additional free equity. As a new investor, you want your entire liability to be on a buyer.
Once you have three or more deals, the cash will flow in, however, so you’ll have the option of buying more aggressively and taking free equity while you do it.
Our partners negotiate a delay of 30 days to support themselves. So in essence, they are using their constant stream of income from the tenant by capturing the first month’s payment and starting paying the seller’s mortgage month number 2.
As we began this article, the lesson from this situation is that deals take time. You have to be committed – not necessarily full time, but wholeheartedly – to this business. And if you do, you’ll love the rewards.
deal summary
Source: Expired Listing
bought: $580,000
enlisted: $679,000
pay day #1: $70,000
payday 2: $26,778
Payday #3: $27,288 ($508 principal paydown x 36 = $18,288. Markup, minus $70K up front = $9,000.)Total: $124,066
If you’ve followed past articles, you know that our pay averages range from a low of $45,000 to a high of $120,000 across the country. We’ve seen exceptions of $30,000 and even $300,000—and that came in slightly above the high average.
What is your best advice for building relationships with potential buyers or sellers?
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Note by BiggerPockets: These are the views expressed by the author and do not necessarily represent the views of BigPockets.
