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How to Negotiate with Sellers and Close the Deal by Shawn J. Dostie    0
inShare Here is a great tool that works for buying and selling, but we'll concentrate on just the buying side.

First, you must realize that all sellers have a problem. They need to sell a property to get something they want or to get away from something they can't afford. You can create motivation--not always, but a good bit of the time--by acting as a counselor on their behalf.

You do not need to bedazzle them with your knowledge of creative real estate terminology. They are not well-versed in this field, nor do they wish to be.

Instead of saying, "We would like to do a wraparound mortgage," or "We will buy your home subject to," you would say, "We will create another paper to make sure you get all your money," or "We will take the burden of those monthly payments away from you." Instead of saying, "We will pay off you arrearages," you would say, "We will make up all the late pays."

If you have sellers with bad credit, and they are behind on their payments and facing foreclosure, which sounds better? "Mr. Client, we will do a 'subject to,' the loan will stay in your name, and sometime down the line, if the new buyer doesn't screw up like you did, the mortgage will get refinanced."

Or, "Mr. Client, we will pay up your late payments and make sure the payments are made on time. Not only will that stop the bank from harassing you, that record of on time payments before the new buyer refinances will look very good on YOUR credit."

Use benefits to convince the sellers Remember to always be closing and always use words that show the benefits to the sellers. What are the benefits to the sellers?

• Speed: The problem can be solved now. No waiting for an agent to bring (or not bring) offers.


• Peace of mind: The property is sold, and now they can move on with their lives.


• Credit: A timely record of payments always looks good, especially one the size of a mortgage.


• Capital gains: This is especially true for older sellers. They only pay the gain, as they receive it.


• Interest: They get additional interest instead of getting 2% at the bank. (Apply to their greed factor.)


• Better price: Terms always net the sellers more than an all cash offer. (Show them a cash offer.)


• No agents to pay


• No landlord headaches


• No holding costs: If they hold the property for six months for a better offer, what will they net? How far will the mortgage balance come down? How much better will the offer be? How much in monthly payments, insurance, and taxes? How about that big fat commission? Will that house they want now, still be available?


• You are here now. What happens in six months if you decide to take my offer, but I already have enough properties to keep me busy for now?

Handling the sellers' objections We are trained as consumers to hate any type of sales presentation, and as a society, we have developed some pretty sophisticated defense mechanisms. It is our job as investors to break down these barriers and get the seller to say yes.

There will be objections. If there aren't, you better watch out because something is wrong. When the sellers voice an objection, stop whatever you are doing and address the issue. It will not go away.

I almost always address objections in this manner: "That's a great question; we get asked that a lot. I always get worried when someone doesn't bring that up. That means you are paying attention. The reason why we do things this way is..." or "This allows us to do business now."

Notice that you are complimenting the sellers for being intelligent. Flattery, if not abused, will get you everywhere you want to go. Flattery is the velvet over the handle of the hammer.

With objections, always be honest and up front. It is not a deal killer if a sellers object. I always ask the sellers if they understand before I continue. I will also ask if they want me to go on because if their objections are insurmountable, I need to know as quickly as possible, so I can go on to the next deal.

Here are some very important words to close a deal. If the sellers have a small objection that you know you can handle ask (memorize this): "If I could would you?" These are the five most powerful words in negotiating. They do not offer an out if you concede to their point. They create a win/win situation.

Finally, when you finish the presentation with an offer, end with an open-ended question: "When would you like to close, two weeks or the first of the month?" Don't ask a yes or no question. Don't ask, "Is this OK?" Always assume the close, and you will close more deals.

 

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_I posted this in another forum back in January and thought that some might find it useful here. Enjoy!

First read all the articles, maybe buy a course or two. Second, develop your personal road map and write it down. You should eat sleep and be your plan. It should never ever be very far from your thoughts. Know exactly where you want to go, when you need to be there by, and a step by step plan ( a would you like fries with that plan) of how to get there by that time. Third, get into a position to control property. If you have problematic credit, work on it, take responsibility for the debts that you incurred and change your attitude. If you have a spending problem ie, spending your profit before you get the cash in your paws, get it under control. Believe me I still reflect upon my
  past activities and wonder how the heck I ever got to here. A strong healthy attitude will carry you a long way. Fourth,always be aware that the profit in a Real Estate deal is made when you buy the property, even though you only get paid once you sell. In other words, Know several exit plans before you sign. Do not speculate, guess, hypothesize,opine, philosophize, on the value of your "investment". You are new, you don't know squat, and a lion in the jungle will eat you. So, fifth know your exit strategy.
Sixth, Go slowly. Do not get in over your head. If you went out to play football on a Sunday afternoon and suddenly found yourself with the ball facing the Tampa Bay Buccaneers entire defense, let alone Warren Sapp, you would get creamed. Same with Real Estate. Real Estate is highly illiquid meaning it takes awhile to turn it into spendable cash. So, if you get in a cash crunch it can absolutely destroy you getting back to ground zero. Seventh, once you know you are ready, look for a motivated seller. This is the most important so I'll repeat it. Seventh, once you know you are ready, look for a motivated seller. These are not as elusive as one might think. People die, get divorced, get transferred, develop medical problems every day. Does that mean that every widow will sell you her property at 65% LTV? I've known some mighty sharp widows in my life. Does that mean that everyone that gets transfered across the country will have scads of equity to give to you, and that no other investor will find before you or have better resources than you to button up the deal? Absolutely not, but it's where to find the deal. Look in the newspaper for clues that a prpperty might belong to a distressed owner (Not a realtor's Owner Motivated sign). Walk and talk to people who may be able to help you. Attornies, CPA's, and Bankers are all close to these types of deals. Call ads or look for for rent signs to target burnt out landlords. I developed a plan for retirement. I have a day job that I love. But I'm self employed which means I'm responsible for my own "Social Security". I will be able to retire comfortably in 20 years at age 56. My personal plan is that I buy cashflow through highly leveraged (read Highly risky) multi family deals. I buy duplexes and triplexes and SFR with Little out of pocket but positive cashflow. I say risky because I am blessed with a strong cashflow from my day job and the positive cashflow I expected didn't materialize. In other words the $18,000.00 I expected actually cost me $87.00. That's right, it cost me $87.00 for the right to have 10 tenants live in my housing. Of course I did a lot of unexpected repairs, learned about the eviction process, spent some saturdays killing bugs, and my children proudly state that daddy buys and sells cars and houses. However My net worth has skyrocketed....anyone can say market value is $xxx.xx but that's not where the rubber meets the road.
My next venture will probably be Lonnie deals or John Lockes Subject to, or forclosures, as well as continuing to grow my long term rentals. If you don't know what a Lonnie deal is, explore this site and search all the archives.

Good Luck,
Shawn(OH)

Hello and welcome to the site. Introduce yourself here and tell me what you think.

Hello and welcome to my very first blog. I suppose I am technologically challenged but wish to encourage you my current tenants, and prospective tenants to help me by giving me your input. Without input, it is very difficult to improve. That said, I am human and subject to the foibles of human nature. I ask that whatever your comments, please keep them clean. Any rude, vulgar, or otherwise socially unacceptable comments will be deleted. I don't mind criticism. In fact, I find that criticism can lead to better communication between two parties and clear up misunderstandings. Please remember that this is a business and not a charitible organization.