I've purchased a course and every creative offer I've made has been rejected Al said. While Al wasn't able to become one of the few people I work with personally, I was still impressed with the incredible desire I saw in his eyes. Sit down, Al. I instructed. I'll give you an essential secret in the five minutes I have before I have to go catch my flight.
“You see I used to be right where you are. I wanted to create financial freedom but I just didn't know how. What I'm going to share with you right now is a big reason that I'm able to put together deals 8 out of ten times when I go to meet a property owner these days.”
Al pulled out a notepad and wrote 8 out of 10 at the top. The secret of being able to close deals is to get more and more careful over time who you are willing to make offers to. In the beginning, when you are first getting started investing, you should really go out and make as many face to face offers as you can. You'll be talking to sellers who aren't highly motivated but that's OK because you'll be doing this just to get comfortable talking to sellers and also to practice your negotiating skills.
Don't even try to get a deal for the first 10 or 20 offers.I continued as Al looked over at me quizzically. If you happen into a deal when you are practicing then good for you, just don't be over eager in the beginning. After meeting with 10 to 20 sellers in this fashion you'll be ready to start qualifying sellers at the next level.
You'll want to find out as quickly as possible whether or not you are dealing with a motivated seller who is open to a creative offer. Truly motivated sellers make up a small portion of the market. I shared. Trying to make a creative offer to a seller who isn't motivated is like trying to teach a pig to sing… It not only won't work… it also annoys the pig. Al laughed at this point thinking about the reaction he had gotten from some of the sellers he had made offers to.
As an investor, you'll want to make a profit on every home you invest in. I explained. There are two basic ways that you can do this. You need to get either a good price or good terms. A good price means buying at a low price so that you can resell today. Good terms means that you get to control the property without putting much money up front and you wait for the property to go up in value.
Buying low tends to leave the seller a bit upset, Al. I continued. I've seen sellers cry when I told them how little I was willing to pay them.
I've found that its easier to find motivated owners who are open to terms. As long as they get their price, even if they have to wait a few years for it.
They're happy. Is it important for you to feel like you are helping other people to be happy? I asked Al. Heck yea! responded Al.
The secret to doing this without getting frustrated is in the questions you'll ask in the first few minutes on the phone.
The first question to ask is Do you need all of your equity out of your home to go and buy another home? I said. You see Al, If the seller needs all of
his equity up front, hell need to find a retail buyer to sell the house to. This means that this house is not for you, just wish the seller luck and get on to your next call.
If they don't need their equity out of the property, then continue with your phone call. Does this make sense Al? Sure does Peter. Al responded as he furiously scribbled notes on his pad.
The next level of qualification means the seller is open enough to be willing to look at a creative offer. Do you know the best way to find this out, Al? I asked. No, please tell me. Al responded. You ask them. I said.
Al seemed suprised that it could be this simple. When I'm serious about qualifying a seller, I'll say, I invest in a variety of ways and I'm not sure which of these methods might be able to help you. Sometimes I'll lease a home for a year or two and then cash the seller out at the end of the lease…Will that work for you?
If the seller answers yes or maybe then he's worth a visit. If the seller says no I wouldn't ever do anything like that, then you gently and quickly get off the phone.
To fully qualify a seller you'll take the conversation a bit farther. A common mistake that beginners make is to race right to these final questions before asking the initial questions I've just shared with you. The problem with this is that without the initial questions, you'll sound too eager. I said. Go slowly but surely and you will be successful, Al.
I continued. Your final questions are going to involve laying out a possible deal right over the phone. Saying things like, I don't know if I could offer you this exact deal or not, obviously, I'll need to see the house. But if I were to offer you rent of… and a price in 2 years of… Is that something that would work for you? If not, what did you have in mind?
You see, Al, what you are really doing is roughing out the negotiating arena with upper limits for what you might possibly pay. You'll hopefully be able to negotiate down in person from the numbers mentioned on the phone. I said.
Now if the seller seems inflexible or just wants way too much then you should save time by moving on, quickly, to your next possible deal. I said with a wink. Which reminds me. I need to catch my flight. Use these ideas to get started and then call me for more help. I might be able to take on another student by the time you call.