When you meet with a motivated seller to negotiate a deal there are five specific steps you need to take to get him to say “YES!” to your creative offer.
Step 1: Ask the seller to show you around the house.
Your Goal In Step 1: To establish rapport with the seller.
In its simplest form, rapport is a connection of friendship between two or more people. Your goal is to become friends with the seller. As you go around the house with the seller, do your best to get the seller talking about himself and establishing a connection with you.
Beware the common trap of picking apart the house to the seller as you walk through it. This only severs your connection with the seller. Instead, focus on the seller and building a bond then on the house.
Once you have seen the house and established a strong connection with the seller, it's time for the two of you to sit down and talk through steps two through five.
Step 2: The Up-Front Agreement
Goal: To create the context for an immediate decision from the seller on your offer.
The up-front agreement is critical for your peace of mind. It guarantees that at the end of your conversation with the seller you will know if you are moving ahead with the deal or not.
The biggest benefit you get from using the up-front agreement is that you will know right away where you stand. You are OK with a “yes” or a “no.” What you will no longer accept is a “maybe.” You need to protect your time. This means only working with sellers who want to work with you.
Get the seller to agree up-front to let you know where you stand at the end of your conversation.
“Mr. Seller, I'm kind of a black and white person. I want to be respectful of your time and my time. At the end of our discussion I promise to let you know exactly where I stand, either no this isn't a fit or yes this is a fit. I am going to ask for the same courtesy in return. Is that fair?”
Step 3: Draw Out the Seller's Real Motivation for Selling.
Goals: To uncover what the seller's real needs are.
Listen to what the seller says then draw out his motivation for selling. The only way you can do this is to subtly get the seller to volunteer their problems with their house themselves.
Just how do you do this? By carefully using negative questions that turn what you think is a real concern of the seller into nave sounding good things. What this means is that you take what you think is a problem for the seller, and apply the following formula to it. You'll be amazed at how fast the seller will correct you and vehemently voice just how big of a problem it really is for them!
The Magic Formula for Getting Motivated Sellers to Admit Their Real Problems
“The good thing is that it's not a problem ____(insert problem)___ right?”
Now you need to say this in an innocent and nave sounding voice but it works wonders. Here is an example to show you exactly how this simple formula works:
“The good thing is that if you rent the place out at least you'll get to stay involved with the property on a day by day basis, right?”
(Typical seller response: “I hate dealing with renters, its a big hassle.”
You then say, “Oh, it's a big hassle? I didn't realize that Why do you feel it's a big hassle?”)
See how easy it is. In essence you are identifying the negative realities the seller faces, but you are phrasing them in such a gentle way that the seller will restate it in a stronger form themselves.
It's a fact of human nature that when we are faced with tough circumstances many of us don't like to look them straight in the eye. Your job in step three is to help the seller to face reality of their situation. And you have to do it in such a way as to let them voice the bad stuff themselves. (Otherwise they will resist it.)
The above language pattern of negative phrasing relies on some facts of human behavior. When sellers are selling their house typically they are motivated more out of a concern for making a mistake and getting taken advantage of then by a desire to make money. And when people are motivated more out of fear they tend to look for what is wrong with a situation so that they can protect themselves. And people who are looking for something wrong “mismatch.” If you say this is a “great” idea they'll tell you it's a “horrible” idea. This is why negative phrasing works so well.
Once you draw out the seller's motivation find out one last piece of information: What is the seller's timeline for selling?
Ask the seller, “Mr. Seller, when did you want the property handled? Six months? Twelve months? Ideally when did you want it handled?” Notice that you are hoping the seller will mismatch you and come back and say with some emotion, “I can't wait 6 months, we've been covering the double payments for three months already. I want it handled right away.”
If the seller tells you that they have no real timeline, that they will just wait until the property sells, this is often a sign you are not dealing with a motivated seller. Make sure you protect you time by being willing to walk away if it becomes clear that it just isn't a fit to work together.
Step 4: Getting clear on the financial details of the property
In step 4 you are going to talk through the financial details about the property. You are going to use these financial variables to create your solution to meet the seller's needs. Notice that you NEVER talk about the financial details until you have talked through the seller's motivation!
Ask the seller what they “realistically” expected to get for the property, what they owe on it, what their payments are, and all that.
Step 5: The “What If” Game
Goal: To get the seller to agree to the major terms of a deal BEFORE you ever make a formal offer
Here's your chance to negotiate all the major terms of a deal with the seller before you ever break out an agreement form and write them up an offer. You do this by using the two most powerful words in negotiating: “What if…”
This is the time for you to think through what you could possibly offer the seller that would meet their needs and create a large profit for yourself. The best part about this is that if the seller ever says no to one of your “what if” scenarios he isn't saying no to your offer, merely to one of your trial balloons. If he says no then ask him what if (make another trial balloon offer.)
Once you come to an agreement to the major terms of the deal, then and only then bring out the agreement and write it up. That's how easy it easy to get seller's to say “YES!” to your creative offers. The key is to cover the five areas in the correct order.