Today’s special episode is part 1 of a 3-part series hosted by no other than extraordinary wholesaler (he has wholesaled over 1,000 properties!) and phenomenal coach (he’s head of training at No Limits Real Estate Investing), Todd Toback.
If you’re familiar with the podcast, you probably already know Todd is Tom Krol’s big brother. Which means his energy and enthusiasm are just as infectious!
Regardless, if you’re a seasoned wholesaler or a cautious newbie, you’d be in for a treat if you listen to today’s show. Todd not only shared the effective tips and tricks he swears by, he also delivered them in a manner that’s both fun and vibrant! No dull moments in today’s episode so make sure you tune in!
How To Meet, Negotiate With, And Close Motivated Sellers (Part 1 Of 3)
I am so excited to be with you for this three-part series on speaking, meeting and negotiating with motivated sellers. I’ve wholesale over 1,000 properties in 1 of the most competitive markets in Southern California. I also happen to be the big brother of Tom Krol, the Founder of this show. I am so honored to share with you the secrets to locking up huge spreads, meeting with motivated sellers and making huge profits in my favorite niche in real estate. That is wholesaling. No matter where you’re at, if you’re brand new and you have locked up a deal or if you’re a wholesaler and you want to do bigger deals, this show is for you.
I remember when I first got started in real estate. I wanted to quit my job. I was frustrated. I wasn’t making enough money. I remember I was in my car, driving home from a meeting with my boss, Derek. I love Derek. The only problem was after I asked for a raise, Derek told me that I didn’t know how the corporate world worked and that I had to pay my dues.
After doing the math on my salary, my income and where I wanted to take my family, it spurred me into action to do something better with my life. That day back in 2001, I was driving in Chevy Impala on the 101 Freeway. I saw Barnes & Noble out of the corner of my eye. I pulled over three lanes of traffic. Everyone was honking and giving me the finger. I pulled into the parking lot of the bookstore and picked up a book called Multiple Streams of Income by Robert Allen.
I was hooked on real estate. I remember I had all this enthusiasm. If you’ve been reading this show, you probably are jazzed about real estate. You understand that you want a better future for yourself. You want to make more money, more freedom and be able to do the things that you want to do, not have to be chained down by the constraints of a fixed income. My goal for this show is to tell you that it is possible and to give you the tools that will make it possible. You just have to take it and put it into action. This is going to be a three-part series.
It’s funny because I tell the story of me doing my first real estate deal, how I quit my job, pulled over those three lanes of traffic and spurring into action. What a lot of people don’t talk about is what happens between the time that they made a decision to do their first real estate deal and the time they got their first check. I want to start very broadly with you over the next three episodes. I’m going to get more granular, narrow and narrow.
Meeting With A Motivated Seller
I’m going to talk with you about meeting with a motivated seller just like I did on that first appointment in which I made $40,000. I did pretty much everything wrong but I’m going to teach you how to do the opposite of what I did. If you put into practice what I teach you on this show, you make three times as much at least collectively.
I’m going to dig into this first episode. It’s going to be wide on meeting with a motivated seller. In the second episode, I’m going to talk about how to talk to motivated sellers and qualify using some techniques of The No Limits Sales System. That’s the system that we use in our business and with our acquisition managers to close deals. In the third episode, I’m going to get specific on how to negotiate prices using a lot of different techniques and questions.
If you’re scared and uncomfortable and feel like you don’t know what to do, growth is coming.
Three Steps To Wholesaling
If you want to know more about this show in between these three episodes, go to ClosingSellers.com. I got free training there for you. It’s an hour or more videos that you can watch there. I remember when I was meeting with this motivated seller. I send out my letters and this is where marketing takes place. All wholesaling comes down to three steps. That’s it. Do not overcomplicate this business. 1) Generating leads, 2) Converting those leads into a contract and then, 3) Disposition of the property, otherwise known as the exit. That’s it.
If you’re overwhelmed, confused and don’t know what to do with this tool, that tool, this strategy and that strategy, take it back to these three steps. Number one is marketing for motivated sellers. Number two is the conversion of those sellers into contracts. That’s what this three-episode series is all about. Three is your exit from the property. That exit could be that you’re going to wholesale, wholetail, fix and flip or decide to hold it as a rental property.
This three-episode series is all about number two but this does not matter if you are not generating leads. You must pick one source of marketing. Dig into it. Focus on it like a crazy animal and generate leads. When you have leads come in, you have something to convert to close the sale. It will give you a different energy. It will give you different moxie and a little swagger, knowing that you have leads coming in every single day and that your next deal is right around the corner. Remember to market consistently and then convert.
Back to my story, I remember I got this book on real estate by Robert Allen and it was Multiple Streams of Income. It told me to find out-of-state owners to mail to. That’s exactly what I did. I went down to the county courthouse. This is before tools like ListSource. I found all the owners who lived out of state. I remember getting a few phone calls. It was only 1 or 2. I remember the phone rang and a lady called me to tell me that she owned a condo in the complex that I was living in.
That was not a coincidence. I targeted this specifically. It was a small beach town in Santa Barbara. If you’re thinking, “This is going to work because you were by a beach town,” I’ve heard other people say, “This doesn’t work because I was in a beach town. The prices are too expensive. It’s too competitive.” Believe me, if I was able to do this deal in a competitive market like Santa Barbara in a condo right by the beach, you can do it in your market.
It could be done in competitive markets, tertiary markets, those that are out on the outskirts, and medium-size markets. No excuses. Know that it can be done using the techniques that I’m going to teach you here. I remember when that first call came in. I was so nervous. My heartbeat was beating out of my chest. I was like, “I have a call. What am I going to do?” I felt like Tommy Boy in the movie Tommy Boy.
I was going to kill the sale. I didn’t have any money in the bank. I didn’t have credit. I knew I couldn’t qualify for a loan. I didn’t even have the contract. I didn’t know what to say. I didn’t even know the price I could pay. I was all over the place. All I knew is that this book told me to find a motivated seller. I could feel my heartbeat through my chest. As I think about that, it’s beating.
I want to let you know that those feelings are all normal. This is not your fault. No one has taught you this but this is good because if you’re scared, uncomfortable and you don’t know what to do, growth is coming. This show is going to give you new skills, capabilities and capacity to negotiate giant deals and five-figure paychecks that are going to go into your pocket.
Three Things About Sales
I want to convey three things to you. Number one, sales and conversion are so important. If you take a look at the most successful wholesalers in this business, they all know how to convert or teach people on their team how to convert. That’s another word for sales. It is a necessity. You can’t get by it or say, “I am or not a natural-born salesperson.” This is required for your success but I have good news for you.
Two, sales is learned, not a God-given talent. Some people may seem like they have the gift of gab. They can talk a lot and maybe build rapport. Maybe that is true but that is not the same as conversion. This can be learned. I remember getting my first sales job selling alarms door to door. I was the worst person on the entire team. I was in this van for three weeks, going door to door selling alarms and hadn’t sell sold any. Everybody else in the van had.
I was a little bit shy. I had no specific sales training. When I was complaining one day, this one girl in the back of the van screamed, “When you learn to stop blaming everybody else, that’s when you’ll be successful.” I started to listen to her and get coached by her. She said, “This is your craft. You’ve got to master your craft, go over the script, say it in the mirror, believe and know it. It’s got to become the fabric of your being.” That’s the good news. You can learn it.
Three is that you must take this seriously and make this your craft. You must practice it, learn it, repeat it and commit to understanding that this business is all about conversion and you are going to put in the work to do it. These three episodes will give you everything that you need to know to close motivated sellers. If you even want to dig deeper, you can go to that free training on ClosingSellers.com. There are free videos there for you and a bunch of other stuff. Remember those three.
I remember I met a motivated seller in person. I didn’t have the contracts, any other forms, disclosures, scripts, the questions to ask, how to look at the house or how to value the house. I went there and did my best guess. Some of the condos in the complex were selling for $360,000 or $370,000, maybe $380,000. I negotiated my best and the lowest I could. I locked that condo for $280,000. I went out and made it happen. We wrote it up on a napkin or a piece of paper. I opened up escrow. I found a partner to come up with the money. I didn’t even know that you could wholesale back then. I did the deal. I made about $40, 000 but I look back on that and say, “What if I knew then what I knew now?”
Sales is learned, not a God-given talent.
I started to study, read and devour everything I could on sales and conversion. I found people across all industries. I was doing deals. I started to keep a journal of what worked and what didn’t. That is the birth of what I’m about to teach you here. In this first episode, we’re going to go on talking about setting the stage and what to do when you meet with a motivated seller. When I met with that motivated seller, I showed up there. I had paper and pen in my hand and didn’t know what I was doing.
I’m going to give you specifics about what to do. This is assuming that you’re marketing and you gauge motivation. Use the tools that I’m going to teach you in the second part of the series so watch out for that. Assuming that you are ready to meet with a motivated seller, what you want to do is get there fifteen minutes early. Notice I didn’t say, “Get to the door fifteen minutes early but get to the property and park a few doors down.”
What you want to do at this point is relieve the seller’s anxiety, especially if you have a magnet on the side of your car or your car is a raft with a “We buy houses” sign. You want to decrease their tension with you being there because most likely, they’re embarrassed that they let a situation go down the tubes. It could be a tenant that’s living in the property, the condition or maybe they’re a hoarder. Maybe they’ve got a ton of family members living on the property. Who knows what it could be?
You don’t know what this is so make sure you park down the block. Get there fifteen minutes early and get your head in the state. Practice your sales skills and go over what I’m going to teach you. Close your eyes and visualize this process in your mind. It’s very important that you build trust with the seller. Every time you do what you say that you’re going to do, no matter how small, is a promise kept. Vice versa is that if you do not keep a promise and you show up 2 minutes early or 2 minutes late, you broke a promise.
Depending on that seller’s personality, you may be a liar. It’s important. If you say you’re going to be there at 2:00 in the afternoon, get there fifteen minutes early. Park down the block. Exactly at 2:00, knock on their door. The seller is going to answer. You do not want to face them face to face. Step back one step and slightly go to the side in a non-confrontational position. This is all ninja stuff I’m teaching you. You come in. Let them invite you in. Next, wipe your feet to show that you’re considerate.
That seller is going to start to notice your professionalism. These are little tiebreakers that are going to allow you to beat out any competition that comes your way. When you come in, this is where most people make a mistake. The first step is to build rapport. This is going to be critical. Everybody says, “Build rapport,” but they don’t know what that means. There are three levels of rapport that I’m going to teach you about in this episode. To get serious, be the best and become a master of your craft, you’ve got to get to level three.
Most people define rapport as they walk and they’re like, “Hi. Where you from?” “I’m from San Diego.” “So am I. What’s the lowest price you’ll take for your house?” That comes off as so funny. The seller knows what you’re up to and they just want to get to business. Do not rush this process. I want you to slow this process down. Slow it down so that it hurts. You got to get to level three, which is rapport.
You’ve already done the marketing, talked to the seller and probably done some negotiating, which I’ll get back to episodes 2 and 3 on the phone. Don’t blow it in the red zone. If you know anything about the red zone, that’s the area of the field where you score. You’re at the 20-yard line trying to get in the end zone. Don’t blow it.
What are the three levels of rapport and how do you get there? Most people are good at the first level. You get in and talk about people, places, things and experiences. If you see pictures, ask them about their family. If you see sports memorabilia, talk about teams. If you see pictures of a vacation, ask about places. If you see a picture of them bungee jumping, talk about that using open-ended questions. What are open-ended questions? If you say, “Have you been bungee jumping?” and you see them bungee jumping, don’t ask that because they’re going to say yes or no. Don’t ask questions in which the answer is obvious.
If you see a picture on the wall of them bungee jumping, don’t say, “Have you ever been bungee jumping?” Say, “Can you tell me about the time that you went bungee jumping? How did you feel? How did you get past your fears? I’ve been thinking about that but I haven’t had the guts. What convinced you to do that?” Get them talking about themselves. You may feel the need to jump in and talk about how much you’ve done or whatever it is. Keep asking them questions, focus on them and get them talking about themselves.
Here’s the secret part. The more you get them talking about themselves, the more they will start to weave in little issues about their property and their situation. Keep the questions off you. If you happened to go bungee jumping or wanted to go, mention that quickly but shift the conversation back to them. Keep them talking and get them to open up. This will also get them in the habit of talking and trusting. The more you listen and the less you speak, the more they will open up to you. Get in this mode.
Once you’ve done that, that’s level one. We are just getting started. Level two is that you want them to teach you something. Do you know how I talked about those open-ended questions? Open-ended questions are questions in which the seller cannot give you a yes or no answer. There has to be some explaining with that. For me, I always use this example, “I love to grow tomatoes.” Whenever a seller had tomatoes in their backyard, I always bring that up.
Always understand that you are learning and growing on every single seller interaction.
I said, “Those are good tomatoes. Can you tell me how you get them so big or how they’re so red? How were you able to get this variety? I haven’t been able to find them.” You want this seller to teach you something. If they’re older than you, you want them to feel like they are helping you. You also want to get them in that mode to keep that momentum. Ask them. Get them to teach you something. If they have a 1965 Mustang and they love cars, get them to teach you about Mustangs, their record collection or their chess championship trophy collection.
Have them teach you. Sit down and play some chess. Do not rush this. Stay in rapport. Sometimes a seller might want to get right into business and that’s okay. I’m going to show you how to handle this certain personality type. For the majority of sellers, this is the way to go. How do you know when you’re at level three report? Level three is when you are ready to move to the next step and start even talking about the house. The seller may have already tried to show you the property. Get away from that.
Maybe look at a few things around. Shake your head and say, “We’ll get back to the seller in a second but can you tell me more about this car?” Whatever that is, level three is when they give you something. That’s when you know you’ve made a friend. Have they given you some tomatoes, a picture of a Mustang, a little car or some cookies to take home? That’s when you know.
On every seller appointment, you won’t get there. That’s part of the process but if you get there, you’ve done a phenomenal job and always shoot for level three rapport. When you’re going through a seller or appointment, always understand that you are learning and growing on every single seller interaction. Either you win or learn. When you meet with a seller, even if you don’t get the deal, what did you learn? Did you get to the level three report? Did you dig deep and make that happen?
I’m assuming at this point you’ve gotten to level three rapport. You’re dying. You want to meet with the seller, get to the numbers, lock up the contract and make that big check. Who does it? Believe me, maybe your anxieties are through the roof. You’re wondering if the seller is thinking that you’re a fraud or maybe you’re wondering about the other offers they have on the table. Don’t worry. We’re going to solve that for you.
Face The Truth Of The Seller And The Pain Step
The second step happens to be my favorite step. A lot of people don’t go through this step because, 1) They don’t know how to do it properly and 2) They are scared of the truth. One of the things that I want to explain to you is that the more you face the truth of the seller, the more that you say uncomfortable things and the more that you say what the seller is thinking or get them to say what they’re thinking, the better off you will do.
The pain step is designed to have them eliminate every other option besides doing business with you. How do you do this? The pain step is all about eliminating procrastination and opening the seller’s eyes that you are the best option. Remember we are slowing this down. If at any point we feel there’s tension in the conversation, we’re going to go back to the rapport step. I will say to a seller, “Mr. Seller, have you thought about maybe listing this with a real estate agent?” Shut up and listen.
One of two things is going to happen. The seller may say, “I am thinking about listing with a real estate agent. I’ve got three of them coming over right after you leave.” Now you know what you’re dealing with. Two, they may say, “I don’t want to do that. I already went through that route. They overpromise and under-deliver. I don’t want people coming through my house. I am done. I’m ready to do business. I want to move on.”
The reason why people don’t ask that question is that they don’t want to have the seller say, “I am thinking about listing with a real estate agent.” You are not going to give the seller any idea that they weren’t thinking about doing behind your back anyway. Get the courage, say what they’re thinking and find out the truth. That’s important. Next, I say, “Have you thought about maybe renting the property, putting some money into it, getting some renters and keeping the income?”
At that point, they may say, “I have thought about that,” or, “No. I’m not renting it. I don’t have the money. I’m not doing this. I just want to sell.” At this point, if you’re doing your job, you should sense a little bit of frustration with the seller. Slow it down. Bring this pain to the top so that you can help them. These people are natural procrastinators. What you have to do is have them eliminate every other option and verbalize it so they’ll look at you as the solution.
It is imperative that you have all the decision-makers here. If there is a husband and a wife on title, make sure they’re both there. If they’re partners on title, make sure they’re both there. Sellers will tell you, “I make all the decisions.” That is so far from the truth. It is not true. A husband does not sell his property without talking to his wife. A wife does not sell the property without talking to her husband. It doesn’t happen. If you don’t have all the people there, you are putting yourself at a tremendous disadvantage. Even if you take a seller through this pain step, you’re going to have the seller try to sell their partner, wife, spouse or whoever it is on the deal. Do whatever you can to get all the people there.
The third part is you could use one more question “Have you thought about maybe putting more work into this place, fixing it up and selling it maybe for a big profit?” Eliminate those options. You should sense that tension. They should start to get a little agitated. Let me tell you a story. I remember when I got my first job working for medical devices. I got a company car, sat in the dealership, had to buy it and got reimbursed for it monthly.
The more the seller talks, the more you win.
I went in there. I thought I was a great negotiator but they kept me in this dealership for three hours. They asked me all kinds of questions. I thought I was going to negotiate them left and right and get the best deal. Long story short, three hours later, I was so ready to get out of there and sign the dotted line. I didn’t want to read the agreement. I just wanted to move forward. They used the pain step technique to close the deal. It worked. I walked out of there with that car. By the end of it, I probably could have paid an extra $2,000 or $3,000. I was done. I did not want to be in a car dealership anymore.
That is what the pain step is all about. Once you feel you’ve built the pain and you’re going back always to step 1 and step 2, that rapport-building phase and the pain phase, don’t be scared of the answers but also keep that friend. Keep this fish on the line. Keep the line tight. Don’t lose it. If you feel too much tension, build rapport. This is important. I always like to ask one question before we move on. “If we don’t do business, what other options are you considering?” That’s my favorite question. I will then shut up.
That will tell me if I’m competing with anybody else or maybe if they’re going to sell to a family member. Whatever that is, ask that question. That’s a ninja trick there. Move slow. Build the motivation. You’ve built 1 and 2. You’re at level three rapport and the seller has grown slightly frustrated and eliminated every other option. You are ready for the “What If” step. I learned this from one of my mentors back in 2000 and 2001, Peter Conti and David Finkel. The “What If” step is designed to make every offer non-confrontational and also the seller’s idea in every single aspect.
When a lot of people come in, they start negotiating. They’re like, “I’ll give you $150,000 for your $250,000 house.” All of a sudden, it’s a confrontation and dies quickly. “I win. You lose.” The seller tightens up, “I want you to try something different.” The “What If” phase is all about asking the seller how they feel about a certain number and engaging their reaction to that. For example, I’m going to refer specifically this show to wholesaling.
You could do this for every real estate like mobile home parks, which I happen to love to buy and hold, manage and turn around. You could use it for apartment buildings, do this if you’re doing a lease option deal, an owner finance or you’re taking over some financing. This all works but I’m going to focus right on wholesaling. Let’s assume for a second that I’m going to throw out a number. In the third episode, I’m going to show you how to negotiate well. I have the actual techniques to grind that number down in the 2nd and 3rd episode. Make sure you take a look at that. If you want more free training, go to ClosingSellers.com between the 1st, 2nd and 3rd episodes. Make sure you go there and register.
Say I say, “I’m not saying I could do this but what if I could pay you $120,000 for the property? Is that even something that you consider or probably not?” That is what we call a stealth mismatch. I’m going to talk about this in the second episode. You noticed I did a little pull away but probably not. It’s cushioning it. I’m doing the opposite of what the seller thinks I’m going to do. They’re going to come towards me instead of away.
They might say, “$120,000 is way less than we were thinking. We were thinking $150,000 or $160,000.” I cushioned it and made it a question, not an offer so I got the seller speaking and their number. That’s how we start negotiating numbers. We use the “What If” step. If you come in hard, it’s confrontational. It’s like, “I win, you lose.” It’s not a question. The more the seller talks, the more you win.
Let’s go to the next step. At this point, I’m going to say, “On the phone, you said that you wanted a 90-day close so that you could have time to move out. What if I could do a 90-day close? Is that something that you consider or probably not?” They say, “Is that what you want?” I’m going to use that and say, “I’m not saying I could but what if I could take care of all your stuff? You said that you wanted to leave this all here. Is that something that you want or probably not?”
I’m going to use that or probably not. I’m going to pull away every single time so that they feel they might even lose it. I’ll say, “I’m going to write it down.” It’s very important to have a pad and take notes as they’re speaking. When you take notes, it shows that you are listening and you are a professional. It’s going to elevate you. Remember those tiebreakers that I’m talking about. Have a pad and write things down. That’s the “What If” phase.
By using that question, you should have a price, closing timeline, condition and the other terms all knocked out. Even if this is your first deal and your heart is beating out of your chest, I understand. This stuff works. This is all from The No Limits Sales System. This is the system that I use to teach my acquisition specialist to lock up deals. I’ve got all these things and terms in place. I got the deal.
Don’t blow it. There are two more steps here. This is what I call the boomerang. What you want to do is throw this deal away so that it sticks. When you chase a dog, it runs the other way but if you run from a dog, it’s going to chase you. A motivated seller is the same way. You’ve got the terms. I’ll say, “Are you sure that you want to do this deal? Is this a good fit for you?” I’ll throw it away and say, “Are you sure you don’t want to list to the real estate agent?” I’ll go back to the pain step. “Are you sure you don’t want to rent this or sell this to your son?”
Most people don’t want to do this because they’re scared they’re going to lose the deal. I promise you, you cannot kill a deal like this. You’re going to seal it. What you want them to do is have them verbalize all the reasons why they’re going to do business with you right before they sign the agreement. They haven’t signed the agreement yet so you want them to verbalize it and say it out loud. There are people there, the husband and wife, brothers or sisters. Get them talking, have them say it and convince themselves.
Remember, we are not convincing anybody. We are a buyer. They are the seller. They need the deal more than we need them. At this point, they’re ready to go and have done the boomerang. The last part is getting close. Notice I didn’t say, “Close.” I’m going to say my favorite question. “It sounds like we’ve got the framework of a deal. What would you like to see happen next?” Then shut up.
One of two things is going to happen. They’re going to say, “Let’s start the paperwork,” or some hidden objection is going to come out. Don’t be scared of the answer. If there’s an objection, you can handle it. That’s something that we go over in The No Limits Sales System. You can find out more about that and get free training at ClosingSellers.com.
If they’re going to say, “Let’s get the paperwork,” at this point, you should not have any paperwork in your hands. It should be in your car and say, “I have some paperwork in my car.” Go in your car and get a contractor too, have a pen and be ready to go. This is a little trick and I’ve changed this a little bit since I’ve been teaching this. It’s funny. Technology has caught up. When you have a contract, have them both sign it. When you’re going through, go through the first clauses word for word. Read it. As you start to accelerate through the agreement, start to paraphrase.
Don’t conceal anything from the seller but start to move faster, paraphrase as you go and get to signatures. Building trust is a little thing that you can do. To break ties is to give the seller the original and then take a picture on your smartphone via Dropbox or something else so that it’s for your records. Explain to the seller that the title company is going to be calling them in 24 hours. That’s going to lock up the deal.
You got the contract. Make sure your title company calls them in 24 hours and ask them what day they want to come in to sign the paperwork and how they would like their proceeds, their money, check or whatever else they’re going to be receiving at closing. That is the first episode on how to meet, negotiate and pre-qualify with motivated sellers. Make sure you lookout for the second episode in the series on the show. If you want more training, go to ClosingSellers.com. I look forward to having you on the next episode.
- The No Limits Sales System
- Tom Krol
- Multiple Streams of Income
- 2nd Episode – Episode 379: How to Meet, Negotiate with, and Close Motivated Sellers (Part 2 of 3)
- 3rd Episode – Episode 384: How to Meet, Negotiate with, and Close Motivated Sellers (Part 3 of 3)
- Be sure to join the Wholesaling Inc Facebook group