Here’s one thing many wholesalers deal with all the time: educating sellers to accept their price. Nowadays, homeowners have the luxury to go online and check the estimated value of their property and make it their basis when negotiating with buyers.
What is not clear to them however is the price they see online is not a true representation of the property’s real value. So how do you go about educating sellers and convincing them? That’s what you’ll learn from Brent in this episode!
Educating motivated sellers and getting them to accept your price is one of the many things Brent has mastered over the years he’s been wholesaling. If this is an art you want to master as well, consider listening to this episode a must!
- What to look for when talking to sellers
- The four pillars of pre-qualifying
- Fundamental rule when wholesaling real estate
- What you need to avoid when educating sellers about price
- Properties you should look for
- The common mistake most people make
- How to get people to become realistic with their numbers
- What the perfect rapport is
If you are Ready to Explode Your Wholesaling Business, Click here to Book a Free Strategy Session with me right now!
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Hey. It is Brent Daniels, Mr. TTP, and what we’re talking about today is something that comes up all the time. This is incredibly common, because right now, anybody, any property owner can go into Google, put in their address and there’s four or five websites that pop up immediately that give them an estimate of what their property value is worth. Guess what? They believe it. They believe that whatever the internet says their property’s worth is an appraisal on it or is the real value of their property in its current condition. We know that’s not right, but we need to educate our sellers and really find out if they are truly motivated.
Now, what this really comes down to, and this is critical, listen to me here, this comes down to their timeline, all right? What is their timeline? I want you to be listening, I want your antennas to be out like crazy. I want the timeline for these property owners to make a decision, to sign a purchase contract with somebody, whether that’s you, hopefully it’s you, or somebody else is within the next 30 days. That’s what you’re listening for, because that’s going to really show you if they are motivated. Let me break this down even further, okay? You called up somebody. I’ll give you an example. You call up somebody and you’re having a great conversation. They tell you… You’re going through and you’re really pulling out the four pillars of pre-qualifying, right? The four pillars of pre-qualifying, any distress property owner is condition the property, timeline to sell, their motivation to seller, what is their problem, and their price.
You’re pulling this out. You find out the condition is in rough shape. It needs to be updated or it needs to be upgraded, right? It needs to be cleaned up. Maybe it needs significant rehab, all right? You find out that they want to sell it quickly, that they want to get rid of it. They’re finally at the end of their rope. They’re just sick and tired of dealing with this and it’s making them sick and tired of dealing with that property and they’re ready to make a decision. You find out that maybe it was a rental property that’s been just beat up by tenants over the years or maybe it’s been vacant or maybe they inherited. Whatever their motivation, you’ve got the condition, their timeline, their motivation. But then they hit you right between the eyes with, “I want $200,000 for it.” Right?
You’re looking at this property on Zillow. Guess what Zillow says that property is worth. $200,000. You’re like, “Oh, they don’t understand. $200,000 is what their neighbors are selling for in retail condition, in fixed up condition. I need to educate these people.” So here is my suggestion, okay? Because your number, your number’s more like 120, 130 to get that property under to make it a deal for you, right? We’re at 120, 130. They’re at 200. This property checks all the boxes, except for the seller’s expectation of price. So what I want you to do is if you were in that market, you need to schedule an appointment to meet with that seller right now, not tomorrow, not next week, right now.
Let me tell you a very fundamental rule of wholesaling real estate. Time kills all deals. All right, time is not your friend in this. You want to be in front of them. You want to start that relationship with you as soon as possible and you want them to make a decision as soon as possible, all right? So, then you go on that appointment. What you don’t do, let me tell you what you don’t do, what you don’t do is you don’t cause friction in the relationship by telling them they’re wrong, all right? You got to tell them they’re absolutely right, right? They look at the property and you ask them, “How did you come up with the price of $200,000 for the property?” They say to you, “Well, that’s what it says on Zillow. That’s what my neighbor sold down the street. I got a postcard from a realtor saying that they just sold a house exactly like mine for $200,000.”
You go in and you dig into it a little bit and you realize that this property has been upgraded and their property hasn’t been upgraded, right? You say, “Mr. or Mrs. Seller, you’re absolutely right. You could get $200,000 on the market 100%. But let me ask you, do you know of the costs involved in selling your property?” Right? They go, “Well, I know that I have to hire a real estate agent. I know that I got to pay some title and escrow fees. I know I need to fix up this property.” Then you start going through it and you go, “Okay, listen. If you want $200,000, which I totally believe that you can get $200,000 for your property. All right, so we’ve got $200,000.” You can write it right in front of them. “Just to let you know, to hire a real estate agent to handle the sale of your property, it’s going to cost you 6%.” So, 6% of $200,000 is $12,000.
Now, listen, I’m only showing you guys this so that in the situations where it’s a property that is in rough condition, right? If this property’s already fixed up, what are you doing? Have them list it with a real estate agent. Get a referral fee if you have a real estate license or check your licensing laws in your state so that you can get paid on these opportunities. But you can refer this to a real estate agent if it’s a clean property and they don’t really need to trade equity in their house for speed and convenience. Remember, that’s what we’re looking for. So we’re looking for these properties that are in rougher condition. We’re looking for these properties that they want to sell it now.
Listen to me, this is a huge mistake. Before we even go into this breakdown any more, this is a huge mistake that a lot of people make as you’re starting to build momentum in your business, as you’re starting to stack your experience in this business, is that you go on these appointments, but they don’t have to sell for forever. It’s like open-ended. Listen, people will live in a distressed situation for a long time. You probably have a family member or a friend or somebody or a neighbor that’s been living like this, living in a junk yard for forever, all right? A lot of them, they’re not to that point of ultimate stress where they’re ready to sign a contract. So the timeline is so important. You got to pull that out and you got to make sure that you’re not forcing people that are going to drag you along forever to try to make a decision now, because as you break this down, it’ll make sense to them, but they’re not going to make a decision, because they’re not at that point yet. So the timeline is critical.
You go, okay, at this time, you’re at their house. You’ve toured their property. Or if you’re doing this virtually, just get on FaceTime with them and have them FaceTime through the house and have a FaceTime meeting or a Zoom meeting with them right there in front of them as you’re going through these numbers, as you’re going through these. So, this is a agent, agent cost, okay? So they got $12,000 off the bat. “Mr. and Mrs. Seller, do you also realize that you have to pay title and escrow fees or closing costs with a closing attorney? Are you familiar with that? The average of a $200,000 house is about $5,000, right?”
Then here comes the big one. “Based on the condition of the property, it looks like, and I’m just doing rough estimates here, I haven’t run it all the way through, but it looks like it’s going to be about $50,000 to fix this up. That’s new kitchen. That’s new appliances. That’s new floors. That’s new bathrooms. That’s landscaping. That’s fixing up the air conditioner, the roof, the pool equipment. Whatever it is, right? Whatever is there that is going to make this retail ready, it’s going to cost about $50,000. Do you agree with that?” Most of them will agree with that.
I’m telling you, if you get most contractors, you just call them up off of Google. They call somebody up that’s referred to them, most contractors are going to come in to renovate a whole house, it’s going to be $50,000. But we know that fix and flippers have the cost way below that, almost 50% below that. That’s how we’re building in our spread if that’s going through your head right now. “So, you have $50,000 Mr. and Mrs. Sellers to fix this up so that it is in the same condition as the properties in your neighborhood that have sold before. Because what you’re seeing here, this price on Zillow, this price on the internet is assuming that the property is in updated condition.” Right? That is the most important thing. Does that make sense? Yes, that makes sense. All right, great.
So you got closing costs and you’ve got rehab. Well, now what’s that? $1,767 off of that, puts us at $133,000. “Now, are you in a position, Mr. and Mrs. Seller to invest $50,000 into the property to fix it up?” “No, we don’t really want to do that.” “Well, that’s great. Because that’s why I’m here. That’s why I work with people just like you, because for $130,000, I can buy your house, cash or whatever, $120, whatever you want to do. You could do $120. $120,000, I can buy your property cash. The best part is I buy it completely as is. You don’t have to put another cent into the property. Not only that, I’ll pay all the closing costs. Not only that, you don’t have to pay real estate agent fees. It goes right through the title company who’s a third party and they’re going to make sure that on the time that we put on this contract that we’re going to sign today,” see what I’m doing, future pacing.
“On the contract that we’re going to sign today on this date, this is when you’re going to get your money for this property and you don’t have to deal with any of this. Because you know what else that nobody really talks about is how long this takes to do. You said you wanted to sell your property in the next 30 days. Well, I can get this done for you on your timeline without having to put through all the stress of hiring contractors, making sure they show up, putting it on the market, having people come through the house, having a professional home inspector come and nitpick every little thing that you didn’t even think about. Then they either ask you for a price reduction or they ask you to do more rehab and more fixes to the house. Instead of doing all that, we can just do it for $120,000 right now. Yes, you can make $13,000 more if you went through all this, but you can handle this right now in your timeline without having to deal with any of the headache. What would you like to do?”
That’s what it is, that’s where you want to go. You want to make it a logical choice for them to choose. They don’t want to go through all this hassle. They don’t want to go through all this. Remember, this only works for properties that needs some love, that needs some renovation, that are outdated, that have been rentals for forever and they just need a complete refresh on these properties. This isn’t going to work for properties that should go on the markets. Listen, if they should go on the market, tell them to put it on the market, all right? You need to determine before you go on that appointment what is the condition of this property, okay? If the condition is rough, this is your strategy. If the condition is in good shape, refer them to a real estate agent and move on.
But this is how you get people realistic with the numbers, right? This is how you get people to be able to come down on their expectations of price. Not because you’re trying to snake the deal, not because you’re trying to low ball them, because logically this makes sense. I’m telling you, this is powerful. It’s a step-by-step. If you explain it the way that I did and go through it and be on their team, this has to… Remember, the ultimate rapport is collaboration. That is the ultimate rapport is collaboration. You want to be on their team. You want to be there as an advisor. If they’re ready to take that cash offer, you’ve got your contract there at the appointment and you get it signed. That’s how you do it. That’s how the pros do it. That’s how you break it down so that it makes the most sense.
Got it? I know you’ve got this. I know it, I know it, I know it. 1,700 millionaires are made every single day in this country. When is it your day? When is it that date on the calendar that is your day that you become that? It starts with taking action. It starts with making an impact in your community. It starts with being honest and educating property owners that have expectations based on just their own research. You can do it. I love you. I believe in you. For anybody interested in joining the most proactive group in real estate investing, it is the TTP family, go to wholesalinginc.com/TTP, wholesalinginc.com/TTP. Check it out, scroll down. If it feels good in your gut, sign up for a call. It’ll either be with me or my right hand guy and I look forward to that. So till next time, see you.