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!
How To Educate Motivated Sellers To Accept Your Price
What we’re talking about is something that comes up all the time. This is incredibly common. Anybody, any property owner, can go into Google, put in their address, and there are 4 or 5 websites that pop up immediately that give them an estimate of what their property value is worth, and 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 find out if they are truly motivated.
What this comes down to and this is critical, is their timeline. What is their timeline? I want you to be listening. I want your antennas to be out 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 within the next 30 days. That’s what you’re listening for because that’s going to show you if they are motivated.
Let me break this down even further. I’ll give you an example. You call up somebody and you’re having a great conversation. They tell you and you’re going through and you’re pulling out the four pillars of pre-qualifying. The four pillars of pre-qualifying any distressed property owner are the condition of the property, timeline to sell, the motivation of the seller, what their problem is and their price.
You’re pulling this out. You find out the condition is in rough shape. It needs to be updated, upgraded or cleaned up. Maybe it needs significant rehab. You find out that they want to sell it quickly and want to get rid of it. They’re finally at the end of their rope. They’re 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 beaten up by tenants over the years, it’s been vacant or maybe they inherited. Whatever their motivation, you’ve got the condition, their timeline, and their motivation. They hit you right between the eyes with, “I want $200,000 for it.” You’re looking at this property on Zillow. Zillow says that property is worth $200,000. You’re like, “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.”
Here is my suggestion. Your number is $120,000, $130,000 to get that property in order to make it a deal for you. We’re at $120,000, $130,000 and they’re at $200,000. This property checks all the boxes, except for the seller’s expectation of price. 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 or next week.
Let me tell you a fundamental rule of wholesaling real estate. Time kills all deals. 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. You go on that appointment. Let me tell you what you don’t do.
Motivated Sellers: Time kills all deals. 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.
What you don’t do is you don’t cause friction in the relationship by telling them they’re wrong. You’ve got to tell them they’re absolutely 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, “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 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. 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 of the costs involved in selling your property?” They go, “I know that I have to hire a real estate agent. I know that I’ve got to pay some title and escrow fees. I know I need to fix up this property.” You start going through it and you go, “If you want $200,000, which I totally believe that you can get $200,000 for your property.” You can write it right in front of them. “Just to let, to hire a real estate agent to handle the sale of your property, it’s going to cost you 6%. 6% of $200,000 is $12,000.”
I’m only showing you guys this so in the situations where it’s a property that is in rough condition. If this property is 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 you can get paid on these opportunities. You can refer this to a real estate agent if it’s a clean property and they don’t need to trade equity in their house for speed and convenience. Remember, that’s what we’re looking for. We’re looking for these properties that are in rougher condition and they want to sell now.
Before we even go into this breakdown, a huge mistake that a lot of people make as you’re starting to build momentum in your business and stack your experience in this business is that you go on these appointments, but they don’t have to sell for forever. It’s open-ended. People will live in a distressed situation for a long time. You probably have a family member, a friend, somebody or a neighbor that’s been living in a junkyard forever.
A lot of them are not to that point of ultimate stress where they’re ready to sign a contract, so the timeline is so important. You’ve got to pull that out and you’ve 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. 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.
At this time, you’re at their house and property. If you’re doing this virtually, get on FaceTime with them. 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. You’re like, “You’re going through these. This is the agent cost. 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.”
Here comes the big one, “Based on the condition of the property and I’m doing rough estimates here, I haven’t run it all the way through. It looks like it’s going to be about $50,000 to fix this up. That’s a new kitchen, appliances, floors, bathrooms, landscaping, fixing up the air conditioner, the roof and the pool equipment. 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.
The ultimate rapport is collaboration.
I’m telling you, if you get most contractors, you 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. 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.
“Mr. and Mrs. Sellers, you have $50,000 to fix this up, so it is in the same condition as the properties in your neighborhood that have sold before. What you’re seeing here, this price on Zillow, on the internet, is assuming that the property is in updated condition. That is the most important thing. Does that make sense?” “Yes, that makes sense.”
You’ve got closing costs and you’ve got rehab. With $67,000 off of that, it puts us at $133,000. “Mr. and Mrs. Seller, are you in a position to invest $50,000 into the property to fix it up?” “No, we don’t want to do that.” “That’s great because that’s why I’m here. That’s why I work with people just like you. For $130,000 or $120,000, I can buy your property cash and 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 and 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 the contract that we’re going to sign on this date, this is when you’re going to get your money for this property. You don’t have to deal with any of this because what else that nobody talks about is how long this takes to do.”
“You said you wanted to sell your property in the next 30 days. 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 and putting it on the market. Also, having people come through the house, having a professional home inspector come and nitpick every little thing that you didn’t even think about.”
“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 do it for $120,000 right now. 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 headaches. 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 need some love, renovation, that are outdated, that have been rentals for forever and they need a complete refresh on these properties.
Motivated Sellers: 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.
This isn’t going to work for properties that should go on the markets. If they should go on the market, tell them to put it on the market. You need to determine before you go on that appointment, what is the condition of this property? 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.
This is how you get people to be realistic with the numbers. 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 or you’re trying to lowball them. Logically, this makes sense. I’m telling you that this is powerful. It’s a step-by-step. Explain it the way that I did and go through it and be on their team.
Remember, 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 it makes the most sense.
I know you’ve got this. One thousand seven hundred 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 their 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. 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. Until next time. See you.
About Brent Daniels
Brent Daniels is a multi-million dollar wholesaler in Phoenix, Arizona… and the creator of “Talk To People” — a simple, low cost, and incredibly effective telephone marketing program…
Also known as “TTP”… it helps wholesalers do more, bigger, and more profitable deals by replacing traditional paid advertising (postcards, yellow letters, bandit signs, and PPC) with being proactive and taking action every single day!
Brent has personally coached over 1,000 wholesalers enrolled in his “Cold Calling Mastery” training, and helped 10,000’s of others who listen to him host the Wholesaling Inc. podcast, watch his YouTube channel, and attend his live events…
A natural leader, Brent combines his passion for helping others with his high energy, “don’t-wait-around-for-business” attitude to help you CRUSH your wholesaling goals as quickly and easily as possible!