The Demoralizing Effect of Unmotivated Sellers

General Real Estate Investing
1

I do not have alot of cashflow to spend on marketing techniques so I have been calling alot of ads in the paper.

It can be so depressing! They all suffer from pride of ownership and want every bit of equity they can get and always “have another buyer… who is going to make an offer” and they can be so darn inflexible!

Well… I ordered 100 signs which should be coming in soon… hopefully that will work out better.

To all new investors…

“If you want a lesson in frustration and abuse… call the ads in the paper.”
-Ron LeGrand

2

wow, i hope your luck turns around!
i used to get “emotionally” involved and take turn downs a little personally but if you go outside and look around, what do you see?..houses…there are so many and no matter what the sellers lead you to believe this is a buyers market–at least in michigan and most other states I believe.
it will happen if you keep trying.
have you thought of checking out foreclosures? the banks don’t have pride of ownership, they just want to sell.
good luck!
wendy

3

Chris, here’s a suggestion.

Creativity is key in some situations. If you find a house that fits your criteria and can make you some money… Call that seller and go through the motions all the way up to the stage where it’s time to put a deposit on the property. You will be talking with them and learning more about their situation. People may not have to sell but they still want to sell. You may be able to capitalize on the reasons why.

Also, cut out the ads and paste them in a book with the date. Don’t call when they first come out. Try them a couple of weeks later. Sellers get worn down too.

I had a situation where a seller refused another buyer’s 135k offer and took my 132.5 k offer because I offered to put down more of a deposit. I found out that was what she needed to feel safe about the deal going through.

Anyone can make a phone call. You have to go the extra mile and find out the seller’s needs. Then you may see some flexibility.

Good luck
Jeff

4

Chris,

You’re right. Speaking with unmotivated sellers is depressing and time consuming. So STOP!!!

In my area, FSBO ads are generally overpriced even if the property is in good shape. My guess is that that is generally true in most areas (unless you’re in a boom market) because a homeowner doesn’t understand how properties are valued and don’t know how to price them. So by calling on FSBOs, you not only have to weed through the tons of calls to get to a potential deal, you also have to convince them that their price ain’t FMV. Bummer.

If you feel that the FSBOs ads are something worth pursuing, then try this. Instead of calling them up and explaining what you do, what you can offer, etc. etc., call up and ask the basic questions everyone would ask about the property. What is the price, heated square feet, number of beds/baths, age of property, etc., etc. Two very important questions to ask early in the conversation are 1) Is this your personal home (was this your personal home if they mention that it’s vacant) and 2) why are you selling it?

Both of these questions a knowledgeable buyer should ask, but sometimes (and especially if not asked tactfully), these questions may not get a warm-fuzzy response. If you’re asked on #1 “what does it matter if its my personal res or not?” The simple answer "I’ve called on several ads that were RE agents or investors selling properties (which will be true if you’ve called ads). I simply didn’t want to waste either of our time if you didn’t actually own it or had lived in it.

On #2, sometimes you’ll get a 30 minute answer of why they’re selling, sometimes you’ll get “we just want to sell.” If you’re asked why you need to know, simple answer, “hey, if you’re selling it because it’s sitting on a toxic waste dump, I’d like to know.” (okay, don’t get smart, but you get the idea. Most states require the seller to some type of disclosure statement [which most FSBO don’t know are required], so they’ll have to tell you sometime anyway if there is something wrong with the property).

Anyway, make the phone call as short and sweet as possible. No need to even mention that you’re an investor and want to buy this property at a discount (or sub2, l/o, or whatever you’re trying to do). Your goal is to find out the property address and it’s as simple as saying “what’s the address of the prop? I’ll ride by and if I like it, I’ll let you know.”

With the addresss, you can actually find the property and decide if it’s an area that you want to be in, and then you can find the address of the owner. How? Look it up in your county’s tax office. Send a post card, letter, flyer, etc to that address, explaining what you can do (buy their property), why they should do it (sell fast, cash in pocket, relieve stress, etc.), and how to contact you if they want to sell it (phone, fax, email, website).

No more depressing phone conversations.

Raj

5

To every no, there is a story to be told and HEARD! The key here is “HEARD!”

If you go out to first get an education, calling ads is the place to do it. Let me give some examples.

I have another offer! Oh? May I ask what the offer is? Why have you not jumped on it, or became serious enough to secure that offer, if it is soo good?

I dont want to carry a second, I need money now! Okay, may I ask what your needs are? AND LISTEN!

My Sisters, brothers nephew got messed up with carrying a second when the buyer walked away. Ok, I understand that, can you tell me more?

The basic no, comes to the “fish that got away” story line, or wives tales. the fact is that the seller does not fully understand what you are asking him/her. All they know, is that they are not getting cash up front!

I typically ask if they have a retirement account, or an IRA, or company stocks with their employer? If they say yes, ask them what will happen if they wanted to cash out of those accounts. They will tell you that they will get less than what is there, if they cash it out today.

Then I explain, okay the same is true here… I can get you cash, but then you will have to take less money! ( I normally cut 25% off their price… HOwever, if you take a note/mortgage secured by the property, you will get closer to what you are asking for. Need cash, go to the bank and get a loan against the note. normally, the payment on the note loan is less than what they will get from you, the buyer.

You see, by listening, you can get to the root of any problem… If you can satisfy their needs, you have a home to buy!

hope this helps!
G.Brents

6

Mr. Brents,

You are exactly right. You are not looking (or telephoning) to find deals. You’re looking for problems to solve to create deals.

However, I don’t believe that the phone is where you need to be having the type of problem solving conversations that you mention. Those are for when you are face to face with the seller and you can develop the right rapport with the seller.

Raj

7

Thanks for the responses. I feel that I am done calling on fsbo ads for good.

I just sent out about 60 yellow letters to preforeclosures and I should get my bandit signs in two weeks. It was a good education… just dealing with all of the crap that unmotivated sellers threw at me.

Personally, I like to prescreen up front… I would rather scare them off in the beginning than suck up to them and then a few conversations later have them tell me they want 10% down and full price yadda yadda. I imagine that is why I attacted alot of flack.

I do not think I am going to have to deal with that anymore though… especially with those behind on payments. Take care.

“They are always more motivated when they call you.”
-Ron LeGrand

8

Personally, I like to prescreen up front…

Careful with that prescreen (what exactly IS a PRE screen anyway?) thing.

Many investors, screen potential sellers to the point that nobody is motivated in their eyes.

If I was the seller and you told me up front that you’ll only pay 80% of my asking price because that’s what you do, I’d say go stick it, I’ll go into foreclosure before I sell to you.

However, if you’ve developed a rapport with the seller and explain to them that yes it’s true that the value of their property is $100K. If they want to sell now, you’ll buy now, but they don’t think that it is fair for you to pay more than a any other buyer for the property do they?

If they were to sell conventionally, they’d have to list with an agent (6%), they’d have to make payments for 6 months (6%), they’d have to negotiate the price (5%), plus they’d have fix this, fix that (3%). Do they agree? Yes, then that’s a 20% discount. Now, if you want to push it, you can also throw, since our company is in the RE business, we need to make a profit, too. Do you think 5% is reasonable? Yes, okay down to $75K.

Raj

9

Thats cool if you want to deal with these sellers. More power to you. I’ve done that before too… and they almost never agree with me on closing costs, price discount, realtor commission etc to lower the price.

Its flat out annoying. I am absolutely done calling ads. The last guy I talked with filed a criminal complaint on me. What a joke.

PS- The danger in being nice to sellers initially is that in the end they won’t discount or be flexible. But if you ask them hard questions up front and they still talk to you and are consciously giving away equity… in the BEGINNING… they you got yourself a good prospect.

10

Chris, ol’ buddy, I think that you’ve got a long, hard road ahead of you.

I agree that you should stop calling the ads. Answer the phone when they call you.

However, you’ve already become cynical about your sellers. The sellers are your supply base. If you can’t change the way that you feel about them, then you’ll rarely be able to speak to them in a way that will develop the right responses.

My suggestion to you, if you haven’t already, is find and read some books on negotiation. Anything on the subject by Bernard (Bernie) Zick is good. Heck, even though I don’t like their REI ideas, the free ebook Finkel and Conti has a very good section on talking with sellers.

I don’t know what you’re saying, or not, to make so many people upset (yourself included). Remember that REI is still a numbers game. More sellers are NOT going to sell to you than are. It’s a simple fact. Why many probably don’t agree with you on your costs, etc. is because they CAN’T. If they don’t have the equity available, and you’re being confrontational (which it sounds like), then they’ll fight tooth and nail. Are you offering a solution to their problem? Do you know their problem?

For example, Mr. Seller, I understand that you can’t discount this property 25% because you don’t have that kind of equity. But you do agree that these costs are valid costs and that that is what it is going to cost you to sell the property. Well, that’s where our company comes in. Our company will take over the payments on this property (either sub2 or L/O, whatever you like), the maintenance, etc. and relieve you of this headache. We can do this in as little as 48 hours, and you’ll be done with all of this. Does that sounds like a good idea to you?

Doesn’t that sound alot better than “I’ll pay you X amount for this property. Take or leave it!”

I’d also suggest that if you can’t get over your feelings about sellers, then you might want to try another form of finding deals. Maybe buying MLS listed foreclosures through a RE agent.

Raj

11

“However, you’ve already become cynical about your sellers. The sellers are your supply base. If you can’t change the way that you feel about them, then you’ll rarely be able to speak to them in a way that will develop the right responses.”

I’m only cynical about UNmotivated sellers. And I should be!

Also… most of the people who disagree with me on costs have alot of equity. They are just unmotivated… they want to sell… not need to. Alot of them are out in lala land on closing costs too… they think it costs 7k on a 700k dollar house. That will just pay for transfer tax and title insurance on that size of a house. When I sell to a buyer and they get a conventional loan… it will cost alot more which I am going to have to pay out of my pocket.

I do not think my approach is wrong… you do not know what I know. One of the most basic prescreening questions for sellers is “What would it appraise for?” and “What is your asking price?” If those two answers are anywhere close you aint got yourself a motivated seller. Why bother?

And I almost never have a ‘take it or leave it’ attitude.

12

… you do not know what I know. Really? How long have you been a fulltime active investor? How many businesses have you started? How long have you been calling FSBO’s? Why did you bother to post if you didn’t want responses?

One of the most basic prescreening questions for sellers is “What would it appraise for?” and “What is your asking price?” If those two answers are anywhere close you aint got yourself a motivated seller. Why bother?
Okay, a normal FSBO will have no real clue to what their property will appraise. They are not in the real estate business. That’s exactly why they’re asking price is usually NOT anywhere close to FMV (usually higher in my experience). But if you ask them those questions, I can assure you that 99% of the time, that they will be the same or very close. They are asking their price because they believe that it will appraise for what they are asking.

BTW, no one has ever answered my question, what is PRE screening anyway?

What you’re wanting will rarely happen. You want a seller to tell you, hey my house is worth $100K and I need to sell it fast, so I want you to buy from me for $70K. Can you do it?

Chris, it doesn’t happen that way. Heck, if it did, then buying houses would be a breeze for anybody.

If you are going to be dealing with sellers directly, then you have to learn to become a problem solver. The best question to ask is “why are you selling?”

Here’s a secret. EVERYONE is a motivated seller. When I sell my properties I’m motivated, trust me. However, my motivation is to get the most money that I can from the sell. If your seller’s are like me, then you can’t make a deal happen. But, if their motivation is to keep from foreclosure, or to stop the agony of double house payments, or pay off some other debt, or a number of other reasons, then if you can solve that problem, you can make a deal.

Raj

13

No offense… but anyone who has studied Ron LeGrand which I have quoted multiple times would know what it means to prescreen… hence you do NOT know what I know.

AND… buddy, I did not start this thread asking for advice which you seem to be too happy to give. Thats GREAT… its well-intentioned, but I did NOT ask for it.

PLUS… if you carefully read my first post… I simply vented my anger about dealing with unmotivated sellers who were advertising and I was looking forward to my bandit signs coming in “Well… I ordered 100 signs which should be coming in soon… hopefully that will work out better.”

And… sellers who need to sell do very often ask a price much lower than market value. They know they are giving away equity because they want out. I even ran across these people calling ads! Those are the sellers I want to deal with and that is why I’m using direct mail and bandit signs now!

14

If you started this thread, I have to ask you why you made up a new ID to make it with. It takes away any credibility you have.

15

Oh well, in that case, excuse me. It was my understanding that posts on this forum were intended to be responded to. Sorry to have bothered you since you’ve studied the great Ron LeGrand and obviously know so much more than everybody else. All of us here just assumed that since you posted, you might want some suggestions to help you out. Again, sorry.

Can’t understand the multiple identities, though. Seems a little strange to me to have to be two different people on a forum.

Also can’t understand why you were calling FSBO’s directly as LeGrand specifically tells you not to do that (review your on quotes if you’ve forgotten).

I guess that I should understand the term prescreen just because Mr. LeGrand has used it, correct? Well, since you won’t, or can’t, answer the question, what is prescreening, I will. Pre-screening is a joke.

It’s a series of questions asked to a stranger in the hopes of determining how desperate that they are to sell, before you actually talk to them about selling. I might also add that the reason that it’s called PREscreening is because it’s recommended that you do this through a voice mail system (another negative in my book).

It’s obvious that you really don’t want any advice from anyone, experienced or otherwise, so I’ll just wish you good luck, and leave it at that.

Raj

16

You misinterpreted why I posted from the very beginning and now you resent it. From the very first post, I made the decision to quit calling on ads and that I will be using my own advertising. And ever since the beginning you have tried to convince me why I am wrong and how it should be done. Not everyone who starts a thread on this forum is seeking advice. Now stop flaming my thread and leave me alone. Yes, I disagree with you… to get incessant advice from you was not what I wanted so back off.

17

“BTW, no one has ever answered my question, what is PRE screening anyway?”

Oooooh…oooooh…I know…I know…call on me!

It’s when you swallow your drink before you start reading some of these post (a.k.a. screen saver).

“The last guy I talked with filed a criminal complaint on me.”

You don’t say.

-Infowell

18

That post made as much sense as to why you posted. NONE

19

No, I didn’t misinterpret your thread. I simply responded to it and to your comments in it. Sorry that that pisses you off so much.

Resent it? Hardly. You have to actually care in order to resent.

My point was, the term prescreen makes about as much sense as the term pre-recorded. They are both false words. The prefix ‘pre’ means before. You cannot screen a seller before the screening anymore than you can record something before you record it.

I sure hope that you have a better attitude when you’re prescreening your sellers than what you have here. That complaint is making more and more sense to me.

Well, good luck and try not to burn your hand flipping those burgers…uh…I mean…catching all those phone calls from the prescreen sellers!

Raj

20

I forgive you for hurting me and I hope you can forgive me.