In the classroom today, Larry Goins shares how he talks to owners selling their property, including the importance of price conditioning the seller.
Larry explains that even if you already know the answers, there’s a handful of questions that you should ask that help them see why you’re offering the price you are.
Mike: Welcome back to the flipnerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Larry: Hey, this is Larry Goins, today’s host of REI Classroom. Be sure to check out all of my other REI Classroom trainings as well. Today I want to talk about negotiating with for sale by owners, all right?
Mike: This REI classroom real estate lesson is sponsored by uglyopportunities.com.
Larry: Now, if you’re going to be in the real estate market, you’re going to be a successful investor, you need to learn some negotiating skills, okay? I don’t care who you are or how many deals you’ve done, you need to be a pretty good negotiator to be a really good, long term real estate investor.
Now sure there’s ways to make offers online, automated offers, all that good stuff, but I want you to learn some good negotiating skills.
Now, the first thing I want to talk to you about negotiating is 15% of negotiating is words, 85% is how you say it. It’s one thing to tell a person, “Your house is not worth but X,” it’s another thing to tell a person, “Based on what you talking about, based on what you’ve told me, it looks like I probably need to be around X. Is that something you think you might be able to work with?”
You’ve got to be very, very careful in what you say. You don’t ever want to offend anybody, you don’t ever want to put their house down or anything like that. If I can’t make or meet their price, I am always going to put it off on me. Unfortunately, that’s all I have to work with or that’s about the only thing I can do on your property at this time.
The next thing I want to talk to you about in negotiating is I want you to be like an attorney. What kind of questions do attorneys ask? They ask questions that they know the answer to. For example, if I’m looking at a small three bedroom, one bath house, maybe it was built in the ’30s or ’40s, they might be asking 40 or 50,000 and I need to be around 20 or 30,000 or something like that.
Think about that, built in the ’30s, small house and old house, small house maybe 1,000 square feet or so. Is that house going to have a sun room? No. Is the house going to have a garage? Probably not. So what I want to do is ask questions that I know the answer to, to price condition my seller.
In other words, they think their house is worth this, I need to get it down to this. So I’m asking the questions. I’m talking to them, I’m communicating with them and all of a sudden I’ll ask a question like, “Okay it sounds nice. Do you have a sun room?” What’s the answer, “No.” And then I say, “Oh.” It’s almost like I was expecting them to have a sun room. I’ve just devalued their house just by saying, “Oh, it doesn’t?”
And then we’re going to talk a little more and then I’m going to say, “Oh, do you have a garage?” “Well no, we don’t have a garage.” “Oh, okay.” Now the good news is, you could even look up online now and see, just Google Earth or look up on Zillow or Trulia or one of those sites and typically you’re going to see some pictures of the property and you’ll know if it has a sun room or if it has a garage or if it’s a corner lot. All those things are price conditioning the seller, okay?
Remember in negotiating, the person who cares the least wins. Always, always, always take notes when negotiating. They might tell you they need to sell the house to go on vacation, they have a job transfer, to move closer to grandchildren, whatever it is, be sure and take notes so you can help them meet their needs.
I hope you really enjoyed this, I hope you got a lot out of it. For more information and some free books, free education, you can check out larrygoins.com and I’ll see you on the next REI Classroom.
Mike: HomeVestors, the We Buy Ugly Houses folks, is a franchise system of hundreds of real estate investors that have purchased over 65,000 houses. If you’d like to learn more about the most powerful real estate investing system in existence whether you’re a pro looking to take your business to the next level or whether you have no experience at all but a burning passion to be successful in real estate investing, please visit flipnerd.com/ugly to learn more.
Please note, the views and opinions expressed by the individuals in this program do not necessarily reflect those of flipnerd.com or any of its partners, advertisers, or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.
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