OK, you’re in the seller’s house. What should you do first? The thing I want to do first is go straight to the seller’s kitchen table and find out why she is selling her home. But what usually happens is that I’m given a grand tour of the property.
In years past, these tours bored me to tears. I’d think: Wow, there’s a bathroom and a couple of bedrooms down this hall – who would have guessed? But with time, I’ve learned that the tour is a great time to begin building a relationship with the seller.
These days, as I’m shown around the seller’s house, I pick out the odd things the seller owns – you know, the things that don’t really belong. When I see an oddity I ask, “What in the heck is this thing?” Often, the seller lights up and launches into an interesting story. Curiosity will help you build rapport.
After the tour, we end up at the seller’s kitchen table. Usually I’m offered a glass of water – or if I’m lucky, some sweet tea. It’s wise to accept the offer. After all, sometimes you’re at the table for 10 minutes, other times for two hours or more.
Here’s an important thing to remember: As real estate investors, our job is NOT to buy, sell or rent property. Our job is to help folks solve their real estate problems. This could mean that instead of selling or renting their house to you, it may be better for them to list their home with a realtor, or refinance their property, or maybe declare bankruptcy, etc. It’s your job to help steer them in the right direction.
When I meet with a seller, I try to think like a doctor. You see, it’s critical that you find out where the seller hurts. To do this, you’ve got to ask the seller a lot of questions – and some questions are harder to ask than others. For example: “How much are your mortgage payments?” or “May I see your closing documents?” or “Are your payments current?”
As a real estate investor who needs to fully understand the seller’s problem, it’s vital that you turn up curiosity and turn down politeness.
Now let’s discuss the biggest and most common mistake investors make when meeting with sellers. Way too many investors spend the first 30 minutes talking about themselves. Look, the seller doesn’t give a flip about you. The seller simply wants to know if you can make their real estate pain go away. To do this, you’ve got to understand what’s causing their pain, and this is accomplished by asking a lot of questions – not talking about yourself.
After you fully understand the seller’s problem, it’s time to structure a solution. This is what’s known as creative deal structuring. In most cases, I can’t give the seller exactly what she wants, but often I can come close to giving her what she needs. This is known as a win-win deal.
Finally, if you come to an accord with the seller and it’s a good win-win deal, don’t spend the next three days considering whether or not to pull the trigger. Take action. If you don’t take action, the seller will call another investor who will.
When making a written offer, we always put in a special stipulation that gives us time to do our due diligence and allow us to cancel the contract if we find something amiss.
We hope this series encourages you to go out and meet with sellers and ask Pete Fortunato’s famous question: Why are you selling such a nice house like this?
Bill and Kim’s North Georgia Real Estate Investors Association meets on the second Thursday of each month, from 7 -9 p.m., at the Hilton Garden Inn off Main Street in Cartersville, Georgia. For more info, go to REIoutpost.com.