Negotiating with Motivated Sellers and Wholesaling Houses Part 3

Well Kris Allen is the next American Idol! I love watching stories where people go from completelty ZERO to HERO, literally over night! This guy came onto that show without really knowing if he was going to make any progress at all. Next think you know he turns around and he is the next American Idol! Incredible! It just shows that you can really do anything you put your mind to and the only person preventing you from success is yourself!

You see, Kris did not have to show up to the Louisville auctions. He did not have to get into his car and drive from Arkansas to Kentucky. He did not have to wait in line for hours to see Simon, Paula, and Randy. He did not have to do any of those things. Because he did and because he took action, he now has a million dollar recording contract! The key word is that he took action.

You have the same choice in front of you every day. You have options. You don’t have to learn to wholesale houses. You don’t have to learn to find and talk to motivated sellers. You don’t have to read this blog. The very fact that you are seeking the right info is a step in the right direction. Now take one more step of action and actually put what you learn into motion! You will be glad you did 🙂 

The next part in our series of negotiating with motivated sellers is crucial. When sellers first call you up they may think that you have all the money in the world and you are going to buy their house for top dollar! Obviously, we really do not want ot be talking to a seller who has such a mindest. Normally they can be weeded out in the prescreening process.

However, even when you are talking to a seller and they are asking way below market value sometimes it is not low enough! So what do you do? You learn how to properly handly sellers expectations.

Properly Handling Seller Expectations

When it comes to properly handling seller expectations there is a right way and a wrong way.  The wrong way would be to walk around the house and totally verbally trash the house.

Wrong way: “I can’t believe you can even think about asking 100K for this house. Don’t you watch the friggin news?? There are houses that are selling for like $3.00 right now and your house needs like  a million dollars in repairs!!!

Obviously that is the wrong way to handle things and even though you might feel like saying that, do yourself a favor and don’t…LOL…

Now the interesting thing about approaching this the wrong way is that every concept you need to convey to a seller is contained in it. You just need to be able to present it in a lot smoother fashion. Actually, you will find as we talk a lot more about the negotiation process it is all about the WAY you say certain things. You will also learn to apply this when you ask seller questions as we talked about last week. They can give you an answer and if you listen to the way they say it, you will find out more than what they are actually trying to tell you. We will talk more about that later.

Let’s look at the right way to break this down to a seller.

Right Way: I understand what you are asking for the property and believe me I would love to pay you 100K for the house. In fact, I would love to pay full price for every house that I get called on. However, the fact is that market is very troubled right now and I would be out of business very quickly, if I paid that type of money for houses. Because of the way the market is there are houses just like yours selling at prices that are really difficult to compete with. Given the fact that your house needs some updating we are going to have to purchase your property for considerably less than what you are thinking. I don’t mean to offend you but would you be willing to consider a lower price?”

You will be surprised what happens when you treat people with respect and honesty. People do not want you to beat around the bushes. I used to struggle with that quite a bit and I still do. I have found that if I just get right to the point with sincerity, I get a lot further.

Another way you can correctly handle expectations is by showing the seller what they actually would NET on the transaction. A lot of sellers are so in the dark when it comes to understanding what it REALLY cost to sell a house. There are a lot of different factors when it comes to a house sale.

Realtor Commission-This will be a minimum of 6%

Repairs or Updates to the House- What is it going to take to get the house in “sellable” condition. There is a difference between “good condition” and “sellable condition.”

Closing Costs for Seller and Buyer-This can actually end up being another 3-4% of the purchase price right off the top. You think I’m kidding. One of my investor buddies just rehabbed a house and actually ended up paying 18,000 in closing costs! Yet another reason why I love to wholesale real estate!

This is just a brief overview of this and can really be broken down into a lot more intricate details. Perhaps in a future post I will do that. Meanwhile if you are looking for more information and a great breakdown of the above process you can check out Virtual Wholesaling or you can look at Real Estate Voodoo. Virtual Wholesaling is the system I use every month to get consistent results. Real Estate Voodoo is a “lite” version of Virtual Wholesaling.

Anyway your overall goal is to show them that they really are not leaving that much money on the table by going with you. Really it would be foolish for them to try to get even 10 or 20K extra for their property and deal with realtors, contractors, and finicky buyers. They have a sure shot in you and should take advantage of it!

I hope you have a great weekend! My wife and I are going to dinner with one of my top buyers. We just closed a deal for 12K and he is paying for dinner 🙂

I love wholesaling!

Check out the Next Wholesaler in my Family

 

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  • Awesome stuff Alex J. You da man!

  • Ben Wilson

    Hey Alex, Great post, Also your baby boy is so cute.