As new folks come into the business, it doesn’t take long for us to teach them the real estate stuff. However, there are other skills that need mastered to become successful and probably the biggest is talking on the phone with sellers in the pretty house business. This skill will make or break a career and truly is the difference between making money or spinning your wheels.
A lot of people quit because they haven’t mastered this craft and aren’t sure why they’re not getting deals. They’re quick to blame it on a hot market or whatever convenient excuse is present. I’ve been through five cycles in my 35-year career and there’s never been a year I couldn’t buy plenty of houses including this year and next, regardless of the market or the city. But this business is like any other business, if you don’t master the key ingredients, nothing will happen. If my chef in my restaurant serves crappy food, nobody will come back. If my GM doesn’t manage costs, I’m soon gone.
If a real estate investor doesn’t learn how to properly screen sellers, they’ll soon be gone. That’s the brutal truth and scary for some. The reality is it can be learned and learned quickly if you first recognize the problem and then implement the solution until it’s no longer an issue. Everyone can learn to handle themselves better on the phone and face-to-face. This is a skill that will affect everything you do, not just buying houses. I can’t fix it in this article, but I can tell you what the largest problem we face is and how to fix it. That problem is…YOU BEG!
You may not know you’re begging, but you are. If you talk too much, you’re begging. If you’re teaching and preaching, you’re begging. If you’re afraid to ask the questions you need answers to, you’re begging.
Oh please, I don’t want to hear it. I know you don’t think you’re begging, but you are. If you don’t believe it, tape-record your next call with the seller and play it back to yourself. I’d suggest you have a barf bag close by. You’ll hear the begging you can’t hear while you’re talking and you’ll also hear the “ums,” “ahs,” “you knows,” etc.
When the seller hears you begging you can expect them to lose confidence in what you’re saying, especially if you’re not following the scripts and saying the wrong things, which everyone does until I train them and beat into them the importance of scripts.
All companies with people on the telephones use scripts. Can you imagine what it would be like without them? Employees turned loose to say what they want, not ask the correct questions, make stupid statements destroy sales. Well, that’s exactly what you do when you get on the telephone and talk too much and don’t use scripts.
The first script is the property information sheet our virtual assistants use to call sellers for you. You’ll find it at http://www.RonLegrand.com/FSBO. It collects the information necessary about the house, but it also determines whether the seller would consider terms, which is the most important part of the call
You get the sheet with a yes or no answer on one of three questions: Will you sell for what you owe? Would you consider a lease purchase? Will you take monthly payments for your equity? When you get a yes to one of the three it’s time to call the seller and use my scripts to clarify what terms if any the seller will accept. This is where many fail without proper training and practice.
The sad part is there are only three basic questions that need to be asked to determine whether it’s a good deal, poor deal or no deal. But, if these questions aren’t asked correctly, there’ll usually be no deal.
If the seller says they will sell for what they owe, your question is… “My assistant talked to you yesterday, and you said you would sell for what you owe. Is that correct.” If the answer is yes, you simply make an appointment to see the house using my appointment script.
If it’s a lease purchase yes, and you’d rather buy it with owner financing, the big question is… “Would you rather lease or sell the house?” The answer is usually… “I’d rather sell it.” Then your next statement is… “I’d rather buy it as long as you will take a monthly payment until I pay you off in full, OK?”
When you get a Yes here, and you will get a lot of them, you know you have a seller who will owner finance the house for you. Your next step is to get to the big three questions that will make or break your deal or allow you to make a substantial income over the year. These three questions are truly million-dollar questions and are on my scripts.
THE MILLION DOLLAR QUESTIONS
- What’s the least you could accept for the house? (Shut-up). Is that the best you can do?
- May I assume you will sell with nothing down? (Shut-up), then what would be the least you could accept as a down payment?
- What is the least you could take per month? (If there is an underlying loan, the question would be different). I assume if I cover your payment, you’re OK with that?
“May I assume you will sell with nothing down” is a totally different question than “will you sell with nothing down.” May I assume means you assume they will. Will you… means please, please, please. Beg, beg, beg. If you don’t say this with conviction like you really mean it and expect it to happen, the seller will pick it up and say “no.”
If you don’t believe a lot of sellers are happy to sell with nothing down, then join us at my one-day Fast Track event or my four-day Quick Start Real Estate School and bring leads, and we’ll prove to you in front of the entire class how wrong you are. Everywhere we go we get deals for people in class by reading scripts correctly to get to the correct answer. It makes no difference what city we’re in. FYI, we record every single call that we make to your sellers while you are there and email it to you if there’s a deal or not if you wish.
Here’s the big “ah-ha” moment if you do what I just asked…
WE DON’T MAKE OFFERS TO SELLERS, THEY MAKE OFFERS TO US!
We simply ask questions. By supplying the answers, they’re making us the offer. It is really that simple, but I’ll confess, it takes a little practice. By making these calls, there will be only three types of sellers on the phone.
Type one is a seller who will do owner financing, but with ridiculous terms, like 50% down. There’s nowhere to go with this because you simply can’t make money unless you can get more down than you’re paying the seller. Won’t happen here. Kill it and move on.
The second type of seller is one that will give you terms, but not real attractive. However, you may want to get a contract with those terms and then go into the market and find a tenant buyer who will give you a larger down payment than you agreed to give the seller and you keep the difference and get out. That’s called an ACTS deal because you’re assigning your contract and moving on after you get paid. For example, maybe you’re paying full price and pretty much market rent and giving the seller some down, but you see room to get more from the market. There’s really no reason for you to stay in.
This will only work if you make it clear to the seller you will not close until you find a tenant buyer you like and get a 90-day term in your agreement. We’ve done this many times, especially on super high-end houses. The seller has nothing to lose, but a little time and a lot to gain because they get full price for the house with no closing costs and a monthly payment until they get cashed out.
HERE’S WHY WE’RE IN THE PRETTY HOUSE BUSINESS
The third type of deal is the holy grail. It’s what you’re spending all your time and energy finding. It’s the reason you’re in the house business. These types of deals will set you free very quickly and create income for years to come by doing the deal once.
When you get a seller, who will give you some equity, sell with little or nothing down and take a low monthly payment, you’ve hit the jackpot!
I call these deals “golden geese” because they keep laying golden eggs for years; the first one being a great big chunk of cash I get to keep within 30 days after finding the deal.
In class, I use an example of a house I currently own that fits this model. I bought it by taking over the debt of $351,000, $1,925 a month PITI with no money to the seller. The value was $385,000 the day I bought it. Within two months I installed a tenant buyer who gave me a $50,000 nonrefundable option deposit and asked for a two-year term, which I granted at a $395,000 purchase price.
I made $50,000 upfront and $575 per month every month this tenant pays rent, and they’re responsible for 100% of the repairs. How many of these do you need per month to surpass your current income?
I got the house free: no realtors, no contractors, no banks, no credit, no costly entanglements, and almost instant income. Income for years to come until someone actually gets a loan and purchases the house.
You see, what I didn’t tell you is the tenant has already moved out and forfeited their $50,000 deposit two years after giving it to me. So now, I’m seeking another tenant to do the same thing and maybe collect another $50,000 on this free house. Just so we’re clear, it was the tenant’s choice to move, not mine.
Maybe you can begin to see how valuable these golden geese are and why only a handful of them can make you financially independent very quickly.
This house was a debt take-over, but could have just as easily been a seller who sold it to me with no money down and owner financed the balance regardless of what they owed on the house. The end results would have been the same…GOLDEN GOOSE.
The good news for you is, if you will follow my scripts and talk to a few prescreened sellers per week, pretty soon you’ll be getting deals like these if you hang in there until you master the craft. If you quit the first time someone says “no,” you’ll master nothing and will soon be on to the next big thing where you’ll discover you have similar problems to solve.
Brian and Lynette Wolff offer a free class called “Taking Action and Communication Workshop” designed to help people get better on the phone and raise their confidence. You might want to consider getting to their next one which you’ll find on our website. They’re both at my Quick Start Real Estate School which is absolutely critical if you intend to master this business of buying houses.
In case you missed it, if you bring leads to class, it’s very likely we’ll negotiate deals for you worth thousands of dollars while you’re sitting in training. It’s become a smart business decision to come to class even if only for this purpose. You’ll also see it isn’t that hard and hopefully leave knowing you can do the same.
Stop begging, start buying.