One of the most common fears among new investors is talking to sellers. Whether these are motivated sellers that contact you from your marketing efforts or a cold lead that falls into your lap, most investors are more fearful of talking to sellers than almost anything else they do in the business. The reality is, and some investors may not want to hear this, investing is a communications business and you will need to put yourself out there every now and then. Dealing with sellers is a situation that you should covet. If handled properly, communicating with sellers can lead directly to deals.
The biggest reason that people are apprehensive in talking to sellers is because they are unprepared. Before you sit down with any seller, you need to do your due diligence on the property, the mortgage, the title and find out anything else you can on their situation. If you blindly walk into a property, it can be very intimidating. However, if you know what you want out of the meeting and you know how and when to ask questions, the meeting will be more conducive to gaining a deal.
If you are prepared, it will lead you to ask the right questions instead of wasting time on basic information. You are there to see if the property and the seller are good fits to make an offer on. At the same time, the seller is sizing you up to see if they want to work with you. That being said, you shouldn’t have a script of questions to read from and rattle off. You want to engage the seller and find out what their motivation is for selling and what they want out of the transaction. If they are upside-down on their mortgage and they have a set dollar amount that they have to walk with, it is better to inquire now rather than a few months later when you are weeks from closing. The more information you can find out about the seller and why they want to sell, the better equipped you will be to make an offer.
Sellers, especially ones that are motivated to sell, want to know how the process works and what is in it for them and you. Take your time and explain the process every step of the way and what is expected of them. If you are dealing with a foreclosure or short sale, the process is different and more difficult than a traditional transaction. They may not want to hear about dates and expectations, but they will appreciate your candor. Don’t shy away from the fact that you want to buy the house as an investment if they ask you. Stress how much of a risk the property is and exactly what goes into rehabbing a property. Sellers know that you are looking to make money. If you are up front about your intentions, they will be more likely to sell to you. Nobody wants to feel taken advantage of. If you can show them comparables as to what their home is worth now, it will reinforce your position and further make them want to sell to you.
The worst thing you can do in dealing with a seller is to lie to them or make up an answer if you don’t know something. There is nothing wrong with saying you don’t know. Saying you don’t know, but will find out, is a better alternative than providing a long, rambling, dishonest answer that will give them hesitation to sell to you. If the seller is going through a foreclosure or needs to sell quickly, they want to know that they are not being taken advantage of and whatever dates and terms on the contract will be honored. It is much easier than you may think for a seller to find out if you are lying or exaggerating on an answer. Even though their situation may seem dire, they don’t have to sell and they certainly don’t have to sell to you. Much of the selling process is about trust. You can gain trust by being upfront. If you don’t know the answer to one of their questions, admit it and tell them you will do your best to find out.
Finally, most new investors view meetings with sellers as a make or break attempt to get a deal. This is most likely the first or second time you are ever talking. You may have been taught to always be closing, but with some sellers you may need to take your time. If you go into the meeting with the mindset that this may take a few hours and a few different visits, it will alleviate the pressure and also have you come across much more likeable. If you are uptight and tense about getting them to sign your offer, your intentions will become transparent and impact the deal. It is difficult to do, but if you go there with the mindset that you are going to present all of their options, show them how the process will work and follow up in a few days, you will be much calmer and much more successful.
Dealing with sellers is as nerve wracking for them as it is for you. Instead of thinking you will sign a deal when you meet, think of it as the first in a series of meetings. In other words, don’t jump in and pressure the seller. Some sellers will want to sign before you leave while others will never sign and have no intention of working with anyone. Dealing with sellers shouldn’t be something that keeps you up at night worrying. The more sellers you talk to the easier it becomes.