When you go into real estate, you have to understand that you’re also going into sales. Sales and communication are very key when it comes to finding and closing offers. Join your host Jeff Rutkowski as he gives you some helpful tips on how to sell and communicate on your offer. Learn how to build a rapport with your seller, what stimulus and response are, and much more. Become a great real estate investor by becoming a great salesman today.
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Get Successful Real Estate Offers By Learning Proper Sales Communication
I’m super pumped about this episode. We have a very special guest, one of my favorite guests, myself. I’m coming to you solo in response to a lot of questions and conversations that I have been having on social media with many of you reading this. I’m excited about this because we’re going to get into some of the intangible qualities of a real estate investor, specifically in the area of sales and negotiation that is going to help you close more deals, get more deals under contract and keep more money in your pocket.
Word Of The Week: Equity
Before we get into that, let’s get into the word of the week. The word of the week is equity. What is equity? It depends if you’re talking about equity in the context of residential real estate or commercial real estate. Residential real estate is simply defined as anything from 1 to 4 units. If you take the value of a property, if the value is $300,000 and you’ve got a mortgage on it and owe the bank $200,000, that $300,000 minus $200,000 gives you $100,000 in equity. That is your money. It’s sitting and tied up in the property.
If we’re talking about equity on the commercial side, equity on a commercial deal is very much referred to as almost like a down payment. If you’re raising equity to buy a deal or purchase an apartment building, that is essentially acting as the down payment to purchase that building. If you buy a building that’s worth $2 million, you force appreciation over the next year. Now it becomes worth $3 million and you owe $1 million on the property, you have $2 million in equity in the property. Oftentimes, you will hear equity raises to purchase and acquire a commercial building. That is the word of the week. Let’s get into it.
Real Estate Is Sales
We’re going to get into the topic and I want to unpack some things that I have learned over the years from my coaches and mentors that have helped me tremendously, not just as a real estate investor but in all phases of life. We’re going to be getting into sales and communication skills. I have had the honor of working with many FortuneBuilders students over the years.
Many of the things that you say and don’t say are going to work for you or work against you.
Not all cases but in many cases, I’ll sit with the person and I’ll realize very quickly that they understand the Xs and Os. They understand how to wholesale and rehab a property in theory. They could tell you steps 1, 2, 3 and that’s how we teach it. We teach it very systematically, “Start here and continue on down,” but maybe not getting the results that they’re looking for and the deals under contract.
We have been sharing with JD, our resident expert here. CT Homes is locking up 1 out of every 14 offers they’re making. Pre-COVID, that was 1 out of 24. The average real estate investor should be in the range of every twenty offers you write, you’re locking 1 out of 25 if you’re brand new. If you’re making more offers than that and not getting a deal or locking up an asset, chances are you could be hurting yourself in the way that you’re communicating or not communicating and the sales skills that you have or don’t have.
If you’re contemplating becoming a real estate investor or you are a real estate investor, I want to let you know loud and clear that you are in sales. I know many people and even myself when I got into the business that sales weren’t something I was super comfortable with at the beginning. Forgive me if you’re reading this and you happen to be a used car salesman but I had the stereotypical used car salesperson in my mind.
My thought process was, “I don’t want to be that and fall into that category.” It wasn’t aggressive and it was losing a lot of deals that I should have been able to obtain. I remember a mentor of mine told me simply. He asked me a question, “How do you define sales?” I gave him the best answer that I could but he had me write down this definition. The definition that he gave me that day was sales is helping people understand what they want and if you can, helping them get it.
Most salespeople don’t take the time to help people understand what they want or even as questions around what is the main thing motivating them to potentially use your service or product. Many salespeople will sit there and tell you how great they are and why you should work with them. It’s a flawed approach and you hear many different things. As you read this week after week and with JD when we’re talking about presenting offers to sellers, negotiating with buyers and things of those lines, there are so many golden nuggets that we drop in there. Specific questions that you used to do discovery on the person that you’re dealing with and create a desire within the person.
A good salesperson or real estate investor is able to create a strong desire for a private lender to give you money for a rehab buyer to purchase your wholesale. They’re able to create a strong desire. When we take the time to hone in these skills and understand how to help people understand what they want, once we realize what they want and if our service can help them get what they want, should we sell them? We should proudly and aggressively sell them because we have the ability to help them get what they want.
On the contrary side to that, if your service or product can help them get what they want, should we aggressively sell them? I say no. One of our core values here is Ethics & Integrity. If somebody truly does not want your service and is not going to benefit from us then forcing it down their throat is wrong. That’s just me. To me, that’s good sales and that is how you sleep at night.
We all have this in common as real estate investors. We are out there week after week looking to find properties. We are marketing to find assets to get under contract, buy and hold, rehab or whatever that may be. We’re out there looking to fund assets and raise money. You better believe that if you’re approaching individuals to borrow $500,000 from their retirement account that they worked to save up, you better have some good skills and know what you’re doing in order to successfully complete that transaction.
Communicating For Assets
We’re all out there looking to flip things whether it’s flipping contracts in a wholesale deal, flipping rehabs or flipping the calendar with rental income. We’re all out there fixing things, other people’s problems and actual properties. We are in the solutions business as a good way of looking at it. This may sound like a small play on words but I want you to think about this. I used to think and look at this business as money and wealth are going to come from the assets that I acquire.
That is true 100%. If we don’t acquire the assets, we’re not going to build our wealth. If we don’t acquire a cashflowing property, we’re not going to cashflow but I now see that there’s a step that precedes that. I have learned that assets come from communicating with people. The secret that I learned was assets are the vehicle that builds wealth but I’m not getting assets if I don’t know how to communicate whether it’s dealing with a renter, contractors, buyers or lenders.
We’re in a very competitive market, as you know. I have a rehab going here in California and I’ve had no problem getting a contractor lined up, getting the work started on time, moving forward and things along those lines. I tend to talk to a lot of people out and about and I’m having such a time finding a contractor or finding this. Nobody is out there available to work. I’m thinking, “That’s not my reality.” I’m not having that problem.
A ton of feathers still equals a ton.
Is it that there are no contractors out there or that all the contractors out there are too busy? Could it possibly be that we need to improve in the way that we’re communicating with them, negotiating with them and creating a desire for them wanting to work on our projects? This is a skill that most business people in general totally undervalue. They undervalue how great of an asset working on your sales skills are and communing. Most people say, “I have been talking since I was two years old. I know how to talk and communicate.” That’s true but many of the things that we say and don’t say are going to work for us or against us.
Look at a simple word like the word why. Why is a double-edged sword. Let’s say somebody gives you an objection. You’re going to get a property under contract with the seller. There’s an objection that they throw out. Maybe it’s, “I need to talk to my attorney. I need 24 hours to think about it.” You respond with a version of why. “Why is it important for your attorney to look at it?” They’re going to tell you why and start expressing and telling you more about why they want the attorney to look at it. There’s a principle in communication that emotion expressed equals emotion increased.
I remember the first girl I dated in high school. I really liked her. Her name was Carrie Cofed. She dumped me. Can you believe that? I remember asking her why and she told me. Little did I know I was digging myself a deeper hole. This is a whole another episode we could do on handling objections or objection blocking. I’m not going to ask why or tell me more about why you don’t want to do business with me. Get them talking and thinking more about that.
I’m going to come back with some things that I discovered when I took the time to understand what they want, “You’re not comfortable signing the contract right now. Let me repeat this back to you and make sure we’re on the same page. You liked the offer and the idea of selling it to a company like mine where you don’t have to pay real estate commissions and could close quickly. You also want to be comfortable with the paperwork that we’re using. Is that right?”
Do you see the difference in that? If I said, “Why don’t you want to sign my paperwork?” Then I’m digging myself a deeper hole as I did with Carrie. If I flip that then I made something that they didn’t want into something that they want. We will get more into this but I want you to understand that if you’re in this business of developing these skills, I would put this under the category of personal development, there is no business development without personal development. Let’s get that on the table.
Return On Investment
If we don’t have a plan and a strategy for us to grow personally then our business is going to suffer for that. The sales and negotiation was something I would put personally under the category of personal development. It’s a million-dollar skillset. If you think about it, you always want to think in life in terms of return on investment. Picture and imagine you’re sitting at a kitchen table with a seller and you’re negotiating back and forth. Let’s say you could lock this property up for $200,000 and it will give you the desired rehab profit of $30,000.
That’s the average across the United States. There’s no guarantee you’re going to get that or not get that. Let’s say it makes sense at $200,000. By using some simple strategies and techniques in a ten-minute conversation, you are able to lock up that property for $190,000, which is very doable and realistic. It happens all the time. In a ten-minute conversation, you made $10,000. That’s about $1,000 per minute based on the skillset that you have.
Think about it throughout the course of a transaction. You’re negotiating with the seller when you’re purchasing the property and the contractor to lock up the price. When the house is finished, you’re negotiating with the realtor and the new buyer. You have a plethora of holding costs and transaction costs. Maybe realtors are involved and you have a negotiation that can happen there and discounts that can be acquired on the listing and selling commission.
On any given property, if you look at it realistically, there probably is about $50,000 on the table if you put everything together. In one rehab transaction, all the different categories of people that you have to deal with from insurance companies, attorneys, contractors, subcontractors and landscapers, we have the ability. Most people think, “If they go high, I’m going to go low. If I meet in the middle, I did well.”
That’s amateur hour. There are so many ways of putting more money in your pocket. What this does are many deals that otherwise wouldn’t be a good and profitable deal now become profitable not by anything you did differently with your marketing or any other area of your business but by simply learning how to communicate, create desire and understand the person that you’re negotiating what it is that they want.
With that being said, I want to give you about 3 to 4 different, very simple techniques that you can start using in your business. The one thing I want you to understand with sales and communication is I believe that a ton of feathers still equals a ton. What I mean by that is there are very few one-liners that, “It’s the knockout blow. This is going to close every deal.” It’s more of an approach of a lot of little things that you’re doing along the way add up. It’s little things that build rapport, create desire and ultimately are going to put more money in your pocket.
There’s no knockout blow. I know a lot of salespeople that take pride in overcoming objections, “I get this objection and crush it.” That’s a good thing. If you can overcome an objection, that’s part of doing business and is a powerful skillset. I would propose to you that doing a lot of little things so you block an objection and it never comes up in the first place and you never have to fight it, to me, that’s a route that I would much rather go.
I’m going to give you 3 to 4 things but before I do, as always, I want to give you an opportunity to learn more about getting started in real estate. As you know, week after week, I point you to a link called FortuneBuildersShow.com. I promise you, this is training you will not regret. It’s a one-day training with one of our top trainers on how to get started and how do you scale in this business. It’s completely free training. Is there stuff that you can purchase at the end of that training? Are there additional ways that the company can help you in real estate? Absolutely but that’s for you to decide.
Learn how to create a desire and to really understand the person that you’re negotiating with. Learn what it is that they really want.
Regardless of whether you do that or don’t, it’s a one-day training where you will know exactly how to scale. You will understand in theory how to conduct a wholesale transaction and a rehab drive transaction and begin buying and holding properties. Can you learn everything you need to know in this business in one day? No. I’m not promising you you’ll be an expert at the end of this training but this is something that has been developed over the years of how in a short period of time do we equip the brand new investor with the tools and the resources that they need to get out there and get going. If that’s something that interests you, get into that training.
Stimulus And Response
I want to talk quickly here about what I consider to be the foundation of sales. That’s something that we call stimulus and response. What stimulus and response mean is that in this world, for every action, there is an equal and opposite reaction. I need to give a demonstration. I have Joe Prutch and Nolan Mercer. That’s stimulus and response. They came into the booth. They had no idea I was going to do this. The stimulus is I asked them to come in and they came in. When they walked here, I stretched out my hand to Joe and Nolan and they shook it. What I want to demonstrate with this is whoever controls the stimulus controls the response.
Think about this. They did not think about, “Should I shake his hand or not?” The stimulus was I extended my hand and in return, I got a handshake. In sales, people genuinely become fearful around selling because they feel like the other person, the seller with the property that they want to buy, the private lender with the money that they want to borrow, they have the illusion that the other person is in complete control of the outcome. They don’t understand that we as the investors control the stimulus which, therefore, in many cases we will control the response.
How would you feel about this business, going out there and negotiating contracts if you knew, “If I do this, there’s a very high probability that this is going to happen in return. If I do this, it’s very likely the seller is going to do this.” The number one advantage we should have as real estate investors is we have the time to practice and prepare. There’s no seller that you’re going to meet that is pulling their family around the table and saying, “CT Homes is going to be here in one hour. When they say this, we’re going to say this and do this.”
They’re not planning this stuff and studying sales skills to sell their property, NLP or Neuro-Linguistic Programming and all of these things that we should be studying. In life, stimulus always precedes response. You saw the handshake. If you’re walking around and giving somebody a big smile, chances are you’re going to get a smile in return. Most people have masks on so you can’t see their faces but I bet you they’re smiling.
If you tell a joke, assuming it’s a good joke, you’re going to get some laughter. This is key. If you make a promise and keep that promise, it builds trust. A quick tip for you is whenever you’re going to negotiate or meet a seller to look at their property, evaluate their property and ultimately make them an offer, you want to make and keep 2 to 3 promises before you ever get to their house. You want to establish a pattern of, “I said this and did this.”
On the first phone call, say, “I appreciate the time, Mr. Smith. I’m going to send you an email here in a few moments with an informational brochure about my company so you can learn a little bit more about what we do and how we do it and read testimonials of other sellers like you that have been very happy with our services.”
A couple of minutes later, I send that email and in the copy of the email, “Mr. Smith, as promised, here’s the informational brochure I was talking about on the phone. I look forward to seeing you tomorrow at 3:00 PM at your property,” or whatever time you set up the appointment for. You get to the property the next day, “At 3:00 as promised, I’m here. Is it still a good time for you?”
It’s the simple, subtle things that we are doing to make and keep promises. Little things like this build trust and rapport. Ultimately, when you’re in a conversation, you always could tell who is in control of any conversation and negotiation by who is the person asking the majority of the questions. Questions control the outcome. If I asked you, “How do you define sales?” I’m making you go into your brain, process that question and bring out from past experience or any training an answer. Whoever is dictating the questions is the one that is controlling the stimulus, process and all of that.
The Power Of Storytelling
There are so many different techniques that you could use with storytelling. There’s a little slogan that I live by. It’s, “Facts tell. Stories sell.” Many investors and salespeople want to say, “I sold this many deals. I did this. I’m so awesome because of these facts and all I’m doing is telling the person about that.” When you tell by storytelling, it is so powerful.
Instead of telling somebody how great you are, let’s use an example of a distressed homeowner that needs to sell their property. If you walk them through a story of how you helped somebody in the same situation, maybe you had a family member or a friend that went through this and how you were able to help them in that transition. What storytelling does is drop the wall down between the conscious and the subconscious mind.
We all have a part of our brain that controls our conscious logical thinking. We all have a part of our brain that is subconscious. Any expert will tell you anywhere from 68% to 80% of all the decisions a person makes in life are controlled from their subconscious side. When we tell through storytelling, it drops the wall to where a person is going to be more prone to think and make decisions from the subconscious side, which is based more on emotion than logic.
If you know anything about sales, you know that most people buy or sell based on emotion, not logic. It’s got to check basic boxes of logic but emotion is what is going to dictate the decision. Start practicing and seeing life through the lens of stimulus and response. I said in the beginning, this goes far beyond business, locking up deals, making money and things along those lines but practice it on friends and family members.
Whoever controls the stimulus controls the response.
If you’re consistently getting in an argument with your spouse about a particular topic, reflect on, “What was the stimulus that starts this argument every time? Is it what I say? Is it how I say it? Is it by body language?” We can then say, “If I could change the stimulus then I can change the outcome.” That’s another important thing that we all know. The majority of communication is non-verbal whether it’s body language or facial expressions. Very little communication is the words that are coming out of our mouths.
Than taught me that whenever you go meet with a seller or buyer or into a bank to close a loan, do a quick mind check. What he means by that is to say, “What is the dominant emotion that I’m feeling in my mind?” If that’s a negative emotion whether it’s fear or insecurity, how we’re feeling in our mind is typically the vibe that we’re going to give off with our body language. If I go in and know my state of mind is negative for some reason or another then I’m going to make a conscious decision to use my body language in a very positive way. It’s faking it until you make it so to speak. Over time as you do this more, you don’t have to fake it. It becomes reality.
That is a little bit on stimulus and response. The second thing that you want to pay attention to is being intentional about building rapport with the person that you’re negotiating with. One of the best ways of building rapport is going into every meeting assuming you already have it. I use that example. If you’re going into a big meeting with a complete stranger, you’re meeting them for the first time and you’re nervous, insecure and afraid then you’re going to give off those vibes.
If we go in and say, “I’m going to act in a sense like this is a good friend. This is somebody that I’m super comfortable with. I’m going to use my body language in a way, facial expressions, a big smile and all of these things.” A ton of feathers still equals a ton, add up. Another thing is simply showing genuine interest in people when they’re talking. We have all been in conversations with people that we know are physically there but mentally are checked out. They’re somewhere else. We know how that makes us feel. “They’re not even paying attention to what I’m saying.”
A lot of times, we’re thinking about in these negotiations, “I need to do this next. He said this or she said that.” We’re processing. We’re not in the moment and showing genuine interest in what they have to say. A great book that is timeless and that we all should read is How to Win Friends and Influence People by Dale Carnegie. This is right out of his playbook showing genuine interest and also giving people feedback. When people are talking or asking questions, give good feedback to assure them that the question they’re asking or the comment that they’re making is an intelligent one, “That’s an interesting question. No one has ever asked me that before. I could tell you by doing your homework.”
As little kids, we love this. My daughters used to be super into gymnastics. They still do a little bit but they’re not as they used to. We go a couple of times a week and they would come home, “Dad, look what I learned at gymnastics.” They would run out in the backyard and do some tricks and then immediately look to their dad for feedback and assurance for what they did.
Little kids love it. Adults love it too. We just won’t admit it. Little things like this make people feel more comfortable. It’s creating commonality. People are most comfortable around people like themselves. Commonality is how can we quickly make ourselves more like the seller we’re trying to buy the property from or the lender that we’re trying to borrow the money from?
How do we become alike? When you’re alike, you’re united. When you’re different, you’re divided. The most segregated time in our country is 11:00 AM on a Sunday morning because everybody is in their different colored church. It shouldn’t be that way. I don’t think it will be like that in heaven but that’s the way it is. Most people are most comfortable around people like themselves. The principle with commonality is you want to stay big before you go small.
What I mean by that is I grew up in Milford, Connecticut. I was halfway between the Yankee Stadium and Fenway Park where the Red Sox played. It was always a mix of Red Sox and Yankees fans. Let’s say I went into downtown New York. I walked into a sports bar and I’m like, “I’m a Red Sox fan.” How much commonality and rapport do I have in that sports bar? It’s very little. How do you go bigger? “I’m a fan of baseball and sports.” Always go bigger. Give people the opportunity to do the talking until you can find something that you can lock in that you have in common that you can build on.
Your Property Should Sell Itself
I want to leave you with two more quick things here before we wrap it up. This is great stuff. I appreciate the questions. I spent a lot of time going through some episodes and fielding some of the questions. There has been a lot of interest, even when we had JD and he was talking about how to get more of his offers accepted, “What was he doing here? Why did he say this? That was brilliant.”
When it comes to sales, the best way to sell your product, service and ability to buy a seller’s house is not to sell it at all but to have them sell you. One of the questions that JD dropped that was brilliant was, “Mr. and Mrs. Seller, what interests you most about selling your home to a company like mine?” Maybe you get responses like, “I like the fact that I wouldn’t have to pay commissions. I saw your CT Home-certified program.” You’re forcing them to elicit a response that is positive about you.
The thing is if you tell somebody, “I’m so great because of this reason,” in their mind, they’re thinking, “Let me be the judge of that. I’ll determine that.” If you get somebody to form their own opinion about your product, service or real estate investing company then in their mind, that becomes gospel. That’s a powerful question that you could use with anybody in this business. You sat down with, “Mr. and Mrs. Contractor, before we get started, I appreciate your time. What interests you most about working with a company like mine? Mr. and Mrs. Private Lender, what interests you most about potentially growing your retirement account and capital with a company like mine?”
Facts tell. Stories sell.
I’m coming at you hot and heavy here. There are a lot of little things that you can go and start applying to your business. The very last thing is I want to give you two forms of question. One, I gave you when we ask somebody any question that is in the form of a why, “What interests you most? Why are you interested in this?” If it’s asked in a positive way, that’s something we call a desire question. It pulls desire out from the person. When you get somebody expressing desire, it increases the desire in their mind for that thing. Any great real estate investor or salesperson for that matter is good at creating a desire to work with your company.
Lastly here, A or B questions are something so simple. You can start using these immediately. Maybe you’re going to set up an appointment, “I’m available tomorrow afternoon. What time works for you?” If you asked the question that way, you have given control to the seller, “I don’t know. Let me check with my calendar or my spouse. I’ll get back to you.” We want to lock that thing up so I’m going to give an A or B decision. You want to do this for as many questions as it works for.
Let’s say, “Tomorrow afternoon works for you. I could be at your place at 3:00 or 5:00, which one do you prefer?” “It will have to be 5:00. I don’t get out of work until 4:00.” “Have it your way. I’ll be there at 5:00.” 3:00 or 5:00 worked for you and your business but when you narrow the universe down to two decisions, it gives the person that you’re negotiating with the illusion that they are in control of the outcome where in actuality both work for you.
As many times as you’re able to when you’re presenting offers to sellers, if you could, position two different choices or offers to choose from. Maybe you have the education and understand how to structure a subject to purchase so you say, “Mr. and Mrs. Seller, I got good news for you here. I have two offers for you to choose from. I could purchase your home for $200,000 cash or $210,000 subject to.” It increases the outcome and statistically the chances of you locking up a deal.
I appreciate you following the show. I appreciate you sharing with friends and family as you have been doing. I love all the engagement in social media. Continue to ask questions. This episode was strictly learning from you and the areas that you’re getting stuck and looking to grow ceilings to press through. With that being said, thank you so much for reading. Follow us on our social media platforms. Direct message me on Facebook and Instagram. I would love to get to know you better. Let us know what you want to see more of on the show. Take care. See you on our next episode.