How to Build Rapport with Motivated Sellers

First Thing’s First…You Need to be Likable

When it comes to buying directly from a seller, there is scarcely a skill more important than being able to build rapport with that seller. Yes, you need to find the right lists to market to and write good copy (check out Sharon Vornholt’s great articles for tips on lists and what to write). But the one thing you know for certain is that no one is going to sell to someone that they fundamentally dislike.

Many people, probably even most, will intentionally hurt themselves if that means they can avoid providing a benefit to someone they don’t like. There’s even a term for it, altruistic punishment. Further, without a real estate agent present, every seller knows that whatever reason you give for why that seller should sell to you (especially at a lower price), it benefits you directly.

There is no neutral third party here. Because of this conflict of interest, you are inherently untrustworthy as the buyer. You’ll need to gain the seller’s trust by doing what you say you will do and not taking advantage of the seller. This will take effort. But trust me, it’s effort that is worth putting in.

But first and foremost, we must start with a Not-to-Do List that Tim Ferris made popular.

Not-to-Do list

1. Bark Out Any Offer

They say that if you are not embarrassed by your first offer then you offered too much. Many times, this is true. But if you’re dealing with a seller directly, an immediate and low offer will come off as arbitrary and likely rude.

If you haven’t built rapport and/or made your case as to why there should be a discount, no seller is going to give you the time of day. If you’re just making offers on random REOs (real estate owned) then sure, there’s no problem with just shooting out an offer. But when dealing directly with sellers, more finesse is required.

2. Use High Pressure Sales Tactics

No one likes being on the receiving end of high-pressure sales tactics. Salesmen who use the “ticking clock” sales technique or are always using leading questions are no fun to deal with. So don’t be one of them.

Not only are these tactics of dubious morality, they also tend to make sellers clam up. I’ve often said that “a confused mind says no.” But so does an overly pressured mind. In addition, these types of tactics are also what is most likely to lead to regret. Seller’s remorse exists in the same way that buyer’s remorse does.

Perhaps you can get a property under contract with such high-pressure techniques, but don’t be surprised when that same seller tries to wiggle their way out of the contract the next day or week. And maybe you can go ahead and enforce the contract regardless. But that doesn’t stop the seller from leaving your company a bad review or telling others not to work with you. And remember, your reputation is more important than any one deal. Either way, who wants to deal with all of those headaches?

3. Talk Down the House

We want to make our case as to why a property should sell for less than the seller wants, but one of the worst things you can do is to try and make this case by badmouthing the property. The problem is that while you mean this criticism innocuously, it comes off as an insult. Many people identify themselves with their home. This is especially true if they live in it and it’s not a rental or inherited property of theirs. And it is even more true if they did the work themselves. Most do-it-yourselfers are not good. But by no means makes it a wise idea to tell them that.

Talking down about the property is basically insulting the seller to their face. You might as well say something like “Why on Earth would you be willing to live here? Do you enjoy living in filth?” Or “Wow, you rented this place out! You must be a slumlord.” Or “So you must be broke and have no money to fix anything. That’s embarrassing.” You get the idea.

I’ll discuss the right way to make your case below as we transition into the To-Do List.

To-Do List

1. Embrace Small Talk

It may sound simple, but never underestimate the importance of making small talk. In one of those “why did they pay money to study something everybody already knows?” studies, researchers found that people are more likely to trust people they like. You “morally elevate them” as Big Think puts it. And no one is going to like you until they talk to you. So talk to them!

Indeed, as I noted for our acquisition of a 32-unit apartment a few years ago, “…anytime we got in the same room with him, we were there for at least two hours.” That amount of conversation is probably unnecessary when buying a house, but the more time we spent with that seller, the more he liked us and the more he started to believe that one way or another, he would eventually sell the property to us.

If you don’t know how to start a conversation or keep one going, there are plenty of good books. I would start with Leil Lowndes’ How to Talk to Anyone. That being said, the best place to start is just to ask, “How has your day been?” And see if things take off from there. Make sure to ask open-ended questions so the seller has a chance to elaborate.

Another good tip I found from Charisma on Command’s great Youtube channel is to be the “human Google.” As he puts it, “[Take] all those questions that maybe we go to technology for or maybe we don’t even voice and [ask] the people around us, especially the people we don’t know…”

In this case, just take whatever questions you have about the house or maybe a picture they have on the wall or something they mentioned in passing (that’s not controversial) and ask the seller about it. That should get a conversation going. Then, after five to 20 minutes or so, segue to business.

2. Be Genuinely Interested in the Other Person

Virtually everyone can sniff out false flattery and disingenuous people. So don’t bother faking it. It’s critical to, as Dale Carnegie so famously put it in his classic book, How to Win Friends and Influence People, “Be genuinely interested in other people.” If you think about it, there’s no reason not to be interested in them. We are a social species and talking to people is generally enjoyable.

Even if the person is unpleasant, there may be something to learn from them. As Ralph Waldo Emerson famously put it: “In my walks, every man I meet is my superior in some way, and in that I learn from him.” The best investors I’ve met have all been avid learners.

While being interested in others you should also be empathetic. Many of these sellers are in difficult situations and you should empathize with them about it. You are there, after all, to offer a potential solution. Sometimes, you can even help take the edge off.

Back in 2009 and 2010 when we were buying a lot of short sales from people who were behind on their mortgage, after the person mentioned they were behind I would say “who isn’t these days?” (This was during the financial crisis.) I think this line took away much of the shame the seller may have felt and made it easier to negotiate openly.

3. Make Your Case Honestly, but Kindly

Most of the time, you will need to make your case as to why the property should be sold for less than what the seller wants. But how do you do this without insulting them like noted in the Not-To-Do list? The answer, in my humble opinion, is to phrase everything positively. Namely, describe what you will need to do to bring the property to where you want it to be, not what is wrong with it as-is.

For example, instead of saying “this carpet is old,” say something like, “to get full-market value, I would need to upgrade the carpet.” The word “upgrade” is a good one because it doesn’t imply that what exists is bad, just that it can be improved.

One billion dollars is an upgrade from $1 million, but are you going to complain about $1 million? Most of the time, the seller will be fully aware that, say in this example, the carpet is terrible. But in the same way that someone will get offended if you say they are bad at math immediately after they admit they are bad at math, it doesn’t come off so harshly when you phrase things in the positive.

4. Don’t Take Offense

Most of the time, your offer will be a good deal lower than what the seller wants. The seller may get angry at this, but is more likely to be dismissive and say something like “Oh I could never go that low.” Either way, don’t be offended or try to make excuses. Just pleasantly say “No worries. How much lower do you think you could you go?” or something like that. If they are angry about it, it’s probably best not even to ask for a counter. Just be pleasant in response and remember that it’s a numbers game. There will be many negotiations that don’t work out and that’s OK.

Regarding this point, however, it’s critical to understand that most negotiations have some back and forth. Many direct-to-seller negotiations last for quite a while before you get the house under contract. A friend of mine actually noted that virtually none of the deals he buys directly from sellers comes from their first interaction. Most of them come quite a while after. This is why it is so important to not take offense when the seller says no and in addition…

5. Follow Up

As noted above, oftentimes these negotiations don’t get settled on the first go around. Perhaps the seller wants to try listing the house for sale by owner. Perhaps they do and it doesn’t go well or they never get around to it. Most of the times the best way to do this is to just ask the seller after they’ve said “no” if it’s OK to follow up in a few weeks.

Usually they will say “yes” no matter how low your offer was. Then wait two or three weeks and call back. Perhaps nothing has changed, but sometimes the seller has a whole new perspective on the situation and will be much more amenable to negotiating.

Before wrapping up, I would add one last point that could go on either the To-Do or Not-To-Do list and this is just to be open and honest about what you do for a living and not try to screw anyone over. Real estate investors can have a bad reputation sometimes because of a few bad apples. It’s a lot easier to convince someone you aren’t one of those by not being one of those.

Being fair with people and telling the truth makes things easier. There’s less to remember after all.

What would you add to the Not-to-Do List and the To-Do List?

Share with a comment below!

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.