how to convince people it's a good deal?

Question

how do i convince people that what i am offering to them is a good deal?

when i am speaking with someone over the phone i make a ballpark offer to them so i can see what we are working so i know if it is worth pursuing to check out the house and then i would crunch the numbers to make a real offer.

whenever i make that ballpark offer, i am never even close to what they are asking.

right now i send direct mail to absentee owners and am having no luck on the second mailing so far.  i still have 4 more to go, but i want to make sure i have not missed anything from all the calls that i have been recieving.

Ryan Billingsley · Answer

@Jack Rengold

Every deal we have closed was done after many phone calls, usually at least one visit to the property and a bunch of dialogue.  We have never made a offer over the phone without seeing the property in person.  The more you are able to talk to them, the more opportunity you will have to build value, educate them, and make a friend.

You have to explain that you cant pay just the ARV minus repair cost.  You are not doing this for free but as a way to make a living.  "So with that being said what would they be willing to take for the property."  You should always over exaggerate the repair cost.  You will end up finding hidden cost in most properties anyways so to plan for worst case scenario is a good idea.  This always helps with lowering the offer as well.

Make them see that you are eliminating their headache.  You are re leaving them of this money pit property.  You have to ask questions to get them talking about why they want it gone.  Then keep reminding them of the reasons.  If they cant afford the annual taxes, if they are tired of cutting the grass, if they just need money, etc.  It is all about making them tell you what you want to hear so you can make them picture what it would be like to get rid of this headache.

This takes time.  Nothing worthwhile is easy.  Persistence breaks resistance.

Ryan Billingsley · Answer

@Jack Rengold

The trick is listening to the seller.  Find out what the motivation for selling the property is.  Use what they say to build value.  Use the rehab cost to build value.  The seller always starts off asking more than you are willing to offer in most cases.  They need to be educated.  If they want ARV for a home that needs 30k in rehab cost.  You need to explain that they can get what they want for their property if they are willing to spend 30k in rehab cost and pay 6% to an agent to sell the property.

Make a friend.  People want to do business with someone they trust and like.  Usually you will get your best leads towards the end of the six month cycle.  Do not be discouraged.  Practice makes perfect.  Stay persistent as well.  Sometimes giving a seller time to sleep on it and following up you will find they have changed their tune.

Jack Rengold · Answer

@Ryan Billingsley

Ryan Dossey

Carol Martin · Answer

It is all about the mind game.Positive you think longer way you go.It is not difficult to convince anyone just check out the client expectations and limitations.Just suggest according to that nothing else,

Ryan Billingsley · Answer

@Jack Rengold

The issue with your first contact offer is that you are not able to really analyze the deal.  You have no idea what repairs it needs and you have barely found out the sellers personal situation.  It is like an artist selling his painting for 100 dollars.  U walk up and within a couple mins offer him 70 dollars.  He has emotional attachment to the property and u just insulted him with out justifying your offer.

To justify your offer you first need to find out all the details, why they want to sell, what repairs it needs, what it is being used for etc.  Then if the person is motivated, has equity, and the property meets your criteria, you set a appointment to walk through the property.  This is another attempt to build rapport, build VALUE, and get a realistic grasp on the repair cost. (very important)  At this point you are at a much better position to explain your offer and actually have a chance at buying it.

Ryan Dossey · Answer

It is ALL about presentation. Think of it like this....

You walk into AT&T needing a new cellphone. They show you the latest and greatest smartphone. Explain all of its features and that it only costs you a mere $95.00 a month. That $95 is talk, text, data, navigation, and insurance. Sounds good right?

Now imagine you call that same store and say you need a new cellphone. They tell you its $2,400 for a 2 year contract.

What is more likely to get your business? That 2400 is about what you would pay at $95x24months.

Brad Gordner · Answer

In my mind they should be trying to convince you, not the other way around.  They are there for a reason and if they are motivated they will because they have to.   Always strive for a win-win.  You want to be able to pass these sellers on the street years later and be able to say hi and them remember how you helped them.

Brad Gordner · Answer

Jack,

Each situation is unique and each should speak to you.  Some investors use the general rule of thumb of ARV * .7 minus repair costs.  It should be used as a guide and not a rule of thumb.  Listen to what others have said in regards to listening to the seller and what their individual motivations are.  Those motivations combined with your numbers will get you, or should get you, a number in your head.  Use that number to create a target purchase price and range around that target that is acceptable.  Let the seller tell you their selling price.  Use follow up questions to get them to further reduce their own price.

If you want to learn more look up Michael Quarles  BP podcast.  He is the king of those phone calls IMO.  Also has articles as well on the subject.

Jack Rengold · Answer

okay so this is usually what i do.  i see what the arv is and then i multiply it by .7 and i give them that as the ballpark number.  should i stop doing that?  do you think that is a deal killer?

what if they live an hour away?  i dont want to drive all the way there to find out we arent even in the same range of numbers.

i am trying to not waste my time by going to useless leads. is there a better way of filtering it?

Ryan Dossey · Answer

I have only made a "ballpark" over the phone offer to a seller once. He was an investor and I knew what he paid from tax records. My ballpark was about what he paid. He told me he was wanting to cashout so I offered him just that. We are supposed to walk through that property this week.

how to convince people it's a good deal?

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