Negotiation Blockages with Sellers

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Negotiation Blockages with Sellers

William Johnson
Real Estate Broker · Laval, Québec · Member since 2014 · 183 posts · 59 votes

Here are some questions that I have:


These are about negotiation with real estate and specifically is about receiving phone calls from advertising for buying homes. okay, so first question

1. Is it better to ask the buyer how much they think their house is worth and then ask them what would be the minimum that they would accept if I was making an all-cash transaction and close on the day of their choice or is it better to get all of their information and then call them back with a concret offer after verifying how much their house is worth and figuring out exactly how much I will pay for it considering the repairs that have to be done.

Or, is it better to do a combination of those two things

2. Do you believe that the attitude that I have the fact that I am not very aggressive and sometimes not very confident of myself because I have yet to close my first transaction since I started this new business, do you believe that that is an important part in closing the transaction. I am wondering if these mentalities are making it impossible to close deals.

I have not closed one yet, and a couple of my mentors are calling me out saying that I have been doing this for long enough now that I should have closed something by now. I believe that I need to stop excuse making. I overthink things and I don't spend enough time interacting with sellers.

3. What can I concretely do to develop the closer's mindset, in conjunction with spending the majority of my time making offers on houses. To become a doer rather than a sayer or a thinker?

One thing I have thought about is to begin posting transcripts of my negotiations and audio bits of me talking to sellers and getting the feedback of the community.

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Chaz Reid
Investor · Fayetteville, NC · Member since 2014 · 916 posts · 190 votes
11y

1. In my operation, I never offer first. What if you offer $50k but all they wanted was $25k. Always find out how much they want for the property. Tell them you have to run your numbers and get a contractor estimate, then you can offer them numbers. After getting your numbers, you know the range you can go on the property. Makes sense?

2. "If you can believe it, you can achieve it." Stop doubting yourself bro, you're quitting before the fight is even starting. Before I landed my first deal I was faking it until I made. I even had a seller to introduce me to his daughter because he thought I was so successful. Little did he know, I was borrowing my Moms car, barely eating three times a day, and living off of less than $1000 a month. So hold your head up, sound like a true REI, and people will believe you. But it starts within...

3. I would recommend replaying events of the day afterwards. I use to judge all of my phone calls after I hung up. Looked for stupid things I said, where I need to sound more professional, etc. Reading will also develop your mindset. Reading allows you to know things you've never known before, do things you've never done before, see through a different mindset, everything. Education in investing, never stops!

Keep grinding bro, you'll make it!

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  • Rene Martinez
    Wholesaler · Grand Prairie, TX · Member since 2014 · 202 posts · 66 votes
    11y

    @William Johnson I'm in the same boat as you. I have made several offers but I haven't closed a deal yet. However, I can say without a doubt, I'm a better negotiator now than when I started. 

    To answer your question, I think that when asking for the value and then what they'll take is just to gauge motivation.

    Yes, your attitude has a TON to do with it. The sellers can smell that like saga smell fear.

    The two things that have helped me a lot are memorizing a script and role playing. Your mentors should be role playing with you and coaching you through certain situations. 

    Good luck!

    2Reply
  • Christopher Salazar
    Investor · Chicago , IL · Member since 2014 · 159 posts · 68 votes
    11y

    You have to be very confident. No one wants to do business with someone who is unsure if they can make a deal happen, or at least sound like they cannot. When I started out, naturally, I wasn't confident in talking with sellers. But I got better with experience, as will you. Maybe your problem is that you're not making enough offers. Whatever the case, keep at it! Be consistent and I'm confident you'll land a deal. 

    1Reply
  • Rene Martinez
    Wholesaler · Grand Prairie, TX · Member since 2014 · 202 posts · 66 votes
    11y

    I'm meant to type dog not saga... Crazy auto correct! Lol

    0Reply
  • RJ Reynolds
    Realtor · Westwood, MA · Member since 2015 · 145 posts · 67 votes
    11y

    Negotiating both terms and price is absolutely essential. How long it takes you to develop the necessary skill depends on a) where you started, b) how much you "practice" and c) your personality type.

    It has taken me, as a Real Estate Professional, a great deal of time to develop the negotiating muscles necessary to confidently assure my buyer clients that we have the best deal possible.  

    Someone who is purchasing a single home to live in every 5-10 years obviously doesn't have the experience to negotiate the deal for themselves, so they hire me and my commission is paid out of the proceeds of the sale.  Trust me when I say that the amount of money, time and anguish I save my clients is totally worth it.

    That said, as an investor, you may not want to hire a professional negotiator as it's a skill you absolutely want to develop for yourself.  

    First step: Completely qualify the sellers mindset with regards to 'need' to sell vs, 'interested' in selling. If they are "interested" walk away.. as an investor you simply will not talk them down to a price worth paying.  You could use the opportunity to practice your negotiating skills in full knowledge that you are NOT going to buy the home.  Personally, I'd save my energy for one that might result in a purchase.

    Second step: Stay in conversation a lot of probing questions that tell you everything about the house, the work they've done on it (and not done on it), what they love about the house, what the hate about the location and so on.. drill down and find multiple ways of asking the same question in case your not getting clear responses.  They may begin to get annoyed so you make sure to express interest in solving their problem.. (buying their house).  Don't talk price right away.. just keep asking questions, expressing interest if the right terms and price can be negotiated.

    Third key step: Do NOT become emotionally involved with the outcome.  

    Fourth: By now you should know alot about the house and the seller as you've developed a feel for the situation as you talked.  Use that knowledge.  Did you learn that they have a new job and need to get this off their plate ASAP? Great, ask them "If we can agree on price and terms, are you ready to close tomorrow?"  Note that you are not asking them to close tomorrow, your asking if the COULD close tomorrow so don't panic if they say yes.

    NOW you have a good idea of motivation.  Thank them very much and let them know you will be back in touch to make an offer.

    In my opinion, negotiation is almost over at this point. You discover what the house is worth to you and offer that, not a penny more.  You try to make all other terms so appealing to the seller that they say Yes.  If they don't, you thank them for their time and wish them luck.  

    Call back in a week.. and offer it again.

    The seller spent the time between the qualifying conversation and the offer thinking how great it would be if you bought the house so the whole situation would be done with.  The offer was so low they said no but a week goes by and nothing happens... the thrill of possible sale replaced by the drudgery of trying to sell.

    Don't forget to represent yourself as the person who can solve the sellers problem.  All other buyers will pale in comparison as they try to nickle and dime the seller. You aren't doing that. Your telling the seller what you can afford in order to solve his problem.

    4Reply
  • Chaz Reid
    Investor · Fayetteville, NC · Member since 2014 · 916 posts · 190 votes
    11y

    1. In my operation, I never offer first. What if you offer $50k but all they wanted was $25k. Always find out how much they want for the property. Tell them you have to run your numbers and get a contractor estimate, then you can offer them numbers. After getting your numbers, you know the range you can go on the property. Makes sense?

    2. "If you can believe it, you can achieve it." Stop doubting yourself bro, you're quitting before the fight is even starting. Before I landed my first deal I was faking it until I made. I even had a seller to introduce me to his daughter because he thought I was so successful. Little did he know, I was borrowing my Moms car, barely eating three times a day, and living off of less than $1000 a month. So hold your head up, sound like a true REI, and people will believe you. But it starts within...

    3. I would recommend replaying events of the day afterwards. I use to judge all of my phone calls after I hung up. Looked for stupid things I said, where I need to sound more professional, etc. Reading will also develop your mindset. Reading allows you to know things you've never known before, do things you've never done before, see through a different mindset, everything. Education in investing, never stops!

    Keep grinding bro, you'll make it!

    5Reply
  • William Johnson
    OP
    Real Estate Broker · Laval, Québec · Member since 2014 · 183 posts · 59 votes
    11y

    Thanks a lot for the thorough responses.  Just to give you guys an idea I have made close to three hundred offers in the last 6 months. I am trying to stay in the grind but your responses are going to help me grind more intelligently. Any other suggestions? 

    0Reply
  • Chaz Reid
    Investor · Fayetteville, NC · Member since 2014 · 916 posts · 190 votes
    11y

    @William Johnson *sighs*

    Whenever you think your struggle is difficult, someone is doing worst. Always keep that int the back of your head whenever you need motivation. 

    If you made almost 300 offers in 6 months, you need to step it up. That's only 50 offers a month. You should be making 50 offers a week. There are too many free sources for you to make offers. For sale signs in the yard, craigslist, offer on the MLS, there are tons of routes you can be taking.

    Sticking with real estate is the hardest part. Its boring day to day, but I would rather make boring big money than exciting little money.

    If you believe in yourself, you will make it happen. You've been doing this without confidence in yourself for 6 month. Until you realize that you are in control of your investing career, you will continue to get the same results.

    My story involved being almost homeless, almost losing my son, negative bank accounts, depression, alcohol abuse, basically being in the worst position I've ever been in my life! BUT I DIDN'T GIVE UP OR DOUBT MYSELF WHEN IT CAME TO REAL ESTATE! I knew this was the route for me, I knew the money was out there, I knew I had the knowledge, I just had to stay focused.

    If you don't believe in yourself and your abilities, who else will?

    3Reply
  • Michael Noto
    Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
    11y

    Good insight @Chaz Reid 

    1Reply
  • William Johnson
    OP
    Real Estate Broker · Laval, Québec · Member since 2014 · 183 posts · 59 votes
    11y

    @Chaz Reid Thanks man, excellent insight and just the kick in the pants that I needed.  I am excited about the concept of getting bored with this.  I am slowly believing in myself and getting fed up with not believing in myself, especially when success is the truly logical conclusion to my actions consistently and performed at a high enough volume.  Not succeeding makes no sense with my current actions being continued and ramped up.

    1Reply
  • Chip F.
    Real Estate Investor · Columbus, OH · Member since 2014 · 8 posts · 11 votes
    11y

    @William Johnson How many of those 300 were off market deals? For off market deals where you're negotiating directly with the seller and no set asking price, NEVER be the first person to name the offer, for the reasons Chaz said previously. You'd be amazed how many times sellers will name something way lower than you would've thought to offer.

    For some great advice on seller negotiation, listen to the BP Podcasts with Michael Quarles. One of them has a role playing of a seller call that has some great examples of ways to get the price down. The best one he did imo, is when they first name a number for how much they think the house would sell for, "Ok, and what were you hoping to sell it for that's LESS than (whatever price they said)." If you haven't listened to them, do not talk to another seller before you do, they're that good.

    1Reply
  • William Johnson
    OP
    Real Estate Broker · Laval, Québec · Member since 2014 · 183 posts · 59 votes
    11y

    @Chip F. Thanks for the suggestion and I have listened to Michael Quarles podcast and I was following that advice and I still do with one change, if their lowest price is way higher than what I am willing to pay I have decided that I am still going to offer my amount anyways.  I think I have a better chance of at least trying to offer something (which takes another minute or two) than just letting it go and assuming that they will not accept anything lower.  It is kind of a back and forth debate as I do here a lot of people who say that they just get the seller to give them their lowest price and walk away if it is too high and my previous mentor would always offer an amount for each one.

    0Reply
  • Michael Quarles
    Flipper/Rehabber · Bakersfield, CA · Member since 2008 · 3k+ posts · 3k+ votes
    11y

    the idea of negotiation is to have the seller adapt your price point as their own. 

    You're making a mistake by offering the seller a price especially when their number is way off.  

    Once you learn how to negotiate using common seller dialog than you'll capture more opportunity.  

    With that said     

    Two things are always true 

    1- you cannot create motivation with responsible expectation. 

    2- you should never expect to receive the unreceivable. 

    0Reply
  • Jeff G.Pro Member
    Investor · Wethersfield, CT · Member since 2013 · 371 posts · 191 votes
    11y

    @William Johnson understand that "No" is often "No, not yet" when dealing with sellers. I send follow-up letters to every "No" that I can at the end of the month. Often sellers think they can get a much higher price than the market will permit and so they think your offer is unreasonable. When they get tired of unqualified buyers trying to purchase the property and you keep sending them letters on a periodic basis guess who wins in the end? You!

    You don't need to be "aggressive" just firm on your price with lots of follow-up. Be prepared to articulate (nicely) why your price is the way it is. If you know why you've set that price and why it's a fair offer you'll be more confident in sticking to it.

    I'll give you an example in progress from my own business:

    I sent out  batch of yellow letters and got a call back from a Reltor about a property in a nearby town. The property is tiny but on a decent lot. But the house has been unoccupied for 4-5 years, is infested with mold, has a lot of structural damage from water and ice due to multiple roof leaks, and the septic system hasn't been used since the previous owner passed way.

    The property generates a lot of interest... from first time home buyers attracted to the lower price-point. But, the property can't get a mortgage because it's not fit for human habitation. So, if you're a first time home buyer with no rehab budget you're just not going to be able to get the house. The seller wants 80k for it, I offered 35k, they countered at 60k which is still too high because of the extensive amount of rehab required. I'm going to keep sending them offer letters for 35k-40k until they change their mind. Unless some other cash buyer comes along I stand a really good chance of getting this property under contract... eventually. If the property were in better shape I could offer more.

    Wholesaling is like chess: it requires patience, deliberate action, persistence, and above all you must think 4 moves ahead. 

    The fortune is in the follow-up.

    1Reply
  • William Johnson
    OP
    Real Estate Broker · Laval, Québec · Member since 2014 · 183 posts · 59 votes
    11y
    Originally posted by @Michael Quarles:

    the idea of negotiation is to have the seller adapt your price point as their own. 

    You're making a mistake by offering the seller a price especially when their number is way off.  

    Once you learn how to negotiate using common seller dialog than you'll capture more opportunity.  

    With that said     

    Two things are always true 

    1- you cannot create motivation with responsible expectation. 

    2- you should never expect to receive the unreceivable. 

     @Michael Quarles Thanks for the response.

    What is your followup system?

    0Reply
  • William Johnson
    OP
    Real Estate Broker · Laval, Québec · Member since 2014 · 183 posts · 59 votes
    11y
    Originally posted by @Jeff G.:

    @William Johnson understand that "No" is often "No, not yet" when dealing with sellers. I send follow-up letters to every "No" that I can at the end of the month. Often sellers think they can get a much higher price than the market will permit and so they think your offer is unreasonable. When they get tired of unqualified buyers trying to purchase the property and you keep sending them letters on a periodic basis guess who wins in the end? You!

    You don't need to be "aggressive" just firm on your price with lots of follow-up. Be prepared to articulate (nicely) why your price is the way it is. If you know why you've set that price and why it's a fair offer you'll be more confident in sticking to it.

    I'll give you an example in progress from my own business:

    I sent out  batch of yellow letters and got a call back from a Reltor about a property in a nearby town. The property is tiny but on a decent lot. But the house has been unoccupied for 4-5 years, is infested with mold, has a lot of structural damage from water and ice due to multiple roof leaks, and the septic system hasn't been used since the previous owner passed way.

    The property generates a lot of interest... from first time home buyers attracted to the lower price-point. But, the property can't get a mortgage because it's not fit for human habitation. So, if you're a first time home buyer with no rehab budget you're just not going to be able to get the house. The seller wants 80k for it, I offered 35k, they countered at 60k which is still too high because of the extensive amount of rehab required. I'm going to keep sending them offer letters for 35k-40k until they change their mind. Unless some other cash buyer comes along I stand a really good chance of getting this property under contract... eventually. If the property were in better shape I could offer more.

    Wholesaling is like chess: it requires patience, deliberate action, persistence, and above all you must think 4 moves ahead. 

    The fortune is in the follow-up.

    @Jeff G. Thank you for the detailed response.  One thing I am getting from the responses to this post is that my process is very important and that wholesaling requires more strategy than I realized.  How much does your mailing system cost you per month?

    0Reply
  • Michael Quarles
    Flipper/Rehabber · Bakersfield, CA · Member since 2008 · 3k+ posts · 3k+ votes
    11y

    I utilize infusionsoft tied with ring central which feeds my call center all of the scripts and data that they needs. 

    We record everything and call all sellers back 4-5 times depending on their tag.  

    And we live answer all inbounds m-f 8-5. 

    The calls who qualify are then transferrd to negotiators who lock it up via the phone.  

    First stage are Alex's 

    Second stage are Ryan's 

    We make offers on all Ryan transfers and Ryan is tagged to follow up and we also follow up via a contract letter which asks how we did. 

    0Reply
  • William Johnson
    OP
    Real Estate Broker · Laval, Québec · Member since 2014 · 183 posts · 59 votes
    11y
    Originally posted by @Michael Quarles:

    I utilize infusionsoft tied with ring central which feeds my call center all of the scripts and data that they needs. 

    We record everything and call all sellers back 4-5 times depending on their tag.  

    And we live answer all inbounds m-f 8-5. 

    The calls who qualify are then transferrd to negotiators who lock it up via the phone.  

    First stage are Alex's 

    Second stage are Ryan's 

    We make offers on all Ryan transfers and Ryan is tagged to follow up and we also follow up via a contract letter which asks how we did. 

     Thank you very much.  I have listened to both of your podcast and followed your filtering questions religiously (along with my best attempts at positive and negative reinforcement with my voice).  I never know how to respond when they ask me how much I am willing to offer after I tell them that they don't qualify.  Right now I tell them that is immaterial considering how far is their minimum price is from my requirements. 

    0Reply
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