Listening to Sellers

Many investors and home buyers have a hard time hearing anything the sellers have to say beyond the price. They dismiss talk about the property as mere puffery. Unfortunately, many of us have gotten to the point where we don't believe much of anything we hear anywhere. Then again, a lot of us don't even believe the price.

It's true and sellers try to present their property in the best possible light, but then, that is why we hire inspectors – or do a thorough job ourselves. This is fine as we tend to discount much of the things we are told, but there is a time we need to listen to the property owners. It is the answer to a simple question, and, possibly a couple of follow up questions to be sure we understand.

The Question

A friend of mine who has been in the business forever looks around a property, looks at the people and asks, “why are you selling a nice house like this”. Never mind the imperfections you've just seen, and now is the time close your mouth and wait for the answer. Unless it is someone trying hustle you, you will usually get a pretty straight answer. It could be they are facing foreclosure, or perhaps they just can't afford to stay in the property. It may be that they found employment in another city and they have to move. Perhaps they want to retire to a warmer, less expensive and safer location. There are a variety of reasons – and, to the seller, they are all valid.

 

You may have to poke and prod a little to understand completely, but you will learn what will move them to accept your offer – and it may not be the highest number. Summarize what they tell you to be sure you understand... and they know you understand and you can make an offer that meets their needs – this does not mean offering two hundred thousand on a one hundred thousand dollar property!

For example, I was looking at the proverbial ugliest house in the neighborhood. When the woman bought it said she didn't realize it was beyond the scope of her budget and ability to make it livable. I sat down with her and she told me about the various investors who came by with their formula driven deals and those with their creative financing plans. Some were newcomers and some old timers in the business.

Meet Their Needs

All this woman wanted to do was get enough money in hand to move up to Tennesee to be with her grown children. Creative deals didn't fly with her... even ones that gave her considerably more than I offered. I've done creative deals as well, but listening to the seller allowed me to meet her needs for less money than others had been offering.

On the other hand, if they don't need the money to buy another home and plan on putting the money away with the banksters, asking them to hold the paper on the property at many times the interest rate the institutions offer, may just be the ticket to giving them a better alternative while getting yourself a much better rate than the hard money guys are willing to offer.

How Do You Look?

Perhaps even before you get to the big question, thinking about how you approach the sellers can go a long way toward getting the deal. For instance, many of us do his business to get nice cars, But showing up with a new Corvette or Cadillac to talk to someone who can't afford the payments on a simple two bedroom house may not be the best way to open lines of communication.

Also consider there feelings. They may have contacted you because they saw it as the only way avoid foreclosure. On another property I sat down with the owner, As we were talking about her situation she explained how this big shot showed up in his fancy car along with his son. As they walked through her home, this guy made his disdain for the place quite evident as told the young man that they would tear this out and replace that. I don't know what they offered, but the lady was almost in tears thinking about the way they bullied their way around her home and she had no intention of working with them. Egos can be expensive.

A little humility can go a long way sometimes – and that is not a lack of confidence. It's understanding that sellers need to feel good about dealing with you. If you are looking to beat sellers into a win-lose deals.... good luck, I wouldn't even deal with you.

Looking at the property and making notes is fine, and, unless the owner has unrealistic expectations, you probably don't have to point out the flaws in the property – they already know. There are times when the sellers have an unrealistic idea of the value of their property, you may have to lay a little truth on them. Try not to make them angry or the deal is gone anyway. Many people would rather give their house away than sell it to someone who doesn't respect them.

So listening will get you the information you need and, most of us, myself included, tend to talk too much. They don't care how wonderful we are, who we know, or any of that stuff. All they care about is what you can do for them. They need to know enough that they believe you can follow through and solve their problem,

So as we talk to sellers, we need to listen more and talk less.