Don’t miss Part 3 of Matt Theriault’s new free course, “Your First (or Next) Deal – Little to No Money Needed Real Estate Investing!” This week, learn how to convert leads into contracts with step-by-step instructions for calls with sellers, negotiations, and in-person appointments. Plus, get Matt’s tricks for building rapport in any setting, sorting prospects for maximum effectiveness, accurately determining the value of a property, and much more!
What You Will Learn About Your First (or Next) Deal – Little to No Money Needed Real Estate Investing Pt 3:
- How to convert leads into contracts
- The qualities of a badass investor
- The 3 pillars of conversion
- How to build rapport in any setting
- The 3 objectives of every call from a seller
- How to make a deal if you can’t agree with the seller on price
- How to present an offer
- An easy and effective way to sort your prospects
- How to position yourself on the same side as your sellers
- The key to keeping control of negotiations
- What to do if a negotiation isn’t going smoothly
- A framework to use for every call with a prospect (so you’re never at a loss for words again)
- Key steps to revealing a seller’s true motivation
- How to use a transition agreement (and why it’s so important)
- How to avoid wasting any time talking to people that won’t give you deals
- Step-by-step instructions to nail an appointment with a seller
- How to accurately determine the value of a property
Whenever you’re ready, here are a few ways we can help:
Work with me One-on-One
If you’d like to work directly with me on your business… go to REIAce.com, share a little about your business and what you’d like to work on, and I’ll get you all the details!
- Would you like to meet in person? Our next live event is right around the corner! Go to EpicIntensive.com for the details.
- Become an Epic community member at The Epic Real Estate Investing Show
One of my favorite things to do is share with investors the latest and greatest tactics and strategic friends I make. I do it every week and you can listen in by subscribing to The Epic Real Estate Investing Show podcast on iTunes – Click Here.
- Grab my book, Epic Freedom ($1)
I frequently hear from people looking into investing in real estate for the first time, “How long is it going to take?” So much so, I wrote a short book about the 2 easiest and fastest strategies to a paycheck in real estate. You can grab a copy for $1 and I’ll pay the shipping – Click Here.
- Join our Badass Investor Program and be a Case Study
I’m putting together a new Badass Investor case study group at Epic Real Estate this month… stay tuned for details. If you’d like to work with me on your real estate investing, go to FreeRealEstateInvestingCourse.com to get started.
- Also, check these out:
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Speaker 1: This is Theriault Media.
Matt Theriault: Yeah, welcome. Welcome to The Epic Real Estate Investing Show, so glad you found us, and if this is not your first time here, welcome back. If this is your first time here, you have found us right in the middle of a very special series of episodes that I’m airing on four sequential Mondays, today being the third episode.
If this is your first episode that you’re listening to this show, probably going to make sense for you to back up a little bit, back up to episode number 386, just a couple weeks ago, and then you can catch up to us to where we are today, we’ll still be here. That probably makes sense, because you can capture the whole essence of what’s going on.
What we are doing is, we’re going over the very steps and tactics to get your first or your next deal is done using little to no money. The reason we’re doing this is, through some conversations that I’ve recently had with various mentors of mine. I shared with them the amazing case studies, or our new RIE Ace clients that they had been getting over the last 18 months. It’s just been a tremendous success.
We’ve made a big shift in how we help people get what they’re looking for, with regards to their real estate investing. It’s really panned down nicely, and I mentioned to my mentors and my friends, how the majority of our clients have closed at least a deal or two. I mean some are just knocking out of the parks, some are getting great results and on the low side, I mean they’re at least closing deals.
The successful people in any program, in any industry, when no matter what they endeavor or what the pursuit is in any program, it’s never among the majority of people are getting great results. The 80-20 rule, it’s always a play where 80% of the results are produced by 20% of the participants. I mean forget the statistics, because I heard on actually somebody else’s podcast I think it was, where, I don’t know, it was like 73% and never even opened up the box of the program or never even logged in or something like that.
In our REI Ace program, I’m approximating we’re right around 60 to 70% of the participants are getting pretty close to exactly what they were hoping for. One of my mentors, there’s the one specifically, he kind of asked me, and he grilled me as I was trying to celebrate. He said, he kind of kept me humble, and he said, “How can you get your results to 100% in your REI Ace program?” I was like, “Well gosh, we just went from like what normally goes 20% to like 60 to 70%, I mean can we celebrate that a little bit?” He said, “No, how do we get to 100%? You’re not done yet.”
I started thinking, and I naturally went to, my mind went to about, to the place and I started thinking about the people that are struggling a little bit and not really, haven’t met their expectations yet. It’s like, how do I help them? What do I have to do differently for them, and how could I tweak them? How could I help them? How could I even encourage them? What more resources could I give them? Stuff like that.
He quickly corrected me, he said, “No, no, no, no, you’re not getting me, that’s wrong, that’s the wrong way to approach it. The answer is, you don’t let that 30 to 40% of those people, you don’t let them into The REI Ace program. That’s how you get a 100% success rate.” I was like, “Wow! I never really thought about it that way.” I think probably the reason that I had never have thought about it that way is because I remember what it was like for me when I got started.
On the surface, when I look like from the outside looking in, I probably looked more like that 30 to 40% of the people that aren’t getting the results, than the 60 to 70% that is, because I didn’t have a whole lot to work with. I had very little experience in real estate investing. I had been an agent, but once you’ve been an agent, and you’ve been an investor, you realize how few similarities that there actually are between the two.
All I’m saying is, if I don’t let that 30 to 40% into the program, you know what that’d mean? That’d mean that I wouldn’t even have qualified for my own program. I would have never gotten a shot. I can’t imagine where I’d be right now. There’s a big part of me that has this, I don’t know, this soft spot for those that are starting from square one with very limited resources, but they got the desire. I mean they just need someone to put them on and they’ll go ahead, and they’re going to make it happen.
I just always feeling like, if I feel like someone might not be the perfect fit, I’m like, but they could be that person. We still turn away, I don’t know. We will turn away 10 to 20%. He says, “No, you’ve got to get to that 30 to 40%, you’re still in too many people in.” My mentor suggested me to create an all inclusive course, because I said, ” Well, I can’t just cut everybody off, I’ve got to give them a shot. How can I get them, I guess like prepped up and revved up to become a successful REI Acer?”
He said, “Well, this is what you do, create an all inclusive course, like just put everything that you know, everything that you know. These are the essentials of everything that you know of how to get that first or that next deal done, if you had limited resources. Like what would you do if you were to start over again?” I was like, “Well, I’d do it the exact same way because that’s how I did it, that’s the only way I know how to do it.”
He goes, “Okay, so just put that together. How did you get that first or that next deal done with limited resources, like with little to no money? Then you’ve got to make the course almost free. I mean you have to make it super easily accessible. You’ve got to get them in there. Now those people that really do want it, and that will really go after it and do what’s necessary, they can easily get in, they’ll rise to the top, and then they’ll have that option if they want to turn this real estate thing into a business, they’ll be perfect for REI Ace then, and you maintain your 100% success rate.”
I was like, “Wow! You sound like you’ve done this before,” and he said, “No, but I know other people that have, and it’s been very successful.” I was like, “Okay, cool.” I did it. I went forward with it, and if you’ve done a few deals already, and you’d like to turn your real estate investing in a business, REI Ace, that’s for you. Go to reiace.com, that’s for you.
This short series that I’m running right now, this is for everybody else. If you’ve still yet to do your first deal, or it’s been a while since you’ve completed your last, maybe you’ve hit a slump, or you’ve lost a little bit of confidence, or you’re just kind of getting back into it and you want to refresh, and you don’t really remember how to do it, whatever it may be, I’m playing it right here on four sequential Mondays, right here on the podcast.
If you want to listen, nothing for you to do. You’re already in, just listen, but if you’d like to see the course, and you want to access all of the resources, all of the materials that are mentioned in the course, and you want to receive community and personal support from me, go to freerealestateinvestingcourse.com, freerealestateinvestingcourse.com and then you can get started there, all righty?
My mentor told me to make it almost free and as you can probably tell by the domain name, I made it actually free. Actually, it’s better than free, meaning, I’m going to pay you to complete the course, that’s how badly I want this for you. I’m going to pay you to complete the course, and I’m going to do that because, if you follow it, I know how grateful you’ll be once you complete it. You’ll have made me look good through your results, all right, so I’d be happy to pay you for making me look good.
I might even have you here on the podcast to discuss your experience, and I’ll make you famous, and we could become friends, it will be fantastic. If you want to listen, stay right here, we’ll get started here in just a second. If you want to see it, you want to access it, and you want to participate and get support, go to freerealestateinvestingcourse.com, all righty, let’s get started.
Welcome back to lesson three, and right now what we’re going to do, is we’re going to take these leads that we generated in the last lesson, and we’re going to convert these leads into contracts. We’ve got to get control of the deal. All right, so let me just show you, actually, you know what I think would be a good idea is, let me kind of recap really quickly where we are in the process, so this all really makes sense for you. I think this will be really helpful.
Back in a couple of lessons ago, we started with The REI Ace model. In The REI Ace model, this is what the three pillars of this real estate investing business that you’re building, this is how we build The REI Ace businesses, but it’s how we eventually create badass real estate investors.
The badass real estate investor it has confidence. They know how to make money, and from there, they know how to put it to work for themselves in a way that the money gives them freedom, the type of freedom that real estate promises. That’s why we’re here in the first place, right?
What we’re doing is, we’re going to create basically an introductory version of this, so you can get going to get your first deal then. Those are the three components, or that’s what we’re going to create. From there our three pillars are going to attract leads, so this is what we did last lesson, now we’re going to take it and convert those leads into a contract. Once we have the contract, next lesson we’ll go ahead, and we’ll exit, and I’ll show you how you get paid basically.
You’ve heard the expression, “You make your money when you buy real estate,” right? This is where we’re going to buy between attracting the lead and converting it, because if you can’t attract what you’ve got remember, you’ve got no opportunity. If you can’t convert, you’ve got no control, and in the next lesson, this is going to be really important, because if you can’t exit, what you’ve got is no profit.
That’s where we were last lesson, this is where we are this lesson. With that come, there’s three profit accelerators for each pillar. It kind of looks like this right there, come around this, like this. We are finding people, pull another color for you. We are finding people, property owners with problems. Remember we’re looking for people that need to sell. No one’s going to sell you their real estate at a discount unless they need to do it, so we’re looking for the people with problems, those are the people that need to sell it because they’ve to a problem.
Now, once we’ve got the problems, we’re going to promote our solutions. That’s what we did with our ads and with our audio business card, with the flyer, those are how we promote our solutions. Then the third point is to automate. Now with REI Ace, we automate a lot of the followup, we’ll automate the lead generation. We do a lot of the automation, but in this context of this course, what we’re doing is, we’re automating you, so you always know exactly what to say. You always know how to seize that opportunity when it presents itself, so you are going to be automated.
Now to convert, there’s three pillars to converting, and that’s what we’re going to go over today is, the first one, you’ve got to build rapport. You’ve got to build rapport because you’re dealing with property owners with problems. They’ve got a situation, and they’re a little nervous, they’re a little scared. They might be a little bit embarrassed, so they’re being very cautious. They don’t want to get hurt. They’ve got their guard up, that’s the mindset of the person that you’re talking to that wants to sell their house. They’ve got a problem, and they’re just not showing up in the best version of themselves. They’re not in the best situation in life, and so you need to be empathetic to that. You need to be sensitive to that. That’s your mindset.
Remember you are the problem solver, so you need to go in with that conversation with the seller that, you are interviewing this seller. You are accessing the situation, and you’re trying to get as much information as you can, so you can basically offer a prescription. You’re getting the diagnosis. Yeah, I think the diagnosis, that’s the right word. You find out what’s wrong with them, what ails them, where does it hurt, what needs to be scratched, and then you’re going to offer the prescription, the solution. That’s building rapport.
People in that state, they want to work with people that they like, they want to work with people that they trust, and they want to work with people that they have confidence in their competence. I’m going to show you how to do all of those things rather easily. Then, the next is, we’ve got to go over how to present your offer, how to present the price and the terms.
You see, as a real estate investor, from now on, from this point forward, you are going to do, you’re going to present your offer in a specific way, one of two ways. Whether it’s, or it’s going to be your price, and the seller’s terms, or the seller’s price and your terms, got it? As long as you can control one, you can always make a deal for yourself, so just always think of price and terms, price and terms, this is going to be like a give and take, and we’ll go over that in a second.
Once we’ve got that, that’s time to get the signature. If you can’t get the signature, then you haven’t converted. It’s not officially converted into a deal. You don’t officially have control until you’ve got the signature. Then next, tomorrow or the next lesson, we’ll go ahead, and we’ll go over the exit, but we’re just going to focus on this right now, okay?
Where were we? Yeah, so these calls are going to come in. You’ve placed your ads, you’ve gone out you’ve made some friends and some relationships, so you’ve, got some referral calls coming in. You’ve handed out your property flyers, you’ve got calls coming in from that. You’re sent the emails out, you’ve got your super signature, you’re getting responses from that, so calls are coming in, and you’re going to have to talk to the seller.
The objective of these calls, particularly the first call, so we’ll call this the call objective. The call objective is one to build rapport. To build rapport you’ve got to be likable, you’ve got to be trustworthy, and you have to show up as being competent. I know this is your first deal, right, this is your first deal. You have no competence, or it’s been a while, and your confidence is a little low, so you’re not feeling very competent in that regard either. Don’t worry, I’m going to show you how to, a shortcut to do that. Yeah, just a shortcut to show the seller that you do know what you’re doing, okay, so don’t worry about that part, but that’s the first part. You’ve got to build rapport.
The second one is, the second objective of this call, is to sort, to sort. You’re looking for people that need to sell. You’re going to be talking to a lot of people that want to sell, but you’re looking for the people that need to sell, so you need to sort those. We call the ones that need to sell, we call those, those are the real prospects. The people that want to sell, we call them suspects, and the people that need to sell, those are the people you’re going to help, that’s where the discounts going to be.
They’ll be some people that want to sell that you’ll still be able to help, but you’re really looking for the people that need to sell, okay, so you’re going to sort. Then the third thing is, the third objective is you’re going to, you’ve got to set the appointment, okay, set the appointment. To set the appointment, that’s the call objective. Don’t do the, take the amateur move and try to close the deal too fast, because you’ve got to come on, you’ve got to build rapport.
You’re essentially building a relationship, and you can’t do that in a few minutes. This, your calls, they could be 20 minutes, 30 minutes long, maybe even an hour depending on the situation. Remember they’ve got a problem and are looking for a friend, they’re looking someone that they like because that’s who they’re going to give the discount to.
All right, so let me give you kind of, I’m going to give you a diagram of what this actually looks like. All right, because this is going to give you a little bit better context of what you’re doing here. Call this the conversion quadrant, and when you first take, start taking these calls, you’re going to hear all kinds of things. I mean I’m going to give you a script, I’m going to give you a framework to work within, but the seller, they don’t have this script, they don’t have this framework to work within, so you’re going to hear all kinds of stuff. You’re going to hear certain types of objections and questions right away. They’re going to try and take control of the conversation. Not always, but sometimes. I put a link down below to where you have answers to the most common objections.
What that kind of does is, it puts you in a place where, right off the bat, if you’re not careful, you can get into this adversarial relationship with the seller. Like it’s you versus the seller, right? That’s just the place where you don’t want to be because when there’s an adversarial relationship, there’s going to be a winner and there’s going to be a loser. That’s a really tough way to work, it can become really tiring and yeah, it can become exhausting actually.
You want to work with the seller, you want to create win-win scenarios. Don’t do the amateur move and go in being the adversary, which we call them, don’t go in being the bad cop. Okay, you don’t want to be the bad cop. The other thing you don’t want to do is, when it’s time to present your price, you don’t want it to appear that it’s your idea. That’s what most people do. They figure out, okay, so this is $100000 property, the most I can pay for is $60000, so sell it, that’s what it is. I’ll give you $60000, that’s the most I’m going to pay. You don’t want to do that either, because that is going to create some resistance.
The wrong way to do this is to have the offer appear to be your idea. You don’t want to be the bad cop, you don’t want it to be your idea. What you’d rather do, is you want to go the other way, the other end of the spectrum. You want to be a good cop. You want to align yourself with the seller. You want to be on the same side as the seller. You won’t be on the same team as the seller.
Remember they’ve got a problem; they’re calling you for a solution. You two have to work together to solve that problem and together you will, but the only thing, the only reason you won’t and the only thing that will get in your way, is the market. The market is going to be the bad cop. You are going to be the good cop, got it?
Now, with regard to your idea, the offer of being your idea, you want to make it their idea. You want to position it so that they come up with the price and terms that they’re going to sell to you. You want to make it their idea, okay, so you want to be the good cop and make it their idea. You only do of everyone else does, all of the newer investors. You can do business over in this area, but it gets really difficult because let me show you.
When you go in as the bad cop, the adversary, it’s you versus the seller, and you say, “This is how much I can pay,” what you’re going to get is a lot of resistance from the seller, okay, and ultimately it’s going to end up in no deal. Every once in a while you get a seller that’s in such distress, and they’re so motivated that, you might still be able to do the deal here, but for the most part it’s going to be a lot of resistance.
Now, the next part where the amateurs play, is they come up here. They go in as the adversary, but they’re so hungry to get a deal that they kind of let the seller run the show. They let them control it, and the seller says, “I’m not going to sell this property to you for less than $90000, take it or leave it.” The new investor’s like, “Well, at least I’ll have a deal, I have a contract, and I’ll feel like I have accomplished something.” That’s what happens up here and when that goes on, what you get is you get a real, we call an arrogant seller.
They think they’re your boss. They’re in control of the whole situation; you are not in control. You are doing this deal in spite of yourself. They don’t, might not have any other options, but they understand that they’re in a position like take it or leave it. Just because you want the deal so badly or it’s been so long since you’ve done a deal, you’ve got to get one, you go ahead, and you acquiesce. You give them, the seller what they want.
What happens here, this whole transaction begins to be or becomes a real struggle, if you even get to close the deal at all. Sometimes you can make some money up here, but it’s really tough. The odds are really far against you, almost more so than even down here, because even if you get the seller to accept your offer, at least you’ve got a deep enough discount. If you’re in the contract up here, it’s really tough to close.
All right, the next place is, you like the idea of being a good cop, right, you’re totally with me. “Matt this sounds good, this sounds much better. Sounds like I’m actually helping people.” We’re going to go in and create win-win scenarios, but you don’t know how to position it in the way that the seller comes up with it, so you kind of still come up with the price. It’s still going to be your idea.
Now you can do deals down here because the seller’s going to like you and that’s really important. They’re going to recognize that you’re on their side, but what, since you’ve come up with the offer, what they’re going to come up, what they’re going to be, is they’re going to be doubtful. They’ve got a lot of concern. They’re going with you because they need you, they like you, but they’re not quite sure, because it was your idea. What you’re going to get is really, really a lot of questions and it’s going to go slow. It’s going to be slow transactions.
Now, if you’re going to do this right, and you are the good cop, and we’re here to create a win-win scenario, we’re here to solve your problem. You position it in a way that the seller says, “Well, based on what you shared with me in this and that, yeah, let’s just sell it for this, so we can get through this.” When you make it their idea, you get cooperative sellers. You get cooperative sellers, you want to work with co-operating sellers. What happens is, the transactions, they become easy. They become easy.
When you’re out there, and you’re negotiating with the seller, and you’re working through your transactions, and if things aren’t going smoothly, they’re not going the way that you want them to go, stop and analyze. Which quadrant I’m I working in? I’m I down here being the bad cop of, it’s all my idea or did they come up with the offer, and I just need the deal really badly, so I went ahead and went against my better judgment and did the deal anyway? Or did I come over here, and I was trying to help them, but I really, I had to just like really kind of force the price on them for them to see it. They’re becoming, they’re really doubtful, the thing’s going slow, or they’ve just cooperating and things are moving along nice and easy. That gives you a kind of a, I guess, a compass so to speak to analyze where you are in the deal. We want to operate up here, and I’m going to show you exactly how to do that okay?
All right, so we’ve got our call objectives, we’re on the call to build rapport. We’re going to sort between prospects and suspects, those that need to sell, and those that want to sell. We’re going to set the appointment. I put a list of all the common objections down below, there’s a little link there with them, all those and your responses. Go ahead and take a look at that.
Now it’s a time when you’re on this call, what are you actually going to say? You know your objective, this is your objective, right, what are you actually going to say? Perfect, glad you asked. Here is what we call the nine-point seller interview. Actually, I’m going to remove this, so it doesn’t shine through, okay. The nine-point seller interview and what this is, it’s a framework for the conversation.
It’s not necessarily a script, although you can treat it like one if you want to. Has ideas for some questions there, but it’s a framework and then it takes the whole conversation, splits it up into nine sections. We want to make sure that we cover everything and with this framework, you are going to build rapport. You’re going to become likable and the seller, by the time you’re done with this interview, they’re going to have confidence in your competence. All right, so let’s go through it really quickly, and I’ll show you how this works.
All right, so box number one, what we’re going to do, is we’re going to set the stage. Okay, so that they call and say, “Hey, I heard you could help me out,” or, “Hey, I saw one of your ads, and I need to sell my house.” Fantastic. Most of the time people who call us, want to know how much they can get for their property and how everything works. Do you have similar types of questions as those? Are you going to take control right off the bat? The person asking the questions is the person that’s controlling the conversation.
Next is, once they say, “Yes, I do have those questions.” “Great. Do you have a few minutes or so to answer some basic questions about your property?” Again, you’re asking them a question, then they say, “Yes.” “Okay super. After I’ll give you some options and then you can simply tell me what you’d like to do, is that fair?” What you’ve just done is you’ve set the stage. You’ve exhibited that, “I know why you’re calling. Most people that call me, they want to know the price, they want to know how this works. Is that your situation too? Perfect, we’ve done this before. I’m just going to have some basic questions about your property. Is it okay if I ask those? Great and after we’re done, I’ll go ahead and give you some options and then you can choose, which way we want to go, is that fair?” All right, so you’ve just set the stage. You’ve totally exhibited competence, and all of a sudden you sound likable and so far so good. Right, so that’s box one.
Next, right here in number box two, you want to get the seller’s information right up front, okay, and sometimes they’re a little bit reluctant of giving that to you, depending on how they found you. This is how you do it. “May I have your full name and property address, please? What’s the best phone number for you and where would you like us to email our contact information to?” We want to make sure that we can put them in your CRM or put them on your spreadsheet as an actual contact, as a seller. You need their name, phone number, and email address. All right, and that’s just a way of, a non-threatening way of asking for all of that information.
Next, about the property, okay. Perfect, now I’m going to run through some quick questions about the property. You’ll notice this, and you’re going to notice this pattern over and over again and you want to get used to doing this, is you want to tell them what’s about to happen. You want to set their expectations. You want to tell them what you’re going to do. If you tell them that up front when you actually do it, it brings down the guard, there’s less resistance, okay, and you get a lot more cooperation from the seller. That’s what this box number three. Perfect.
“Now I’m going to run through some quick questions, about the property. Question one, what’s the general condition of the house?” These questions, you don’t have to ask every single one of these. These are just ideas of questions to ask. A lot of times when you ask the question, they’re going to answer the next three or four automatically without you ever having to ask them. Just kind of let it flow, okay. You’ve talked to people before, you know how to do this, just go with the flow. If you go off into some far tangent somewhere, and you start talking about your kid’s little league team, or the vacation that you guys coincidentally took at the same place, last year, go ahead and go for it, go wherever the conversation leads you.
Then when it’s time to get back down to business, like when that part of the conversation comes to a natural close, just jump back into the next box. All right, so it’s going to keep you on track, and it’s also going to create that rapport, create that relationship. Here’s a bunch of different questions, what’s the general condition of the house? Does it need any repairs? If you get any resistance, does it need any repairs, is a question I like to ask. Well if it doesn’t need repairs, but let me ask you if you were going to stay another 10 years, what types of repairs would you do? Right, it’s just a nice way of asking if anyone living in the property right now? What does it or what it rent for? Is there anything else that you think I should know about the property? Okay, so just basic questions, you don’t have to ask them all. As I said, you ask one they’re going to answer three or four of them automatically.
Four, box number four, this is really important. What’s the motive, why are they selling? Remember the foundation of every deal lies within the seller’s motivation to sell. You want to know why they are selling, and you want to keep it, and you’re going to keep asking. The reason you’re going to keep asking is that, they’re not always going to tell you the whole truth right away if they tell you the truth at all right away. Each time you ask, you get a little bit more out of it. You’ll notice as we go through this process, you’ll be asking more and more, why are you selling? Oh, I forgot, why is it selling and when do you need to be there? You’re going to ask all these why questions.
Right here, okay, so great, after you’ve got the information about the property, it’s, well this sounds like a property that might work for us. Why are you thinking about selling it? Okay, they’ll tell you and then how long have you been thinking about it? You’re going to find out how long their problem has been a problem. Then next you’re going to ask, have you considered calling a realtor?
Now, a lot of people get a little bit nervous about asking this question, because they feel like they’ve just suggested that they should go call a realtor and then they’ll go call a realtor, and you’re not going to have the deal. No. If that’s the case, you want to know that right now anyway. You don’t want to go through this whole process, and they eventually say, “Well, you know I think I’m just going to call a realtor.” No, you’d rather have that information right now.
Even more importantly, what this question does, it reveals more about why they are selling. No, I don’t want to deal with no realtor, or I don’t have the time to deal with a realtor. You want to know what type of stuff because you’re like okay it’s urgent. They don’t want to deal with a realtor, they don’t like realtors, this is my deal. I get to take care of them. I don’t have to worry about losing this deal to a realtor. All those different things can happen, by asking that question. It reveals a whole lot.
Next, encumbrances, this means, is there anything against the property? Like is there, are any taxes due, any judgments, any liens, is there a mortgage? We’ll ask that and then we ask, do you have a rough idea of how much that would be? Okay, and so you want to know that, if there is a mortgage on there, if there’s some taxes, anything like that, you want to know that, because that’s going to affect the value. It’s going to affect your offer.
Six, property’s value, right, remember this is an interview. You are assessing the situation, and you are interviewing the seller. You want to know, for your sake and for the sake of putting together a good deal and solving their problem, you want to know everything that the seller knows. This is not the time to be extracting or excuse me, offering your opinion and demonstrating how much you know about the market. No, it’s not worth this, it’s worth that because this house over here sold for that.
A lot of the new investors, they do that because they feel like that’s their crutch to exhibit what they know. It kind of wields their power over the situation. Don’t do that. You’re just there to be helpful, you’re just asking questions, okay, so this is a really good way to ask. Okay great, so I think I got some information about the property. What I’m going to do is I’m going to check the most current market conditions, but do you have an idea as to what properties like yours are selling for? You’re just asking, do you have an idea of what properties like yours are selling for? They’ll say, “Oh no,” or they’re going to say, “Yeah, the house next door sort of sold for $200000.” You want to know what they know okay, so that’s kind of your, a nice way, an indirect way of assessing how much they are probably expecting for the house. How much they think it’s worth.
Next question is, after you’ve asked them that it’s, what’s the lowest price that you might consider for your property? Right there you’re making this assumption that, if the house next door sold for $200000, but okay great, that’s good. What is the lowest price you would take for your house? Assuming that, well you’re not getting 200 and that’s kind what they’re assuming too. “Oh, I’d be okay with 180,” you might get an answer like that, okay.
Then the next question is, so 180, got it. Is that at all negotiable? Those are the sequence of those three questions when you get the properties value, and you’re not going to pass judgment. You’re not going to make a face, you’re just going to, just ask the questions and whatever they answer, you’re going to go ahead and scribble that down okay, so take a note of it.
Next, seven, problem check in. What you want to do here now is, you want to go and summarize the whole conversation that you just had with the seller. You know one of the habits of the highly effective people, out of the book, The Seven Habits of Highly Effective People is, first seek to understand then be understood. Right now, you’re going through this whole process, this whole conversation, you’re going to relive it. You’re going to summarize the whole conversation to just make sure that you understand them, and you want to make sure that they feel understood, okay.
Go ahead and check in and then seller expectations. After they’ve told you everything, so Mr. or Mrs. Seller, what you’re saying is, you’ve got a three bedroom, two bath house. It needs some repairs. It probably needs a new roof. There’s nobody living in right now. You think it will rent for 1500 bucks. The reason you’re selling is, because you’ve just gotten relocated in your job, and you need to get over, to across the country, within the next 30 days. Is that right? Did I miss anything? Okay, so that’s how you’ve checked in with the problem. They say, “No, you’ve got it all, sounds good,” and great.
What would you like to have happened? That’s the question right there, and you want to ask that question because you don’t want to assume you know what’s best for them. New investors, when they’ve never purchased a property at a deep discount or ever been given a property before because it happens. That’s never going to happen for you until you allow the seller to actually tell you what they want because what you think they want might not be what they actually want. What they actually want, might be easier for you to provide than what you’re thinking that they want, you got it?
All right, so what would you like to have happened and then just be quiet, just shut up and listen. Great, so when they say that, perfect. If I or anyone else could make that happen, would this be a later or a sooner thing? If I or anyone else could make that happen, will this be a later or a sooner thing? Very keywords okay? Will this be a later or a sooner thing? They’re going to tell you how urgent this is for them. “Oh I need to do it right away, I’d like to have this thing sold yesterday.”
See, you’re costly peeling back the layers of that onion, revealing their motivation and what the sense of urgency is. You’re separating them from someone that wants to sell to someone that needs to sell or vice versa, okay. This is part of the interview process and then the last question is, if they sooner, then great, how soon is sooner is what you’d want to ask. If they say a later thing, okay would you say 30 days, 90 days, sometime further out?
If it’s out, like say, “Oh, I don’t need to move till, you know six months from now, summer will be fine, around the holidays will be fine,” something that’s far away then I stop, I stop right there. It’s like well gosh so far out. Why me and why now? Again, the why questions, you find out why they called you and it’s going to reveal a lot more information okay. There, you’re done with the interview. Now it’s time to make this transition, remember.
Our goal was to build rapport, to sort and then the third thing was of the objective of this call, is to set the appointment. Now we’ve got, we’ve built rapport. We’ve decided whether they want to sell or need to sell, so we’ve decided if they’re a prospect or a suspect. Now it’s time to set the appointment with those that need to sell. It’s time to set the appointment with the prospects. We do something, what’s called a transition agreement, and you’re going to use this frequently in this whole transaction, in every transaction.
It’s a transition agreement, it’s when you’re transitioning from the phone call to the appointment. Essentially what you’re doing is, you’re going to be setting the expectations again. You’re going to tell the seller what’s going to happen and then you want to reassure them that it’s okay if this isn’t a good fit for you, you can tell me so. All right, so this is the exact wording.
Sounds good, but I’m not sure if I’ll be able to help you or not. The market conditions will have more to say on that. What that’s saying is, I’m not sure if I can help you or not. I’m not sure if I can help you or not the good cop. The market is going to be, is going to have more say on that whether I can or can’t, got it? I don’t know if I’ll be able to help, but I’m certainly going to try. The only thing that’s going to get in my way is the market, got it?
This is one thing I can tell you when I come over to take a look at the house, if I decide that this is not going to be a good fit for me, because you know I can’t buy them all. If I get over and as soon as I know it’s not going to be a good fit, I’m going to let you know that, is that fair? All right so you’re letting them know, that I don’t need to buy this. It might be a good fit, it might not be. I’m going to come over there and if it’s not a good fit, I’m going to tell you right away. What are you doing right now? You’re developing trust, you’re developing this relationship that I don’t need to buy this, I’m here to try and help you. If I can, I’m going to, but if I can’t, it’s going to be the market’s fault, got it?
If I can’t, if it’s not going to be a good fit, I’m going let you know. What I’m going to ask for in return is, if at any moment you think it’s not going to be a good fit, do you promise to let me know? Got that? You’re giving them permission to say no. That’s what’s called a released statement. You see, you’re never going to get a true yes from anybody in any scenario or any capacity unless you give them the ability to say no, unless you give them the permission to say no, and you’re giving them the permission to say no. I got the permission to say no, and I’ll tell you no, if it doesn’t work, but I want to give you that same permission as well. All right, it’s building trust. It’s making you likable, all right, it’s building a relationship.
All right, so perfect. I can come over later today or first thing in the morning, which time work best for you? All right, so you’re just going to give them two times. I would say try to get over there as soon as you possibly can. If it’s in the afternoon, I can come over tonight or if it’s at night time, I can come over first thing in the morning or maybe later in the afternoon, give them two different options to choose from, got it? That’s the seller, the nine-point seller interview.
With that, I just want you to follow the steps, and I want you to listen more than you speak, remember it’s an interview. Can’t interview somebody very well if you’re talking all the time, so I want you to interview. I want you to listen to one third, let them talk two-thirds of the time, that’s the rule, right. Don’t worry about being perfect, okay. The seller did not just watch a free course on how to sell a house fast to an investor. They don’t know if you’re doing it right, they don’t know if you’re doing it wrong. They’re nervous; they’re all in their own world. They don’t know if you’re messing up, so don’t worry about you being perfect.
If you get lost, just lean into the framework, it’s there to keep you on track. If you lean into this, and you follow this, you’re going to come out by the tiny reach box number nine, you’ll be likable, you’ll be trustworthy and that seller is going to have confidence in your competence. Even it being your very first time, they’ll be, “Wow! They know more than I do, so let’s do it,” okay. That’s how the framework works, that’s how the interview works.
Now, something I want to let you know what to expect, so you set the seller’s expectations, let me set your expectations. You’re going to run into pretty much four types of people. Four types of sellers, and some in every capacity it goes out when you’re talking to people on when you’re calling through Craigslist, you’re calling the buyers, you’re calling the sellers. When you’re going to your networking events, when you’re going to your REI meetings, when you’re going to your chamber of commerce meetings, when you’re going to all those places you’re talking to all these people, the people that you’re going to talk to, are going to fall into four categories. I’m going to specifically address this to the sellers you’re going to talk to and rather than just, we’re just going to use something to categorize them. We’re just going to something very non-threatening, very apolitical, we’ll just use fruit.
We’re going to use apples. You’ve got red apples, and you’ve got green apples. You’ve got, that’s a brown apple and then you have what we call rotten apples. Your red apples, the red apples, these are the sellers that need to sell. The red apples are the people that need to sell. The green apples are the ones that they want to sell. Okay, and motivation isn’t quite there to be red, they don’t need it as much, but they still want to sell, so that’s good.
Brown apples, these are the sellers we call them, they’re curious. Maybe, maybe not, don’t know, not making any commitment today, maybe tomorrow. Just kind of curious, what’s this all about? Who are you? I got referred to you, I saw your ad, saw this flyer. What’s this all about? Right, so those are a curious people. Then you have your rotten apples. We just call them, I don’t know, I refer to them as crazy, all right, crazy people. They’re negative, they’re angry, they’re ornery, something’s going on in their life they’re just pissed off. They don’t like the way your flyer looks, they don’t like the way your ad looked. They’re just, they’re mad, okay, but these are the four categories.
As you’re going through, and you’re talking to people, I would say of all the people you talk to, probably only 3% are going to be red apples, just 3% will be red apples. Of the people, the green apples, about 12%. This is approximations and this will vary over large groups of people, but that’s essentially how it’s going to pan out. The curious people, that’s going to be most people, maybe 70%, and some might end up being green, and some might end up being rotten, we don’t know. All right, but 70% will be curious and so crazy people, that’s probably about 10 to 15% of the people out there. There’s going to be angry people you don’t want to deal with, people that are going to upset you. People that are going to put you in a bad mood, so you just want to stay away from them.
Let me give you the recipe for success. The recipe for success. I want you to spend as far as how you divided your time, I want you to spend 90% of your time with red apples. Spend 90% of your time with red apples. With the green apples, you’ll spend 10% of your time; 90% with the red, 10% with the green. How much time we’ve got left? Not a whole lot more time, right, so I don’t want you to spend really any time, especially as we’re going after your first deal. Don’t spend any time with the brown apples.
The rotten apples, I want you to, see if you can ignore them. Okay, just flat out ignore them. Don’t come to our support desk, don’t come to help to complain about the rotten apples, because what we’re going to say is, what do you do with rotten apples? You ignore them, right? Then why are we talking about them? This is the recipe for success. Let me show you how people fail, let me show you how people quit, and they give up in this business when they say, this real estate thing it doesn’t work. Okay, and that’s a bunch of baloney by the way. It’s worked for more people than anything else ever will in creating wealth okay, or anything that ever has. I don’t know what’s coming around the corner, maybe something better than real estate, but until that happens, it’s all about real estate. It’s got the track record, it’s created wealth for more people than anything else, any other industry, any other investment vehicle. Don’t tell me it doesn’t work.
This is why it’s not going to work for you if it doesn’t work. People that come into this business, or it doesn’t work, what they end up doing, is they spend 100% of their time with the brown apples trying to force them to be red. Don’t do that. This is the recipe for failure, and on top of that, what they do with the rotten apples, all they do, they can’t forget them. They focus on the rotten apples, they say everybody is mean and angry. Nobody’s, everyone’s nasty out there, this doesn’t work. Don’t do that. 90% with the red, 10% with the green, no time with the brown and ignore the rotten, got it? Can you do that? That’s the recipe right there, that’s the formula. I gave you the formula for failure. I gave you the formula for success, okay.
What’s next? Okay, so you are going over to the property, you’ve set an appointment with the seller. Now you might set that at, maybe at Starbucks or a restaurant or maybe it’s at your office or something convenient. I would recommend, don’t go to their office, because you do need to see the inside of the house. You’re going to have to see the inside house at some point, so you might as well just do your best to make it, “Hey, I need to come and see the inside the house, can’t buy a house without seeing the condition.” You wouldn’t buy a house, Mr. Seller if you didn’t know what the inside looked right? Yeah, I’m the same way. I can’t do that either. Try to get into the house, okay. That’s where you want to set the appointment.
What we’re going to do, we’ve got the appointment set. Now we’re going to do a little bit of preparation, okay, we do a little bit of preparation. We’ve got this called the seller information sheet. This is going to be information to find out about the property. You can put, you put like the seller’s name there, their phone number, you got their email, you got all that. Then you can put all the basic property information that you’ve got, the address, the bedroom, the square footage all this basic stuff. What you want to go find now is, you want to find out the cops, the comparables.
What that means is, what are properties comparable to the one you’re about to go look at, what have they sold for recently? Within the same area, like their property and within a reasonable amount of time. You try to get within 90 days, the more current the better. Sometimes depending on the area, you might have to go out for six months, you might even have to go up to a year sometimes to find a comparable sale.
What we’re going to look for is, we’re going to look for three or four of those transactions, those recently sold. We’re just going to take an average of whatever they sold for, and that’s going to give us a ballpark idea of what the value of this house is, because we don’t want to go in totally blind. This doesn’t mean this is what we’re going to offer it, it doesn’t mean this is ultimately what the value is going to be. It’s just going to give us an idea, it’s going to go as a ballpark of where, kind of what we don’t want to spend more than, of course. I mean, obviously you want to buy it at a discount, it’s just going to give us an idea of what the approximate value is. This is how we do that.
All right, so I’m just going to go over to Zillow, it’s just kind of the household name. If you have a source that you like better for looking at real estate information, feel free, go ahead and use it. I’ll just use this for a quick example here. If we took, let’s just say Kansas City, Missouri okay, I’m just going to pick any old random house. Just click, I don’t have an address ready. All right, there you go 44-0-8, Independence Avenue. If I click this right here with Zillow, they’re going to give me their opinion of value. They say it’s worth about $72000 okay. That’s what Zillow says, so that’s fine, I’ll keep a note of that. Was this is right here? That’s it, right there. All right, so what I’m going to do, this is a two bedroom, one bath at 1400 square feet.
I’m going to come over here and this is what the stuff is for sale, this is stuff that hasn’t sold yet. We don’t know if it’s worth that or not, because it’s still waiting to be sold. We’re only really concerned with what has sold. What someone came along and validated the price, where the market validated the price. Someone pulled out their checkbook, they wrote a check and said, “Yes, it’s worth that,” and they confirmed it, so that’s what we’re looking for.
We’ll just take off the sales, we’ll take off these potential listings and I just want to look for what recently sold. That was a single family, let’s make sure we’re only looking at houses, because that’s what’s comparable all right, and that was what, two bed, one bath. Here we go. Here is one bath, where is the bed? Here’s the bedrooms, two over here and it was like 1400 square feet, so we’ll just take like, we’re kind of already there. Here’s 1300 to 15000 square feet, and we’ll see if we can do that in the last 90 days, see what kind it gives us towards there.
All right, so we’re down here somewhere, so just for the sake of making this easy, I’ll kind of zoom in here and I see a kind of a wider range. I see a 34000, a four-point two of only 4200. There’s a 33000, okay. Let’s go back a little bit more, see if we can get a little bit more data, probably not the best area for a house that’s selling for a 1000 bucks in here, right? That’s what I’m guessing. That’s what you get when you just go random. Okay, but hey, this is a real-world example, so I would be looking at it. I would know, there’s a 4000, a 12000, a 34000, what’s this one? Doesn’t give me a number there.
All right, okay to say this is our little cluster, let’s drop the lowest, drop the highest. We’ve got, if come back over here, I’m going to take, so we’ve got one that’s 4000, I got one that’s 12000 and let’s say we drop the lowest one, so the 10000 and then 20000. I’ll take 10 and 20. Let’s say those were our cops, okay, probably not the best example, but that’s what we’ve got. It will work the same relatively with the, whatever you’re looking at. I’ve got 20, 10, so there’s probably 15, so that is under 14, no, maybe $10000, right? Yeah, so maybe our comp is 10 grand, so I might be going into the seller’s appointment like, okay I’m kind of thinking 10 grand. It’s really going to greatly depend on the condition. I’ll probably dig deeper and to see, look at the pictures through these properties to see what type of condition they were in. Just so I had a little mental image, a mental note when I go into this property, I’ll know exactly what I’m looking at.
Okay, and then go ahead and fill in whatever they said the rent was here, and any notes that were pertinent that you got during that phone conversation, you put those there, okay. Now you’re going in. You are prepared, we’ve got our transition agreement. We had a transition agreement when we left the phone call, to set the appointment. Now we’re showing up at the appointment, about to start the appointment, and that transition agreement is remembered, it’s, we’re going to set expectations, we’re going to tell them about what we’re going to do. We’re going to let them know that, hey, if this isn’t a good fit for me, I’m going to let you know. If it’s not a good fit for you at any time, you tell me no as well, okay, so that’s basically how it’ll work.
Mr. Seller great, I’d love to take a look at your property. I’d love for you to show me around. Please point out anything that you think might directly or indirectly impact the properties value, anything that you think I should know, anything important about the property, please let me know that. While we will go through, I’m going to ask you some questions. I’m going to ask you all these questions that I have on these sheets. In fact, are on the sheet, in fact, I’m going to read them right off the paper just to make sure that I don’t forget anything because I don’t want to miss anything that might cost you some money or cost you an opportunity. Would that be okay if I just read them right off the sheet, because they’re the same questions I ask everybody? I’m just going read them off here, is that okay with you? Now you’ve got permission, so now you don’t even need to memorize these questions. You’ve got permission to read them right off there.
Okay, then say, I just want to remind you that, as we go through and I’m asking you these questions, you’re pointing out and sharing the house with me and telling me everything I need to know about it. If at any point I just feel like, you know what, this isn’t going to be a good fit, I can’t buy them all. I’m not going to waste our time, I’m going to let you know that right away. Okay, is that fair? Then, and at the same time, if we’re going through this and you’re not feeling good about it and you don’t like the way it’s going and if you don’t want to move along any further and you want to stop, you’ve got permission to do that. Will you let me know that? Great, so let’s go ahead, let’s get started.
That’s it, and then you just go through and you’ve got full permission. They know exactly what’s going to happen. Now you know what’s going to happen, right, so you’ve set the expectations for the seller. If this is your first time, you’ve set them for yourself and you just go through and a nice bedroom, nice kitchen, got it. Here I got some questions here, why are you selling? Does the house need any repairs? If it does need repairs, have you had it looked at? Do you have an idea of how much it would be? You know, what are your immediate cash needs? Is the house enlisted with a realtor? All these questions are right here, you can just read them right off the paper, okay.
Now, you come, you’re done, right, you’ve taken the whole tour, you’ve got all your questions answered and now it’s time to come up with a price and terms to present the offer. Again, transition agreement, Mr. seller, Mrs. Seller, I think I got everything that I need to know and what I need to go do is kind of look and see what the market’s doing. Then come back and see what it’s going to allow us to do. Got that? I’m going to go look and see what the market’s doing. This is your first deal, so you don’t have the write an offer right there on the spot, but your objective here is to get the property under contract as soon as possible. Okay, the more you do this, the better you’ll be able to do it on the spot, but don’t put a bunch of pressure on yourself right now if this is your very first meeting or even the first dozen, don’t put the pressure on yourself to come up with a number and get under contracts. I don’t want you to get on a contract on the wrong number, okay.
We can get ballpark, a ballpark is good, but if we’re way off base bad. You can just kind of excuse yourself for, okay great, I think I got all the information I need. Let me go see what the market’s doing and then I’m going to see what it’s going to allow us to do, okay. Us, it’s going to allow us to do, the market, the bad cop, might get in the way. Let’s see what it’s going to allow us to do.
Your objective here is to get this property under contract. This is really important. First of all, understand that you’ll never get it under a contract unless you present a written offer. Your objective, whether you do it right there on the spot or you go back to your office or down to the Starbucks at the corner to present your offer, do your research to present your offer, you have to present it in writing. Regardless of what you’ve communicated with the seller back and forth verbal, the dynamics change completely once the offer is in writing. That’s the first part, because everything changes once it’s in writing, it becomes real. You get true consideration from the seller once it’s in writing.
The second thing is, if you don’t have it in writing, they can’t sign it, meaning you will never do a deal unless you actually presenting an offer. Your goal is to present an offer at every single appointment that you have, so that’s the objective. Now, why do we want to do this? Let me show you this example. Let’s say, we’ll say that’s the Mona Lisa, okay, the Mona Lisa is coming up for auction and you heard about this and so did all the auction houses in the area. All the auction houses are vying for the opportunity because they want to sell the Mona Lisa because there’s going to be a healthy commission attached to the sale of this.
We’ll take two auction houses, the two contenders. They have auction house A and auction house B. Now auction house A, auction house A, this is an auction house that’s been in business for generations. It’s a family run business, they’re a household name in the local area. They’re especially a household name when it comes to selling and buying these really expensive elaborate items and they’ve got a huge database, a huge network. They’ve got all kinds of marketing dollars. Any time they come up and they have something to auction off, they’ve got all the power. They can put, they can just fill the house, okay. These Xs, these represent people, okay. They can put the butts in the seats, like nobody’s business. They can fill this house.
Now, auction house B, they heard about this opportunity to sell the Mona Lisa and they said, “What a great start, what a great launch to our business this would be if we could sell the Mona Lisa. How much, that could be a massive windfall and we could be in business and establish ourselves.” They go out, they open up their little LLC. They buy their business license, they go and rent the property and they rent the building and they start. They’ve got a little bit of money left over for their marketing and when it came down to it, they got one person to show up for their auction. They got one person to show up for the auction.
Now, if you were the owner if you were the owner of the Mona Lisa, which auction house would you want to win this bid for the right to auction off the Mona Lisa? You’re the owner, you’re the seller. You want to auction house A, don’t you? Yeah, because you want all of these people to bid against each other, to drive up the price as high as possible because this is your Mona Lisa, that’s how much money you’re going to put in your pocket. The more people that are bidding for this, the better, right?
Now, if you are the buyer, who are you hoping wins this opportunity to auction off the Mona Lisa? You’re hoping auction house B, right, and you’re hoping that that’s you, right, so if you’re the seller you want this house. If you’re the buyer, you want this auction house to win. Right now in this scenario that we ’ve talked about you are the buyer, right, you’re the buyer. When you put a property under contract, this is why your objective is to get this property under contract, because when you put this property under contract, this is you in this house. You are the buyer, under contract, it’s you. When you put that under contract, you lock the door. How do you do the little keyhole? You lock the door and none of these people here, none of them can get in. That’s you, that’s your opportunity. That’s what a purchase agreement does in real estate, and that’s why you want to get a property under contract. That’s why you always want to put it in writing because you’ll never get it under contract unless you do put it in writing. Got it?
It’s very key, it’s very important, that’s the objective of that meeting. The objective of the call is to build rapport, it’s to sort and it’s to set the appointment. When you’re at the appointment, is to build more rapport, is to collect all the data that you possibly can, the information from the sellers, really find out their motivation as to why they’re selling. Then it’s to get the property under contract, got it? Perfect. There is a purchase agreement. Let me make sure that you can see that. There it is. There she blows, okay. Put that over there, purchase agreement and so this is how you’re going to do this.
Also down below, there is a script on how you present and get consent. Present and get consent, and if you use this wording, exactly how it’s written here, it’s going to keep you in this upper right-hand quadrant. Up to this point, we’re still here, aren’t we? Yup, we’ve been the good cop the whole way. We blame the market on everything. We come back, we’ve got an idea of how much we’re going to offer, and now it’s time to present. Here’s our, what we call our quick and dirty math formula.
You take this two-part, you take this two-part close so to speak. You met with the seller, you got everything figured out and now you’re going to go down the street and you’re going to hash out the numbers. You’re going to see what the markets doing. You’re going to figure out what you’re going to offer. Okay, so here’s the quick and dirty math. You’re going to start with your comp. That comp was, where did our sheet go? It was what? 10000 bucks, that’s what we kind of came up with I think. It’s, this was really a bad example of a house. We’d like to start with a little bit higher price point, but this is what we did and so let’s keep it congruent.
10000 is what we call our fair market value, okay, and from here, we have to minus what we have for repairs. Say if we looked at the house, there is $3000 of repairs. Then we have to subtract profit, okay and we want to look at profit in two ways. We want to divide up into a portion or into two separate portions, pieces of pie so to speak, is, one piece is yours, one piece of the profit is yours. The other piece that you want to leave just in case, is for another investor that you might sell this property to. We’re going to get to that part how to do that, but I just want to have that in mind. You want to be prepared for that person.
If it’s another investor, what do they want to make? Why are they in this business? They want to make money too. You have to leave a little meat on the bones, so to speak. You have to leave them a little extra equity there for that seller or for excuse me, for that buyer, for that other investor if you want to be able to sell this and get a piece for yourself, okay. Again, the next lesson I’ll show you exactly how to do that, but that’s just the mindset. You want a piece for you and you want to save a little piece for somebody else.
Say there’s 3000 in repairs, that’s what this is, okay, and then maybe another three K for, that’s profit one. That’s your other person and then you’d be good with three K of your own, okay, and that’s your profit. Again, this is really crazy starting with a $10000 house, but that’s just kind of what we ended up with, it was totally impromptu there. What this would be is, 10000 minus three, minus three, minus three equals? The most we could pay for this property is 1000. That’s kind of what the market has said that we could pay for this property is $1000.
Again, the amount doesn’t matter, the principle is all the same. Now we’ll go to the script, now you’re going to present the offer. You’ve got your idea, you’re leaving Starbucks, you’re going back to the seller, “Hey, I’ve got something for you, let me come and share with you what I found.” This script right here is very key because it’s going to keep you in this upper right-hand quadrant of our conversion quadrant. It’s going to keep you as being the good guy and it’s going to make the offer their idea. Yeah, the seller is going to look at this and say, “Wow! Yeah, I think we should sell it $1000.” This is how you do that.
Mr. Seller, the current market conditions have your property’s value right around $10000, okay, so that was our starting point. We’ll keep this script the same, so $10000 and based off what you shared with me about the repairs needed and then making room for a small profit for myself, what you’re saying is, we’re right around $1000. Is that right? Did you get that? Based off what the market is saying, is the property is worth right around $10000. Then based off what you shared with me about repairs, $3000. Then after [inaudible 01:07:44], I’ll just add a small profit for myself, what you’re saying Mr. seller is that we’re right around $1000. Is that fair?
You position that whole thing, bad cop their idea, bad cop their idea and you slide in and then after carving out a small profit for myself, what you’re saying is we’re right around $1000. See the wording right there is very specific, and once you ask that, is this fair, then just shut up and listen and wait. Got it? You’re just going to wait. If they agree, boom gets the contract signed. If they don’t agree, don’t take the amateur route, don’t stop there. You’ve got more room to play.
Okay, so based off what the market is saying and what you did share with me, what is the lowest number you would accept? Okay, so based off what the market shared with us, what the market is saying and what you shared with me, what is the lowest price you would accept? You shut up and you listen, you wait. The seller is going to say, “Well, I can’t see myself taking anything less than $2000,” okay. Their idea, they said $2000, right, still their idea.
Now you have a decision to make if that’s a good deal for you if you still think that’s a good deal and you can make that happen, get the contract signed. If $2000 is too high for you, then go ahead and we’ll roll it up again and we’ll ask again, okay. If $2000 is good, you’re going to get the contract signed. If you guys don’t agree, boom you go to the next step, don’t give up. You’re going to keep on going after this.
All right, Mr. Seller you know, my biggest goal here is not to make the biggest profit, although it is to make a profit. I mean this is how I feed my family, but my bigger goal is to make sure that I’m safe and that I don’t lose money. Based on the current market conditions, what you’re proposing is beyond my risk tolerance. Would say $1500 be doable if I could close quicker? Okay, so what you’re proposing Mr. Seller, it’s beyond my risk tolerance. The market ain’t going to allow me to get there, but if I could offer you $1500 and close quicker, would that be doable?
Again, it’s, they’re going to say yes or no. It’s going to be their idea, would that be doable? “Yeah, I guess that would be doable,” or, “No, that wouldn’t be doable,” okay, but what you’ve done here and this is very key, remember I said at the beginning you’re going to purchase property in one of two ways. Either by your price and their terms or their price and your terms and since you couldn’t come on the first two attempts, you couldn’t come to an agreement on the price, you’re now going to introduce a term. The term being, can you close quicker. Right, so now you’ve taken that negotiation back and forth from price where you’re going to have a winner and a loser, and now you’ve introduced an additional term to where you can both get something that you want, okay.
Sometimes a seller is going to like that fast money, that fast nickel over a slow dime and that’s what we’re talking about here. If I get your money by the end of the week, would you take 1500? It’s a lot better than waiting for four weeks for the full $2000, you got that? You guys are going to come to an agreement or not. If you come to the agreement, boom, you’re going to get the contract signed, right? If you don’t agree, all right, perfect, take another stab at it.
Mr. Seller okay, so you now know my biggest goal and you know what I’m looking for. Can I ask what your biggest goal is? Is it to get top dollar or is it to sell fast? You get to let them choose, right, it’s still their idea, what’s your biggest goal? Is it to get top dollars or to sell fast? Top dollar, that means they’re going for price. If they’re selling fast, that means you’re going for terms, and as long as you control one, you can always create a deal out for yourself. Okay, and we’ll get more into that in tomorrow and how that works.
If you come up with a number and go ahead and get it signed. If not, then this is a moment where you say, “Oh well, Mr. Seller doesn’t look like the market is going to allow us to both get what we want and unfortunately I was really looking forward to helping you. If something changes, give me a call. Here’s my card, here’s my number, I’d be happy to come and work something out. I don’t know if I’ll be able to buy this house, that when you do call me. As of right now, I’ve shared with you what the market will allow us to do. Hopefully, that doesn’t change too much, if it comes down to the point that you still, you need my help, but I wish you the best the luck. If there’s anything I can do, you know, give me a call.” You walk out and you’re done, okay.
Don’t go and come up too high into their idea and all of a sudden you’re just kind of acquiescing and you’re just you know, you went too high and all of a sudden you’ve got this arrogant seller. It’s going to be a struggle because you’re going to need to sell this property. You’re going to need to sell it quickly and like I said, we’ll go over that in the next lesson. If it’s a struggle, it’s not going to happen fast and there’s only two reasons you won’t be an able struggle. or excuse me, there’s only two reasons you won’t be able to sell the property.
One of those reasons is, it’s just not a deal. Second is, you lack the exposure and will go over the exposure the next lesson. For the most part, you don’t need a whole lot of exposure when you actually have a deal. You don’t want to be up here, because it’s a real false sense of security. You’re going to think you’ve got a deal, you think you’ve got a contract, you think you are just about across the finish line, you’re just about to get paid and boom, you’re going to be disappointed, you’re not going to get it. You did a little bit of research, if you weren’t able to get in the ballpark of your number, then you’re moving on. You can’t buy that one.
Now you can follow up and check in with them and take other attempts at it, but it’s better to miss out on a good one than it is to buy a bad one. You don’t want to buy a bad one, got it? All right, so where are we now? Got my notes over here just to make sure, okay perfect. If you did come to an agreement, now we come over here. Where did it go? Here it is. If you did come to an agreement, here’s the contract. You’re going to write it up. It’s pretty darn easy, just fill in the blanks. Here’s the date, seller’s name, your name, property address and here’s the property address, here’s the purchase price, any terms that you’re going to close in seven days, five days whatever it may be, any special terms. Throw in the cat, love the car, whatever it may be, okay and it’s a very basic contract. You just fill in the blank and you are now in contract.
You have control, you have purchased the property. You know the expression, “You make your money when you buy real estate,” right. You just bought it. Now it’s contingent, you don’t officially own the entire thing, but you do technically own a portion. You have something, what we call equitable interest. You own a portion of that property, you own now the right, you have blocked people out. Right, you’ve locked the door, no one can get in, this is you. You own this space. Okay, you don’t technically own the Mona Lisa yet. but you own the space and the right to purchase the Mona Lisa.
Now you’ve made your money, by tomorrow I’ll show you how to get paid. Let’s recap a little bit. This is the daily success report. Today what we did is, we took an incoming call, we made this incoming call. We set an appointment, we ran the appointment, we analyzed some properties, those comps. We analyzed the properties and we presented an offer, and we got the offer accepted. That’s how we track our points, with all the activity that we did today. Okay, all right, so we went over how to build rapport with your leads, how to present the offer, how to get the signature.
Again, my most successful students are quick to implement, quick to ask questions. Travel as far as you can see, when you get there, you’re going to see further. Move at the speed of instruction. You’ve got to stay ahead of your negative thoughts, you’ve got to stay ahead of your doubts and you’ve got to stay moving. You can’t steer a parked car. You’ve got to keep moving so you can steer and correct the course when you need to.
All right, so if you need help the, probably the Facebook group, you’ll see the link below this video. If you haven’t joined already, now would be a good time and when you need help go there and either I or the other people in the community will help you with any questions or concerns that you have. If there any dots here that didn’t get connected and we need to do that for you, go ahead and do that. Then also, the monthly call where I or one of my team members will be on the call once a month and give you our personal undivided attention in that call as well. Is there anything else here?
You know it’s very common when people ask for help that, that question was answered in the video and that might happen. If there’s a question you asked and I say, “You know what, go back and watch the video, because I remember specifically we talked about it,” it’s just, it’s going to allow me to help a lot of people, so I need to leverage these lessons in a way so I can do that and refer back to them. Like I said, if there’s any holes there, something that I missed, which is very possible. I’ve been doing this for a long time. I take a lot for granted and maybe I did skip over something, I went through too quickly or didn’t complete the thought and left you wondering, then go ahead and now that’s the time to ask the questions and let us help you and I’ll walk you through that.
All right, yeah that’s it. Travel as far as you can see, when you get there, you’ll see further. Tomorrow I’m going to show you how to take that contract and how to get paid, how to actually collect a paycheck without you using any of your own money. No credit, no banks, no nothing, you’re not going to have to do any of that. We’re going use someone else’s money to get you paid, right, so I’ll show you that next lesson. Take care.
Okay, that’s it for today. If you’re cool with listening, then catch us next Monday and we’ll wrap it up with your exit strategy. How you’re going to actually get paid. You know up to this point, we’ve made our money in real estate. Next week, it’s going to be time to collect, time to get paid and I’ll show you exactly how to do that next week, next Monday. If you want to listen, I will see you next week. If you want to see what’s going on, access all of the materials and get community and personal support from me, go to freerealestateinvestingcourse.com. freerealestateinvestingcourse.com, all righty. God bless and to your success I’m Matt Theriault, living the dream.