How to negotiate a real estate sale? Now, guys, whether you’re a beginner or you want to get better at negotiating real estate deals. By the end of this post, you’re going to understand that for all deals, every single deal begins with a motivated seller.
In this post, I will share with you the four pillars of how to understand when a seller is motivated. Now, guys, we’ve all heard this phrase, “God gave us two ears and gave us one mouth,” what does that phrase mean? It means we really should be listening more than we talk, and that’s in every conversation, but it’s even more important, or it’s more crucial than during negotiations with real estate.
You need to understand that this principle is very important. It’s probably the most important principle that you can live by. You’re going to be listening. You’re going to be listening more than you speak when you’re talking with a seller. But what exactly are you going to be listening for?
What Is Your Seller’s Timeframe
Let’s get right into those four pillars of Motivation so that you can understand that again, all deals, not some deals, every deal begins with a motivated seller. So, let’s find out what those four pillars are right now. Number one, guys, number one is the time frame.
Now, what does this have to do with Motivation, and what exactly am I talking about? The time frame can start to explain what’s going on in their life. For example, someone that has six months to move does not have much Motivation. Because they have time, they have plenty of time, and because they have time, that also opens up how many options they have.
For example, if someone has six months, they can put it on with a real estate agent, list it on what’s called the MLS and have a retail buyer pay the highest and best price for it. They’ve got the time to wait it out, and in most cases, in six months, most homes will move unless it’s priced wrong because we’re in that market where you can sell homes.
But what about an individual that needs to sell in the next seven days, 14 days, 20 days? What happens is because they need to sell super quickly that also limits how many options they have. Now, if you were to list a home like a real estate agent and want to put on the MLS, you’re looking for a retail buyer. You’re going to need a minimum of about 35-45 days minimum.
That’s if everything goes smoothly. The moment it lists on the market, the next day, someone puts it under contract. Because it usually takes about 30 days of due diligence between inspection and getting approved by a loan to make this happen so they can close hopefully at 35 days 45 days okay, and that’s a smooth one. So when they tell you, they’ve got a move in 10 days 15 days 20 days.
What they’ve also done is eliminate being able to list this with a real estate agent. So, in your defense or now for you, this is already a sign of Motivation. You’re like, “Oh, that level of motivation just went up,” because as they lose options, they also are narrowing down to you an investor, and that’s where you can come in and start to work with the seller. Because you hear that Motivation, and it’s the beginning of a great deal.
What Is The Condition Of The Home
The second pillar, guys are condition. Now, guys, understand right when I say that. Do you understand what it is with the condition? Condition of the home. What is the kind of conditions a home is in? Maybe there’s deferred maintenance. Maybe you’re talking to him you say, “Okay, I notice I’m looking at the county assessors. This home was built in the 1950s.”
You’re doing all your research. You’re looking at it, and a simple question to find out condition is cool any updates been done to the home since you’ve owned it or any updates since the homes been built. If they say, no guys, here’s the thing. If it’s built in the 80s, we’re now at what 10, 20, 30, what almost 40 years where it has been built.
Shingles don’t last that long, cabinets don’t last that long, flooring doesn’t last that long, bathrooms you’re starting to see things wear and tear, and things don’t last that long. So if there’s been no rehabs, no updates, no fix-ups, you can bet your bottom dollar. There’s going to be deferred maintenance. There’s going to be a home that shows distress.
So, the condition of the home can reveal if there is Motivation behind the seller whether he wants to sell it or she wants to sell it or not want to sell it. Guys, if it’s a brand spanking new home. It’s a 2020 build, and it’s only a year old. There’s a good chance that that home’s in great condition, and because of that, they’re not that motivated to sell. They know they can sell it to a retail buyer.
You’re looking for those that are distressed. So I always like to have my criteria of like years of the home where homes are like 30 years of age and older because that’s where you can start to understand by just asking simple questions, and you’ll start to understand that condition plays a huge play. For example, guys, it’s not out of the normal where you go out an appointment.
You realize, oh my gosh, there’s meth in this house, or there’s mold in this house, or there’s missing flooring, or they’re missing shingles, or there’s broken windows or boarded up windows, or missing garage doors, or they’re hanging sideways.
You start to see this, and you realize if they can’t even take care of some of these issues these problems in their home, there’s probably a good chance that there’s more than that going on. It could be that they also can’t afford their mortgage. It could be that they can’t afford the bills that they have every month. So, deferred maintenance or conditional home is a great sign of Motivation.
What Is A Deceiver With Negotiations
Alright, our third pillar, guys, is price… Now, what does that mean? Someone tells you a price, and you instantly hear you’re like, wow, that sounds like a deal. That sounds like a discount. So, instantly you can know there’s Motivation there.
I’m going to go on that appointment. I’m going to talk to that seller. But here’s where I hesitate; I hesitate so many times to tell people that price is a sign of Motivation because 99 times out of 100, it isn’t. It’s what I call a deceiver, meaning it’s going to deceive you.
Everyone wants the highest and best for the home, just like you want the lowest for their home. That’s where negotiation starts. They want high, you want low, and you start to like work your way work your magic so you can get at a number or a price where it’s a win-win, and it works for them, and it works for you.
So, when you hear the price, I understand when people tell me all the time. We get this all the time. I now have a full operation. I’m sitting in my office right now; it’s at closing hours right now. So no one’s here, so I can keep it quiet and stay focused on helping you guys.
But when my team’s here, every phone call that comes in, as I said, guys, if 100 phone calls come in and it’s a motivated seller, 99 out of 100 will say away high price. It would help if you didn’t focus on that. So here’s something very simple when it comes to negotiation.
When you’re talking to someone on the phone, and they tell you a price, and it’s super high, and you know it because you’re looking at Zillow, you’re looking at the county assessor, and you’re like, “Whoa, this guy wants full retail,” this isn’t a motivated seller.
I want you to understand people are going to do that. They’re going to tell you that. What I want you to do is simply shelf the price and simply say this, “Okay, cool, it sounds like you know what you want for the property,” and then start finding out the other pillars.
Now, I’m going to be sharing with you the last pillar here in just a second. But you’ll be more now focused on that time frame, focused on the condition, and you’re focused on this last pillar that I’m going to be talking about and focus on that.
Because if those pillars exist, you get out on that point. I can’t tell you how many times my team myself. We’ve gone on appointments where someone says, “If you are a dollar less than this, I do not want to do business with you,” and they have to do that.
They don’t know you. They don’t know you enough. You haven’t built a rapport with them. You haven’t built a relationship with them. You haven’t become their friend. You haven’t been anyone that they like love, respect, trust. You haven’t earned the right for them to see why they would want to sacrifice price. You haven’t presented what is the benefit that they get from going with you.
What kind of problems you can solve instead of price giving them the highest and best price and we do that face-to-face. When you’re on with the initial phone call, the phone call is to find out these pillars’ questions and their Motivation. All the real negotiation takes place when you’re face to face.
What Drove Your Seller To Sell
The fourth and final pillar is the driver. Now, what do I mean by that? That is what drove them to pick up the phone and call you whether you’re sending out postcards. Whether you’re doing direct mail. Whether you’re doing PPC with your computer. Whether you are cold calling. What allows them? Why are they staying on the phone with you? Why did they type in your website that they wanted to call back and they want a price?
They want to talk to you about selling their home. What was the driver? What drove them to do that? That’s your job. That’s where you need to spend a lot of time. Now, one of my favorite questions, and I would suggest that you write this question down it’s my favorite, it’s this.
“It seems like a nice home why are you considering selling it?”, guys think about that question how good it is. It’s because now you’re almost doing like a hesitation a pull away. We talk about chasing the dog versus the dog chasing you. If you chase the dog, the dog keeps running, but when you step back, the dog chases you.
You can’t be the aggressive buyer. You’re like, “Hey, I want to buy your home. I’m good at this. I know I can do this. We can buy it as cash. We can buy it as is. We don’t have any real estate fees. We don’t have any agent fees. We don’t have any commissions.
Like, we’re going to be the buyer you’re going to love buying with us”, and what you do is you start chasing the dog, and he’s kind of like, or she’s kind of like, “Whoa, slow down bro like I’m gonna be talking to multiple people like slow down,” you need to ease up. Guys, negotiation’s not about that. It’s about listening again more than you talk. Ask the right questions. I love that question. This seems like a nice property; there’s your pullback.
Why are you considering selling it and they’re going to be like, “Well, we’re going to be moving to a smaller home,” and face value, you might be thinking, “Okay, is that very much motivated? No maybe not”, and so you gotta ask and mirror them.
This comes from a book. I’m going to hold it up for you guys. It happens to be on my desk right now. This comes from a book called never Spit the Difference by Chris Voss. This book is all about negotiation, and he talks about marrying people.
This is a great time to mirrors when they say, “Oh, we want to move into a smaller house,” move into a smaller house and sit there quietly, and if they say “yes” or if they say “no,” that’s where you have to ask a better question now. So that they take a long time and expand on what they’re talking about.
So for those that are, you’re going to call, and you will have people do this. They’re going to be the ones that are literally “yes-no” people. They’re just short answer individuals. Because of that, you have to recognize that you need them to talk, and to do that, you can turn any question from a “yes to no” to where they have to talk about it.
So if you find out by just mirroring people because that’s the one downside of mirroring people right that you learn from that book is when you say so downsizing. Sometimes they’ll tell you, “Yeah, we’re downsizing because me and my wife we just don’t need the space all of our kids moved out,” “All your kids moved out,” and you’re just mirroring the last few words of each sentence.
That’s all you have to do that is powerful. But for those that are like “yep, nope,” what you can do is, “So, you’re downsizing? Tell me a little bit more about that”, and now it allows them to expand on and keep going. Guys, the real story is what happened, and I had an individual that told us that they’re selling, and I said, “Well, seems like a beautiful house. Why are you selling?” this individual ended up saying. “Well, because we want our kid to go to another school district,” I said, “Okay, so you want your kid to go to another school district.
Tell me a little bit more about that”, and this is where he said, “Oh yeah, we’re going to be going up there and you know and even my wife’s family’s up there.” I’m like, “Oh, your wife’s family up there. Tell me a little bit more about that”, “Well yeah, we want to move close to them too we really like hanging out with them and stuff like that.”
How To Negotiate A Real Estate Sale
Now, guys, this is a power pro tip that I will share with you right now. Guys, the pro tip is that number one is to assume the best they’ll tell you the rest. What do I mean by that? Have you ever had a friend where you ask them you’re like, “How much do you make?”, they’re going to be like, I’m not gonna tell you how much you make. That’s none of your business, right?”.
But what if I could ask it a different way and get the answer I’m looking for. Man, assume the best they’ll tell you the rest. “Man, you look super good. You’re always dressed to the nines like you’re always dressed well. You’ve got a sweet car. Golly, you’ve got to make at least 500 grand a year.” “Cody, you’re too nice you think I make 500 grand. I wish I did. I make like 250,000.” “Oh man, that’s great good for you,” you ask it a different way.
So what I did was assume the best they’ll tell you the rest. “Oh, you’re probably moving up north and you’re probably they’re talking about hey living with my family?”, If I say, why are you living with your family? Because that was the scenario. We’re going to go up north, and we love our family. We’re going to be moving in with my family.
Now, I’m not going to say like, “How much money do you make?” I’m going to say… “You’re moving in with your family or why are you moving with your family?”, they’re going to be like, “None of your business dude,” but what if I could assume the best. I tweak it and say, “Hey, you’re probably moving with your family because there’s a lot of construction going up there and you’re just waiting for your nice big home to be built.” He said, “Cody, I wish that was the case. I’m moving in with my wife’s family because I just lost my job.”
Now you can understand what’s going on in their life, and as you get to understand, you peel back those layers where they start to tell you the truth. Now, guys, face-value he said he wanted his kid to go to another school that was the result because he lost his job and because he had to move in with his family. The result is his kid is going to have to go to a new school.
So, keep asking the right questions, and as you do this, you’ll understand that Motivation leads to deals. You need to understand Motivation. You need to understand that you’re there to solve their problems and the number one problem solver is the one that walks out with the contract every single time.
It’s not about the deal. It’s not about buying homes at a discount. That’s just the byproduct of good negotiation. That’s just the byproduct of genuinely serving these people solving their problems, and in doing so, they’re going to want to do business with you, and the byproduct is you’re going to get their home at a discount.