here are the “5 steps to Negotiating a Terms Deal”
1. Rapport Building
2. Avoiding Let Me Think It Over
3. Uncovering how motivated they really are
4. Getting the lowest price (Wholesaling Only)
5. The “What If” Step Close
You need to get face to face with the seller first.
Here are 5 prospecting ideas.
A.. Listed Houses
Houses that are listed with an agent generally are in an “exclusive right to sell” listing arrangement. This means that there’s no one else that can list the house for sale. The commission is negotiated on the agreement, and if through their marketing a buyer comes even if the listing goes expired, if it is the procuring agent, meaning the agent responsible for sale is responsible for introducing the buyer to the seller, even on the lease 2 own and not a cash sale, they are still going to get their commission.
See Procuring Cause Article.
If you the real estate investor in your trying to get the seller to consider terms instead of cash and avoid the sales commission, the listing agreement is between the seller and the agent.
I basically say the following to the seller that has a listing sales arrangement with an agent:
“Mr. Seller, you have a legal contract between you and agent regarding selling the house.
“I like you to SAVE the commission if possible but it’s up to you. 6% a lot of money.
“What you could do is go down to the broker’s office and basically get in writing that the listing is going to be rescinded, and you no longer want their services. You also want them to say in writing that you owe them no money regarding selling their house, even if you sell it yourself.
“You may want to get an attorney to make sure that the listing is expired and you can sell it yourself.”
In my the lease to own solution with the seller has a good amount of power and value if the seller can avoid paying the real estate commission.
B. Expired listings
Houses that have expired generally are asking too much money for the house. If the house has reasonably good location is in the reasonably good condition, and it is price correctly, and it’s not messy inside, it generally sells at this price correctly.
A survey of hundreds of realtors that basically said that over 80% of all expired listings are mispriced houses, meaning the sellers want to much money for the house.
See – Over Priced Listings” Article
I like expired listings the best, and I like to knock on their door and not mail them anything and not talk to them on the phone.
I know if you live in a rural area that’s hard, or if you’re an expensive area that have gated communities that’s hard, but most middle-class neighborhoods it’s easy to just knock on their door some Saturday afternoon, and have report ready to hand them.
******In the report you want to have a cover letter, the cover letter basically says the following:
Dear Mr. and Mrs. Home Owner:
I understand due to public record that you tried to sell with an agent, and it didn’t work out. I’m very sorry for that situation that you had to deal with, and it must been very difficult to deal with
I have a proposition for you; you may want to consider this proposition because it will not cost you anything to sell your house this way.
I specialize in “lease to own” where the seller can get top sales price for their property, and avoid paying a real estate commission, which can be a lot of money.
They also avoid some of the costs to sell which include closing costs and other costs. Sometimes the total savings to you by doing lease to own is over 8%, which on a $200,000 property is $16,000.
Enclosed are some articles from the Wall Street Journal, Money Magazine, Realtor.com, USA Today and some other public newspapers, about Lease to Own and Seller Financing.
Many realtors don’t know a thing about Seller Financing or Lease to Own, and their Brokers do not encourage their Agents to talk to Sellers about it.
I currently have at least 2 “Lease to Own Buyers” that are interested looking at your house, that will give you full price for your house, and save you quite a bit of money.
In order to properly explain this to you, I need to sit down with you and go through the positives and negatives of this decision, so that you can make a good decision about your home sale.
I get paid from the buyer so you don’t have to pay me anything.
Please call xxx-xxx-xxxx so we can sit down for 30 minutes and go over the basics of how this works for you and your family.
Innovative Property Solutions LLC
Assisting Home Sellers Solve Problems
If you notice the letter stresses saving money and doesn’t tell them how it works, and also educates the seller was some mainstream articles from national newspapers and realtor.com.
Print the cover letter to a generic homeowner on good letterhead, and print the articles on good letterhead.
You can use a binder clip to get them altogether.
If there is no one home when you knock on the door, don’t leave this free report in the mailbox, or or don’t hand it to a child with the parents not home. That’s a waste of time and paper.
If an owner is not home and someone answers, I offer to come back.
If an owner is not home and no one answers, I will put a yellow sticky note on the door. I’ll use a medium black sharpie pen, and I’ll write something like,
If your home is still for sale, would you mind calling me please?
if someone calls you off your yellow stick notes, that means they haven’t gotten their free report yet, so say something like,
“oh is your house for sale great, would you mind if I stop by and say hello and take a look at the house?” Keep it conversational.
For sale buy owners they want speed and they want full price without an agent, that’s what they want. They are generally very confused about how to sell the house themselves, how to negotiate with a buyer, how to market for buyers, what kind of paperwork to use, etc.
Many sell via FSBO because they tried to sell an agent and it did not work out, or they have sold before with FSBO in hot sellers market, or an easy mortgage credit market.
What I do with FSBOs is act like cash buyer, sounds like you’re not really telling the truth doesn’t it?
Well, if they accepted a wholesale all cash price I would be a cash buyer!
If you do the 2 and one half hour training negotiation with the seller and teach the seller “the costs to sell with an agent”, versus renting it out, versus seller financing, it’s all easier to deal with the FSBO.
After I go through the 5 steps negotiation with the FSBO, I generally tell them I can get their house problem fixed in 30 to 45 days, so they want to hire me to get that done, at no cost to them, then they sign a letter of intent to lease or sell.
For many landlords of homes, they want tenants that are neat and tidy, pay the rent on time, and don’t call at 2:00 am for backed up toilets.
So I generally act like a prospective tenant and walk through the property.
Most do-it-yourself landlords are very sophisticated, business like, and I just use this “one what if statement with them,”
“Bill let me thank you for walking me through the property, looks like it’s in great shape, I just have one question for you, and if you say no to it I understand, but if you say yes then maybe we can talk about it in more detail, so here’s the question,
“What if I could get you 24 payments at 1100 dollars which is what you want for the rent, and then you would allow me to buy the house, at a price that you can live with, and at a price I could live with.
With that be something we should even talk about or maybe not?”
I leave them a very simple one page letter for landlords, the benefits of lease to own versus regular landlording and my contact details. I might even include a national article from realtor.com or from the Wall Street Journal about seller financing attached to the back.
Many of do-it-yourself landlords wanted to not get involved with lease to own because they are buy-and-hold people, but you will never know unless you ask.
E. WE BUY HOUSES PEOPLE
The last group of people are people who are trying to wholesale deals, people that are sending out yellow letters, postcards, bandit signs are up on telephone poles, and they get leads that have thin equity, and they can’t do anything with them.
1. You can find “we buy houses people” through the Internet, and just do a Google search, we buy houses Boston Massachusetts, sell your house Boston Massachusetts, you’ll find some.
If I find them on the Internet, I’ll make an appointment to see them for lunch and talk about a marketing arrangement where I’ll pay them to $250 for every lead that I convert into a sale. They are throwing the lead away anyway. They have nothing to lose.
CAUTION: don’t educate the wholesaler as far as how you are making money with terms deals! Just get the lead and pay the commission if you get a sale.
2. You can go to REI a meetings and get in front of the group and say,
“We help wholesalers make more money with the leads they have. We look for thin leads the don’t have a lot equity. The house needs to be in a good school district and a quiet street. If you throwing away a leads at all please contact me in the back of the room.”
Now, on to the “Negotiating with Home Sellers For Term Deals!”