Hey Moguls, Cris Chico here with a great REI negotiating lesson today.
I recently did a Live Training Call for RealEstateMogul.com where I briefly shared a negotiation strategy - it’s useful and really powerful so I want to lay it all out here because I think it deserves a full lesson.
You’ll want to keep reading because this tip applies to anyone who talks to a seller – and I bet that’s you!
The Multi-Call Tactic
This negotiating strategy has a lot to do with your intuition, your gut feeling. It involves you really knowing the REI craft and using your judgment to help close deals. Here’s how…
Let’s say you’ve found a property that you want to make an offer on to wholesale it. In order to get the deal done, you first have to finesse the seller.
What do I mean by that? You’ve got to subtly make them feel comfortable with you by establishing a connection through frequent, but brief phone calls. Don’t worry, we’re not talking over weeks, you know as well as I do that we don’t have that kind of time in this business. I’m talking a day or two, max four days.
You need to invoke your powers of persuasion and build a rapport with the seller so when you feel the time is right to make the offer, they’ll be inclined to play ball with you and not someone else.
Is Your Spidey Sense Tingling?
Look, sometimes you can go ahead and make a soft offer the first time you speak with a motivated seller. But you also need to know when to back off. Every deal is different.
If you’re Spidey Sense starts tingling, go with that feeling and use this negotiating strategy…
So, again, you see a property you want to invest in, but even if you’re ready to make an offer you have to play hard to get. With frequent communication, you have to break down the seller’s barriers and make them want you. You’ve got to woo them. I know, it sounds like a bad episode of The Bachelor, but it works!
So you’ve spoken to the seller once to get some information. You thank them and tell them you’ll be in back touch shortly after you review the details. Later that day, call them back and ask them a question or two more about the property – in actuality, you don’t really need to ask them anything, you’re getting them used to you and stretching out the conversation to work to your advantage.
See, they may be dealing with a handful of buyers and you have to make them remember you and feel comfortable with you. They don’t know you from Adam, and if you abruptly toss out an offer upon your first meeting or call, they might think you’re a scammer trying to make a quick buck.
The next morning, call the seller for the third time. Now, they’re becoming familiar with your voice and not getting you confused with some other interested buyer.
The seller tells you that they’re not willing to go below a certain number (which you think is still too high for the property), and you respond by saying that you use a variety of different funding sources and you have to see if you can get approval from one of them. Tell them you’ll crunch the numbers and see what you can do.
This third call has helped in not just one, but two awesome ways…
First, it’s provided you another opportunity to stretch out the conversation and continue building their trust.
Second, you’ve made it sound like you’re working for the seller – after all, it’s your ‘funding source’ that’s being restrictive, not you, you’re going to bat for the seller. Just like that the seller feels like you’re working together.
By the time you make your fourth call later that day, it’ll probably be the one that closes the deal. The seller’s hesitation is gone because with each brief phone call, you quickly establishing familiarity and built trust.
They are comfortable with you so you’re the frontrunner. And all it took was 2 days and a few quick phone calls. Done deal.
Go with Your Gut – No, that’s not last night’s dinner disagreeing you, that’s your intuition. Pay attention to your gut, if you sense the buyer doesn’t trust you yet, it’s that feeling that should trigger the multi-call negotiation strategy.
Play Hard to Get – The secret to winning these kinds of deals is learning how to make a motivated seller want you. Don’t throw an offer at them right away; play hard to get, make yourself - your deal really - be desirable. Yea, I know we’re talking about real estate, but investing is an art form too in a way!
Establish a Pseudo-Relationship – With frequent, quick calls, gently establish a connection with the seller. They’ll become familiar with you and think you’re trustworthy so they’ll want to work with you when you do come around with that offer.
Cris Chico
is a successful real estate investor in Florida who specializes in wholesaling in local and long distance markets. Over the last two years he successfully flipped 116 properties and generated over $1,452,108 in profits. He rarely personally inspects any of the properties that he flips or meets with any buyers or sellers. In fact, most of the markets that he operates are thousands of miles away.