From Jamel Gibbs, Strategy Advisor...
Have you ever put your all into spotting a solid wholesale deal, estimated the after repair value, negotiated a solid deal with the seller, and even piqued your investor-buyers interests enough to have them walk through the house – only to watch them turn and walk away from the deal?
Ever walked a half dozen investors through your “killer wholesale deal”, but found yourself with zero interested buyers to show for it?
If your answer is anything but “yes”, then you’re either not being honest or you need to read How to Make More By Pricing Less.
In this lesson, I’m going to show why and how to get an offer from every investor-buyer who sees your property, no matter what, which will enable you to make more money – now and in the future.
{Mogul Elite members: You have an audio of Jamel discussing this lesson in your Power Pack tools for this lesson.}
What No-Offer Walk-Aways Mean
More often than not, there’s only one reason an investor-buyer will walk away from a property they've taken the time to see: It’s priced too high.
When this happens, your deal is walking through the shadow of the valley of deal death. The good news? You can breathe new life into these deals, and emerge on the other side of the valley, victorious in every way. Here’s how.
Strive to Get an Offer on Every Deal
Not too long ago I had what I thought was a can’t-miss deal. Guess what? I missed.
I had the burned out shell of a property that was structurally sound, but it needed a full rehab. The good news is that the fire had done a pretty effective job of handling the “gutting” part of the rehab for me.
Since I only had $700 in the property, and I only wanted $5,000, I thought it was pretty straight forward. My investor-buyer had other ideas. When he said, “Jamel, this deal just won’t work for me. Thanks for showing it to me, though.”
At that point, I could have just given up the hunt, assuming there was no way we could get a workable deal. After all, he gave me a very clear “no thanks”.
Then it occurred to me: Maybe we could.
“Listen, what part of this deal doesn't work for you? We’re only talking about $5k. If that price doesn't work for you, what price would work?”
His response? “I don’t want to offend you. You said it yourself: This is only a $5k deal. I don’t want to insult you with a really low offer.”
While I could have let the guy walk away at this point, I hunkered down for a second a said, “Don’t worry about my feelings. I can take it. How much would work? Give me a number… you might be surprised!”
Shocked, he thought for a second, then came back with an offer of $2k. I took it. Remember, I only had $700 in the property, so I was looking at a quick $1300 – all because I asked him for an offer.
Why You Should Coax an Offer Out of Every Buyers
The fact is, if someone takes the time to come out and look at one of your properties, they're clearly interested in it at some level. If after seeing it, they try to pass, then chances are either:
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They’re too embarrassed to make you another that would work for them, or
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They’re assuming that if they make you an offer that works for them, it will probably insult you and just be a waste of time.
But I always want them to coax them into making me some kind of offer whenever I can, and so should you.
And mainly for three reasons:
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Something about the deal has garnered their interest on some level. While the deal isn't done, they’re at least interested. While you have nothing to talk about if it’s not a money thing, you don’t want to let a few bucks stand between you and a deal if there’s anything you can do to help get the deal done;
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You want them to say out loud to you that they're interested. Which gets them to emotionally commit at least a little bit...which makes it all the easier for you to get them to play ball with you when you're able to come back to them and make an alternate deal.
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You really need to know how much the market will pay for the property. Estimating values is a judgment call. I don’t walk on water – I’m going to make mistakes and so will you. Even the best wholesalers occasionally misjudge what the market will give for a certain deal. By getting a firm offer from investor-buyers, you’ll know how much the market will bear, which can give you the ammunition you need to go back to the seller to renegotiate a deal if needed.
(If you’re under the impression that sellers won’t renegotiate the price, don’t be. A great way to do this is by placing the “blame” for the renegotiation squarely on the shoulders of your “funding partners”, which takes the heat off of you. It’s also true!
You simply explain that unfortunately your "funding partners" have decided they can't make the deal work at that price, but they can make it work at "X" price. But you need SOME kind of offer from a serious buyer to make this work. But you’ll find that quite often you can rescue a troubled deal this way.)
Chillax
If you’re the kind of person who feels insulted when people make you a counter-offer on your wholesale deals, get over it.
If your ego is easily bruised by a low-ball offer, suck it up.
I don’t know about you, but I’m willing to line up all day long for the chance to be insulted, especially if the payoff for my hurt feelings is $1300 on a $700 investment, compared to negative $700.
And the Bottom Line is:
When you're showing a property to your investor-buyers, if you don't get any offers, then probably offered too much on the property. When this happens, always coax some kind of offer out of your buyer.
Here's a couple of awesomely easy ways you can accomplish this:
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"Here's what I'm asking. Are you interested in making me an offer?"
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"If something happens and this thing doesn't sell and I'm able to renegotiate with the seller, what number would work for you? And don't worry, nothing you can say will offend me."
Based on their counter-offer, renegotiate with the seller if you have to. Find a way to make the deal work!