Has this ever happened to you?
You got a great lead, which ended up turning into an awesome deal (happy face!)… only to have it all fall apart? (Sad face.)
Well, don’t worry, this happens to the best of us.
And, it just happens that there’s a little secret to locking in that ‘Yes!’ from a private money lender or seller. And I think you’ll find this lesson pretty interesting…
Make It Scarce
So, like anything else, there’s no guaranteed, one-size-fits-all approach to get people on board with your business. But there are absolutely some powerful tools you can add to your belt when talking to potential private money lenders, buyers or sellers – and it’s as simple as the words you use.
I’m talking about the principle of scarcity.
It’s the same psychological magic that has people scrambling to McDonald’s every time the McRib sandwich comes back… or piling Disney DVDs in the shopping cart when their childhood favorites leave the proverbial “vault.”
Robert Cialdini puts it this way in his book, Influence: The Psychology of Persuasion:
“Human beings have been hardwired to want what is going away. Far more people are motivated by the thought of potential loss than by potential gain.”
Basically, this is the law of supply and demand. Make people think they’re about to miss out on something, and their motivation level explodes. You can create this effect easily by limiting either time or amounts.
Let me give you a quick rundown of what creating scarcity looks like with potential private money lenders, sellers or buyers.
Private Money Lenders
Limit their time.
When you call a potential lender to follow up, say something like:
“Well, I want you to know that we’re going to have someone lined up for this awesome investment opportunity by next Wednesday. So if you’re interested, you will need to let us know soon.”
Limit the amount.
Again, call the prospective lender to follow up and let them know your company is just looking for a few — probably less than 5 — highly qualified private lenders to join your team. And once those slots are filled, you probably won’t be offering these kinds of deals to people on the outside.
Sellers
Every contract you write should have an expiration date.
Whenever you sit down with the potential seller, emphasize that once that time frame expires, the offer is no longer on the table.
BOOM!
Scarcity.
Or say:
“Mr. Seller, I just want you know, it looks like the company that I work with is only going to be buying 1 or 2 more properties this month. So if you call us next week, we may have already found other properties and won’t be able to purchase yours. The sooner you let us know, the better.”
Buyers
I’ve got 2 words for you: Group Showings
This may not blow your mind at first, but think about how many other investors you know who are doing it. Probably not many. And the fact is, your house becomes a scarce resource when there are multiple people who may be interested in buying.
Start marketing your property, then as the leads come in, set up only 1 time to get everyone there.
Nothing motivates like a little competition, right?
There You Have It
See? Super easy ways to instantly up the ante in the minds of your potential private lenders, clients and business partners.
Everybody hates missing out on a good deal.
This stuff may be simple, but it’s powerful. Give these strategies a-go in your business today.
Has This Worked for You?
I’d love to hear how these strategies are working for you. Tell me about it in the comments below.
Limit private lenders’ time to create scarcity.
Include an expiration date in your contracts with sellers.
Book group showings for buyers to create a scarce resource for all that competition.
Patrick Riddle
has been investing in real estate ever since he got the bug in college at Clemson University and - to his parents dismay - dropped out of college to dive full-time into real estate at the age of 22 with a couple friends/partners from school.
The first few deals were rough for them, mainly using their own cash, credit, and hard money loans. But, soon he found out that was a rough and unsustainable way to build a real estate business.
After "on the job" learning through the school of hard knocks at first, he found the key that helped their company get deals done more quickly, with higher profit, less risk, without having to go to banks or use their own cash.
Fast forward to today, their company has closed over 130 real estate transactions and has put over $6 million in private money into their own transactions.