Marketing REI Beginners Asked and Their Answers

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Question 1: How to get motivated sellers to contact you in a hot market?



In a hot market...You don’t! You contact them. Figure where they are and slap your name and phone number down in front of them. Heck if you’re too shy to knock on their door, leave them a note. Get out of the market place and work subterranean, the market beneath the market where the real deals are hidden. You may need to go outside of your immediate area where the market is more suited or inviting to finding the “motivated” seller.

Jim Kennedy-Houston, Texas listed 33 ways to find motivated sellers. Here is the list:



1. Place a newspaper ad (major daily)

2. Place an ad in PennySaver, ThriftyNickel, Greensheet, etc.

3. Bandit Signs

4. Drive neighborhoods looking for vacant houses/FSBOs

5. Call FSBOs

6. Search MLS for junker properties

7. Search MLS for expired listings

8. Contact landlord who are evicting a tenant

9. Contact landlords with properties for rent

10. Pre-foreclosures

11. REOs

12. Foreclosure auctions

13. HUD/VA houses

14. Tax Sales

15. Estates Sales

16. Properties with outstanding building code violations

17. Properties with outstanding health code violations

18. Condemned properties

19. Fire damaged properties

20. Out of area owners

21. Network with professionals, i.e. attorneys, CPAs, Realtors

22. Network with service people, i.e. letter carriers, pool service workers, lawn service workers, newspaper delivery person, carpet cleaning workers, plumbers, etc.

23. Bird Dogs

24. Wholesalers

25. Magnetic car signs

26. Distribute business cards..EVERYWHERE

27. Career attire (Polo shirts with embroidered “I BUY HOUSES” logo)

28. Flyers

29. Door hangers

30. Billboards

31. Radio spots

32. TV spots

33. Full page ad in the Yellow Pages



2. How do you pre-screen motivated sellers?



The pre-screening is used to set the appointment and where the property is located. After arriving at the appointment TELL the sellers what they are going to do. TAKE CONTROL in a tactful and gentle way!!!



First of all, let defined who is referred as a “motivated seller”: “A motivated seller is a person who is moved to sell to you!” Most sellers are not what I call “motivated” because they want their full asking price or purchase price for their homes and land. Try calling a “For Sale By Owner” and ask if they would be willing to take a discount on their properties and LISTEN to their responses. Either they will “laugh at your question” or they will “get angry at you for asking the question.”



But don’t get frustrated or discourage at their responses by LISTENING CAREFULLY to the sellers you can LEARN what their NEEDS are. Perhaps they are needing to purchase another home or they are being transferred to another state needing the money to move on. You can FOCUS on their NEED(s) rather than their WANT(s). Remember, this rule of thumb for the real estate investors, “You, the real estate investor is helping the seller focus on their needs not their wants!”



Secondly, You need to create a friendship with the seller by sitting down together and talking with the idea of reaching an agreement on TERMS by the time we draw it up, its pre-accepted. It is foolish to put in the “purchase price” spot and hope the seller finds it acceptable. DON’T DO IT. That’s not negotiating, that is wasting your opportunity to make a good deal happen. My target was not a fixed price, but rather, getting the home at the seller’s rock bottom price. What you need to do is to ask questions not a whole bunch (not 20 or 30 questions) maybe, 8 to 11 questions. Also, talk about numbers. The idea of the first person mentions a number loses isn’t always true. Sometimes I hear sellers mentioning sky high prices and a low ball price right between the eyes can get the sellers back to reality in an instant.



Example of pre-screening an unmotivated seller to where they will become “motivated” to sell to you:



REInvestor: Good morning! My name is Clair McManigal, I’m an real estate investor looking to purchase

homes in your area. May I ask you, what is your first name?

Seller: John

REInvestor: John, Do you have a few minutes to answer a few questions about your home?

Seller: Sure! What do you want to know Mr. McManigal?

REInvestor: John, Please feel free to call me, Clair. And I will call you, John, fair enough?

Seller: Fair enough!

REInvestor: John, What is your asking price?

Seller: $265,000

REInvestor: Is your asking price set solid in stone or Is it negotiable?

Seller: Clair, My asking price is negotiable! I can reduce the asking price a little bit less.

REInvestor: How much can you come down on your asking price?

Seller: $200,000

REInvestor: Is that the absolute lowest price you’re willing to come down too? (Silence for five minutes is a killer to the seller’s negotiating skill.)

Seller: Clair, I might be able to come down to $185,000!

REInvestor: Is there a mortgage on your home?

Seller: Yes. (Feeling a little Reluctant to say so.)

REInvestor: May I ask what is still owed on the mortgage?

Seller: Why do you need to know that, Clair?

REInvestor: John, If you don’t want to tell me what the amount is still owed on the mortgage. That is up to you but I can get the information from the public records at the county courthouse if you prefer?

The reason I ask you is simply to be fair and reasonable to you in giving you an offer which would be a win/win for both of us. Does that sound fair to you?

Seller: Sure! $165,000

REInvestor: Why are you selling, John?

Seller: Clair, I have been transferred to another State where I will be working.

REInvestor: So, I expect you are going to use the purchase money to move on and find another home, right?

Seller: Yes!

REInvestor: John, I am willing to give you $185,000 providing we can draw up and signed the paperwork right now?

Seller: Sure!

Don’t be afraid to ask the sellers to draw up the paperwork in their home and signed it so you can walk away with an agreement to purchase their home for the agreed amount for their home. You learn to “read” people and by asking questions and paying attention to what’s said and what isn’t said. You zig and zag until you’re at the point of knowing what their NEEDS are. Again, most sellers you run into will allow you neither the option. So, forget about “sellers” who are “moderately” motivated and focus on the ones who are already have their bags packed and one foot out of the door.



3. Can you use a realtor to find motivated sellers?



First of all, you need to realize that the realtor will be expecting to get their full commission in helping you out if you can show the realtor how to get his/her commission satisfactorily. I like to ask questions to realtors whom I work with to pre-screen them.



My most favorite questions for pre-screening realtors are:



1. How long have you been an agent?

2. How long have you been working for the your Broker?

3. Do you personally own any rentals?

4. Are you willing to do ANYTHING to make a deal happen?



If the agent answers the last question in a positive response then you have a “motivated” agent who is willing to lend 50% to 100% of his commission to you to make the real estate transaction a reality. Real estate agents are a great source to use MLS in finding “motivated” sellers but, remember, they are “trained” to think of conventional lending practices, where you have to have “good credit,”and a “good job” going to a bank to get a loan to purchase a home. A few agents have the capability to become “creative thinkers” doing real estate transactions in using “creative strategies.”



4. Is it advisable to go to the seller directly by passing the listing agent?



I wouldn’t advise going directly to the seller by passing the real estate agent unless you have his permission to do so. But the seller will still be responsible for paying the realtor’s commission. If you deliberately go directly to the seller negotiated an agreement of another purchase price then you can be taken to court in a law suit.



You can negotiate with any seller you wish regardless of whether they have an agent. If the seller sells you his house, he has two options:



1. Pay the agent his contracted commission and be done with it.

2. Try and to beat it out of town without paying the commission.

This happens all the time. As for you, there is no legal obligation to anyone except to pay what you bought. The seller made the contract with the agent not you.



An alternative is to make a verbal agreement with the seller but wait until their listing agreement expires before doing a written contract. Or the seller maybe able to get out of their listing agreement early by paying a fee. If you enter into a written agreement while the listing is still active, you can be sued for contract interference, its called Tortious Inference, if the agent isn’t paid their commission.



5. How do I go about presenting an offer to the owner who is working with an agent?



If you have your own contracts, then just fill it out and fax it over to the agent. If you don’t have any contracts, you can call the agent and tell him/her you would like to make an offer on the property and you would like them to write it up. Either way, figure out your numbers you want to work with as it sounds as if you want to buy it outright with cash or new loan. You don’t care if she has $100,000 first mortgage, $3,000 in back taxes, $10,000 in agent fees, and she walks away with some amount of money. All those fees and bills she has to pay out of her side is none of your concern if you figure the amount you want to pay, just offer it. Cash or new loan, none of that matters since you aren’t responsible for them.

Alternative ways to financing the property if you trying to close with no money out of your own pocket are:

1. You can have the seller refinance his free and clear home so he can pull money for the down payment out and sell to you on OWNER FINANCING.

2. Is to OPTION his house not a lease option if you can get an equitable in the property using the option. You can sell the OPTION to anyone who can bring $70,000 cash to the closing table i.e. a standard mortgage from a bank. This assumes that there is time left, and the seller didn’t already sign a listing agreement with an agent. If he did-all he needs is an exclusion right to allow you to sell the house. The option will cost you $100.00 plus advetising cost. You make the difference between the seller’s asking price and what you will sell it for. You can take you time in finding a buyer by using a 60 days contact to get him qualified by a bank.

Comments(11)

  • mjdreal26th November, 2003

    Thanks,,, that was a very good article.. I hope that very soon I will be up there with you... It's like having a million dollars infront of me and not knowing how to pick it up........Thats why we have givers of info ,,, like you..Thank-you again,,,,,,,,,MD

    • Clair-MO26th November, 2003 Reply

      Thank you! For your gracious comment on the article. These questions are some of the questions which are in a special e-book that I am preparing for beginners as well as seasoned investors...called "Questions Beginners Asked and Their Answers to Real Estate Investing!" Soon be out in February I will be talking to Joel to see if he will add it the books he has on this site! This isn't an advertisement for my e-book but I found it is part of human nature if a person has a spirit of curiousity within him or her this book is for YOU!

  • Chrishette22nd November, 2003

    Great article. Exactly what I was looking for.

  • Lufos24th November, 2003

    Dear Clair,



    You are obviously not a member of the Poor Clairs. You do state it well and your Standardized Operating Technique is great. You have spelled out in great detail a very direct, effective method of closing.



    I could as could you list 100's of slight variations. But the method is perfect for positive persons like yourself. God I wish I had your talent.



    To compensate for my lack of direct confrontational ability. I slow it down a bit. I create small pauses during which time I talk of other things, trying very hard to find his motivational triggers. I may because I feel a negative upcoming, back away and talk of shoes and ships and cabbages and kings. It is for a reason, my disengage lunge has been met with a parry and I must abandon the attack and seek another advantage. I try never to overpower my would be seller with the forcemont of my personality. Probably would not work. I do not think I have your presance.



    But following your lead and program I will arrive at the same conclusion. I try as you have suggested, very hard to find that path he has layed out for himself. To help him achieve a passage down it I will bend every effort and in that task will achieve the closing and subsequent transfer of property that is my aim..



    In many instances the Seller has overpowered and lead me directly to the closing I seek. I hope I have made this clear. It has become such a large part of my actions this Win/Win ending.





    Respectfully Lucius


    • Clair-MO24th November, 2003 Reply

      Lucius, As a real estate investor yourself, you don't have time to waste in chit-chat with a seller. The main reason is to find what the seller's need(s) is/are and the questions that I use will get to finding out what the need(s) is/are of the seller. Most of the time, Sellers are not "motivate" in selling their homes to you. You have to "educate" or "trained" the seller in thinking the way you want him/her to think, which is simply to sell to you. That is the reason to use the sellers first names to break down the barriers of being strangers! Does this make sense? I have found many a seller coming to me dictating what they WANT from me but I am not interested in what they want but what they NEED! I try to be empathic to the distressed seller and try to do what is needed to be done in not taking advantage of the distressed seller! Lucius, Why don't you give me a call so we can talk, 417-862-5582. I can help you out with a few pointers, fair enough? I understand where you are coming from because I was there at one time.

  • SolutionsKid24th November, 2003

    Oh boy! That would kinda be like grandpa sitting on grandpa's lap! You two have been at this for longer than most and you both have great minds...would love to hear you both talk about REI.



    Hi Clair....



    Hi Lucius...



    Christian "The Solutions Kid" Beebe

    • Clair-MO24th November, 2003 Reply

      Christian, Would you like to do a three way confernece call?

      • SolutionsKid24th November, 2003 Reply

        Of course...with you two...wouldn't miss it for the world.


      • jimh63426th November, 2003 Reply

        hmm...got room for one more? I could really use all your help on "getting through" to a potential seller.



        Jim

    • Lufos25th November, 2003 Reply

      Sounds like an invitation to a Manage a Trois.



      Thats allowed on the Web Site? I mean talk about Modern Liberalism.



      Sure, but why stop there. I have this book on selling used cars, can I quote from that?



      Opening remark, " Hi thar folks, my name is Bob and whats your name, friend?" "Lucius ah, my that's certainly a fine name. Had a feller in here the other day same kind of name. Strange person had a forked tail and some very interesting horns and oh yes, He was all red. Any relation?"



      Now thats what you call establishing communications leading to empathy, then diverted to motivation. Finaly to a Directed Action. Thats the fun of a PhD. What I am really saying. Make somebody do what you want. quote Napoleon Hill and of course Kid Yellow Gloves.



      Looking forward. Lucius






    • Clair-MO26th November, 2003 Reply

      Jim, Give me a call and I'll work with you to see how we can get a workable deal to happen with this potential seller. Send me an email with what you are trying to do with this particular deal. And I will try to give you some pointers in getting this deal to become a reality. Remember this, "Working on a game plan will bring your "Dream" to become a reality than just "Dreaming!" Does this make sense to you, Jim? If you read my comment to Lucius, you will see I give my phone number to him,please feel free to give me a call, fair enough?

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