The Velvet Hammer.... Closing the Real Estate Deal
I haven't had the time to write a full blown article on negotiating, but here is a great tool that works for buying and selling, but for this article, we'll concentrate on just the buying side. First, you must realize that all sellers have a problem. They need to sell a property to get either something they want, or away from something they can't afford. You can create motivation, not always, but a good bit of the time by acting as a counselor on their behalf. It's your attitude, not you aptitude, that determines your altitude. (You'll see many zig Ziglar references in my writing) If you help the seller get what they want, they will help you get what you want.
You do not need to bedazzle them with your knowlege of creative real estate terminology. They are not well versed in this field, nor do they wish to be. Instead of saying we would like to do a wraparound mortgage, or we will buy your home subject to, you would say we will create another paper to make sure you get all your money, or we will take the burden of those monthly payments away from you. Instead of saying we will pay off you arrearages, you would say, we will make up all the late pays. If you have someone with bad credit and they are behind on their payments facing foreclosure, which sounds better? Mr client, we will do a subject to, the loan will stay in your name, and sometime down the line, if the new buyer doesn't screw up like you did, the mortgage will get refinanced. Or, Mr Client, we will pay up your late payments, and make sure the payments are made on time.
Not only will that stop the bank from harassing you, that record of on time payments before the new buyer refinances will lokk very good on YOUR credit. Remember to always be closing, and always using words that show the benefits to the seller. You know what the benefits are to you the buyer, and the seller doesn't care.
What are the benefits to the seller in a creative deal?
- Speed. The problem can be solved now. No waiting for an agent to bring, or not bring, offers.
- Peace of mind. The property is sold and now they can move on with their lives.
- Credit. A timely record of payments always looks good, especially one the size of a mortgage.
- Capital gains. This is especially true for the elder seller. They only pay the gain, as they receive it.
- Interest. They get additional interst income instead of getting 2% at the bank. (apply to their greed factor)
- Better price. Terms always net the seller more than an all cash offer.(show them a cash offer)
- No agents to pay
- No landlord headaches
- No holding costs. If they hold the property for 6 months for a better offer, what will they net? How far will the mortgage balance come down? How much better will the offer be? How much in monthly payments, insurance, and taxes be? How about that big fat commission?
Will that house that htey want now, still be available?
- You are here now. What happens in 6 months if you decide to take my offer, but I already have enough properties to keep me busy for now?
We are trained as consumers to hate any type of sales presentation, and as a society, have developed some pretty sophisticated defense mechanisms. It is our job as investors to break down these barriers and get the seller to say yes.
There will be objections. If their aren't, you better watch out, because there is something wrong. When the seller voices an objection, stop whatever you are doing and address the issue. It will not go away. I almost always address objections in this manner. That's a great question, we get asked that a lot. I always get wooried when someone doesn't bring that up. That means you are paying attention. The reason why we do things this way is ....., or This allows us to do business now.....
Notice that you are complimenting the seller for being intelligent. Flattery, if not abused, will get you everywhere you want to go (It's like Visa). Flattery is the velvet over the handle of the hammer.
With objections, always be honest and upfront. It is not a deal killer if a seller objects. I always ask the seller if they understand before I continue. I will also ask if they want me to go on, because if their objection is insurmountable, I need to know as quickly as possible, so I can go on to the next deal.
Here are some very important words to close a deal. Once you're done with your presentation, if the seller has a small objection that you know you can handle ask (Memorize this)... If I could would you? These are the 5 most powerful words in negotiating. They do not offer an out if you concede to their point and creates a win win situation.
And finally, When you finish the presentation with an offer, end with an open ended question like, When would you like to close, 2 weeks or the 1st of the month? Don't ask a yes or no type question. Don't ask, Is this OK? Always assume the close, and you will close more deals.
God Bless you all and go close a deal,
Shawn J. Dostie
Coshocton, Ohio
Terrific article and one I need to read often & repeatedly.
My usual, instinctive closing technique (which I am working to modify) is not nearly so smooth and would more resemble a sledge without any velvet padding...so I've had to learn all over again how to relate to the seller and his problems...and your article is right on track.
Shawn,
You are the master of the close. That was a doozy of an article. The best I have read in many a year. Yes I would buy a used car from you. I thought I was listening to George Washington Hill, the old time genius of the advertising business. You know the one that bought the house of ill repute, when asked why he replied that he wished to lead the girls on to a better way of life. Set them free from the bondage of ***** and fear. And, to obtain a discount.
He took me to lunch on four occasions and in each instant, he would take the check, start talking, hand it to me while he increased the rapidity of his gestures and there I stood at the end, alone with the check in one hand and my open wallet in the other.
I asked him why he did it and he said that he was training me for bigger and better things. I think he was talking about more expensive lunches. Keep it up. write a book. Lucius