When a seller calls about a house for sale, make that first call just an information gathering call. Use the time to build rapport and find out all the important information you’ll need to make a decision about the house. The basic information you need to get is the sellers name and phone number, the address of the property they want to sell, number of bedrooms and bathrooms, and what repairs are needed. You should find out the mortgage balance if there is one. Ask if there are any back payments or taxes. One of the most important questions is “why are you selling”. This will give you an idea of their motivation level.
I never ask what they think the house is worth. What they think it’s worth is completely irrelevant anyway. Avoid any talk of price on the initial call.
Once you gather the initial information thank the seller for their time, then tell them you need to do some research about the property and you will call back. Ask them if you should call back this afternoon or tomorrow morning.
This will take all the pressure off you to make an offer on the initial call!
They may try to pressure you to give them a price on the first call. But you should avoid naming numbers until you’ve had a chance to check comps and estimate repair costs.
Even then, it’s better to avoid making make offers. If they ask you what you’ll give them for the house, remind them of the benefits you have to offer like no real estate commission, selling as is, a quick close and a cash offer – but avoid talking price.
Always try to get the seller to throw out a number first! Say, “If you can sell your house “as is” and close quickly, what's the least you would consider taking for the house?” Remember, you are offering them a quick and easy solution to their problem. You are not making an offer; you are “offering” a hassle free solution to their real estate problems.
Here's the logic:
Suppose the house is worth $100,000 all fixed up. You determine that $50,000 is the most that you can pay and you know you can wholesale it to another investor for at least $53,000. But, this time, instead of you naming a price first, you ask the magic question: “What's the least you'll take?”
To your surprise they say $25,000!
Did you see what happened here? Instead of you telling them what you'll pay, they are telling you what they'd take and it was a lot lower than the offer you would have made! In this case you're sure you can get at least $53,000 when you wholesale it to the rehabber. So, instead of you making just $3,000 on the deal ….you’ll make as much as $28,000!
See why it's important to ask the seller what they'll take versus making offers to them.
You will increase your chances of getting an even better deal if you never name the price first.
Now sometimes a seller just refuses to name a price and you are forced into making an offer first. In that case, you need to always go low – real low. If you know you can pay as much as $50,000 and still make a profit. You should never give them your top price to begin with. The sellers could turn it into a bidding situation, and the only way you can go is up. If $50,000 is your top price, you can’t go up. That’s why you need to leave yourself a little “wiggle room” if you are forced into a situation where you have to name the price first.
Before you starting talking price you should always remind the seller of the benefits you have to offer like buying the house “as is”, that you can close quickly, pay all closing costs and that there will be no real estate agent commission — then say, “the best I can do is $40,000”. Once you have explained the benefits and named your price, then just be quiet and see what they have to say. Don’t try to justify your price further. Let them make the next move.
If they come back and say they can’t take less than $45,000, then you should ask if that’s the best they can do. They may go down a bit. If not, you still got a better price than you would have if you blurted out your top offer to begin with.
So, to recap, ideally, you’ll get the seller to name their asking price first. If that does not work, then you should never give them your top offer but instead, always leave room for negotiating if necessary.
