THE PHONE CALL

So you have been advertising and putting yourself out there now for months. When the phone finally starts ringing you’ve got to be ready with your list of questions, criteria, and an appointment book. While everyone should take their own personal approach in dealing with phone calls, the conversation should generally go something like this:

ME:   Hello this is Kallen. How can I help you?

CLIENT:  I received one of your flyers in the mail and I’ve got some questions.

ME:   OK! Great! What can I do for you?

* You need to do your best to sound like a real genuine person, not an employee or phone operator.

* Stop what you are doing and take a deep breathe. You must come across calm and confident.

* You are the solution to their problem, and you’ll solve it fast IF you can come to a Win / Win agreement.

* You do care about the particulars of their predicament, and you can adjust your approach accordingly. 

CLIENT: Well, I lost my job recently and we got behind in payments. I’ve been trying to get a refinance, but I’m not sure that it’s going to work and I don’t want to run out of time.

ME: I’d like to set an appointment with you to sit down and explain this whole foreclosure process to you, so you know your options. I need some information first.
 
Where is the home located?

Is it a single family home? (not a manufactured house or mobile)

How much do you owe on the home? (to verify the N.O.D. public records)
 
Is that a first and second mortgage? Or just a first mortgage?

How much are the monthly payments?

How much are you behind? (Or how many payments are you behind? You can do the math here)
 
How is the condition of the property?

How much do you think that the home is worth right now?
(This one is a gem. They will often site other neighbor sales at the higher end of the spectrum, but then almost instantly work their value down based on the condition of the home and their situation)
The key here is to weed out homeowners with unrealistic expectations about the price you are going to offer. They must understand that you are operating a business, and are under the restrictions of certain financial guidelines and ultimately must make a profit. If you find that the amount that they want for the property is far above the amount you are willing to pay them, then it may be time to move on. If the two amounts are close than it may make sense to drive out and meet the homeowner.

* You’ll use this information to gauge whether or not the home has enough value to set an appointment. If it does not, simply explain that it does not and move on.

* If the home and situation fits your criteria, move forward to setting an appointment. You’ll want to explain some of the key benefits the homeowner will find working with you.

Some of mine are:

I’ve been in the business ten years now and bought hundreds of properties.
I’ve never lost a foreclosure deal to the bank.
I’ll allow you plenty of time to move out, on your terms.
You can leave the heavy items behind; I’ll hire help to dispose of them.
If the numbers work well, I’ll hire a moving service for you to help you move.

* You then set an appointment where you will simply offer information and options for the homeowner. Let them know that they are not under any obligation to work with you if the two of you cannot reach a mutual Win / Win agreement.

ME:  OK, It sounds like I might be able to help. I don’t want to waste your time or mine though. If the offer we discuss at our appointment sounds good to you and is a true Win / Win for both of us, are you ready to sign?

Schedule the appointment and get over there quick!

THE APPOINTMENT APPROACH

The times in my career when I’ve sat down with homeowners and talked through their problems to work out a Win / Win deal. These times have been some of the most personally rewarding times of my professional career. Outside of making solid money for my time I’ve found true benefits in helping people in their time of need.

Some key factors in presenting yourself as a genuine individual are:

* Look them straight in the eye.

* Offer a smile without making light of the situation.

* Firmly shake their hand.

* Take the time to sit down, get comfortable, and shoot the breeze for a moment.

* Discuss what they plan to do after this problem is solved.

* Discuss how they’d like to use the money they will receive from the sale.

Begin talking numbers. If the numbers were previously discussed on the phone, use this as an opportunity to reconfirm them. By identifying what they paln to do with the money once the deal is close and how much they owe, you can get a strong inclination as to how much they NEED (not how much they want) in order to get the deal done. You can also use this information to set up the terms of the sale. If they don't need all of the sale proceeds immediately then you can set up a promisory note against the property (a promisory note is an agreement between the Buyer and the Seller where the Buyer agrees to make certain payments to the Seller over a period of time. The house is used as collateral to guarantee that promise.) using a promisory note to the Seller can greatly reduced the amount of cash that you have to come up with at the time of closing in order to get the deal done.

ME: So this seems like a nice place. It seems to fit the criteria we need to make a deal work. How much do you NEED for the house?
  OR
How much over the amount that you owe do you need to handle whatever other problems you have on your plate at the moment?
OR
How much cash do you need in your pocket today to make a clean, fresh start?

(Always get them to spit out the first number. If they force you to make the first offer then jokingly offer $10). You need to determine their frame of mind before offering any figures. This will help keep you in the door and the deal in your hands. If you have to, simply ask them what other homes sold for in the area and how those homes compare to theirs. This will tell you two things. First, whether or not the homeowner is knowledgeable about current values. Second, how they think their home compares to the others in the neighborhood. If a homeowner says the houses are worth around $200,000 and you know that they owe $120,000, you now have a range of values you can work with. You need to use your value comparisons and repair estimates now to determine where your offer will come in.

* The idea here is to throw the market value they COULD get for the home under ideal circumstances, if they listed through a regular Realtor, and installed new carpet, and waited 90 days or more for an offer, and then waited another 30 days for the buyer to close OUT THE WINDOW!
* Their circumstances are not ideal and you are not a buyer with a mortgage buying the home to move you and your family into.
* Many deals will work for you and the homeowner and many will not, so you must simply be ready to NOT DO THEM and walk away. This calm and rational approach will keep control of the deal on your side. They often need you much more than you need them.

If they again force you to make the first offer, shoot low. They may balk at the figure and give you a list of reasons why they can get more, should get more, or simply that they are into the property for more than that and cannot take less. Keep calm and relaxed. This gives you an opportunity to get back to the number that they NEED in order to make the deal work. Shooting low will reset their frame of mind in terms of real value to an investor and where you stand on it. They will often fire back a price on the low end of their position. Avoid the word “want” altogether.

Always blame a low offer on financial requirements and the amount your Handyman is going to charge you to bring the property up to a sellable condition. Never directly insult or be disrespectful about the property or the condition the owner has left it in. They will take it as a direct insult against themselves and their lifestyle. Remember that this is an investment deal for you and it all comes down to a numbers game. The conversation should look something like this:

ME: I can see where you may want to get $ X for the house, but material and labor are getting expensive these days and my Handyman is going to charge quite a bit to fix those doors, the leaking roof, paint, and install new flooring. Financially, I am just not able to get you more than $Y.

Remember to remind them of the other Non-Cash benefits that they will enjoy when they work with you. Some of these benefits may be:

You won’t have to move out right away.
I’ll take care of the trash and heavy items you need to leave behind.
You’ll get the cash quick, and be able to solve the other problems you’re having all at once and save som emoney and frustration there.

Take the time to consider what original or alternative options you can bring to the table. Be sure to include them every time in your pitch.

Work to close the deal. If you are getting resistence from the homeowner, then give them the room they need to feel good with their decision. Forcing them into a deal is not the way to go, they can often back out or avoid you if they feel overly pressured. If you haven't built a WIN/WIN deal with some benefits for them, them you way run into problems in the future. I have always felt comfortable leaving the homeowner with a verbal offer and returning at a later date. Some investors may feel that you are leaving the door wide open for another investor to strike, but you have left the owner with the feeling that you are clam, rational, you now what your doing, and you are robbing them or else you wouldn't have left. There are thousands of real estate deals out there each year. Don't get caught up with any single deal in particular.

Negotiation is an art that will take practice. Your body language often speak louder to the homeowner than anything you say. Genuine comfort and confidence will speak volumes about who you are and what you offer.