Negotiations in real estate is an important skill to hone.
Over the years I’ve developed a consultative approach, working with the homeowner to achieve their desired solution: to sell their house.
Using tactical empathy as Chris Voss discusses in his book Never Spit the Difference, I can better understand the homeowner and negotiate a solution that involved selling as-is for cash, selling as a traditional retail listing, or maybe an alternative option.
Transcription:
Viktor Jiracek 00:00
You are able to present like you have this motivated seller, they want to get rid of the property. Okay, you know, we can either give you a cash offer or we can list it. So like, what sort of benefit do you see there? Like how many, how many people do actually convert to either terms of actually cash offer actually like listing it?
Chris Bounds 00:16
Yeah. So you’ll find like in a robust market, you’ll get more listings. I mean, because people know that one competition, so that this was another way, like, I can’t buy every house for 85 cents on the dollar. But I do know, there’s a lot of people who will, and somebody will, they’ll pay full retail, because they don’t care what it’s worth, as long as it rents and gets a certain yield, like hedge funds, like visual care.
So wholesalers can get out there, lock up properties for 80, 85 cents, maybe even 90 cents on the dollar, and go out and sell it to an end buyer. Typically landlords that are okay with that 6% , 8%, 10% yield over a 517 year period. Like they’re okay with it. I can’t compete with that. From- in myself I want to be wholesaler, which I don’t. My kinda like you, I like flipping.
We’ve wholesale a couple deals here and there, just, you know, stuff that we didn’t want to flip. But, um, I didn’t want to go that way. So I just like, “How can I compete with them”. And the other way I can compete is I can list it and I can get them more than what wholesaler can.
And on top of that, I’ll disclose like, look, this is exactly what the wholesaler is gonna do. They’re gonna do it, but this isn’t this, they’re gonna make 15, 20, 30 grand. And there’s nothing- and I’ll tell them, there’s nothing illegal about it.
I mean, long as you’re properly explaining what’s going on, there’s nothing illegal about it. I can do this, as this and that 30 grand goes in your pocket, not in the wholesalers pocket. What sounds better to you? And in this type of market, like it’s not like you got to wait 45, 60 days, like, really?
Like you put homes on the market. You, you probably seen motivated seller, like, you know, ugly houses around in the lesson. They go in days, too. Yes. So yeah, I mean, historically, this is where I came to realization of that model. And 2018, I had my lead manager, I said, “Hey, every deal we made an offer on, I want to”- and we didn’t buy it, like we made an offer.
They did something else. What happened to it? and we found it was like 130 of them sold retail, they went on a loss. You’ve walked these kind of properties where the home isn’t trash, it actually looks pretty nice. You’re just minor things. They I mean, they’re interested in what you have to say. But they’re not motivated, per se. Yeah.
Everyone has a sister, cousin, neighbor, that’s a realtor. So, at the end of the day, like if you can’t help them with a cash offer, they’re asked then there’s no listing. So I just like and then NAR National Association realtors, their statistic is most people list with the first agent that they speak with.
Also, people tend to call investors before they talk to realtors. So, I’m an investor and a realtor. And I mean, yeah, you’re in their living room, and they’re literally telling me I want to sell my house. I’m not gonna sell it for 70% off doing a sell my house. And what I was doing under the old model with a lot of investors do is, they’re a one trick pony.
They’ve got their cash offer maybe an owner finance offer. And that doesn’t work. I mean, they don’t really do anything else. Maybe they refer it to their friend who’s an agent, but at that point, communications lost its cut. And then someone else has to reestablish communication.
And if you’ve tried to do that, you know that that is very difficult. I’m in their living room with a hot lead that needs to be closed one way or another. I mean, they’re buying their house from listing their house. We just need to have a very honest conversation about their needs and wants, and see how I can best help them.
So that, that’s the conversation flow that I have. It’s never can you buy it? It’s about, yeah, I could but let’s just see the best way to get it sold.
Viktor Jiracek 04:18
I like the perspective where like you’re just trying to help them out and you’re just you’re not even trying to convince them or manipulate them into something. You’re just like, “Here are the options, which option would you like to take?” And either option they take, you’re winning. Like if they want to list with you great you’re gonna win.
If they want to, you know sell to cash like that’s great, you’re gonna win. But you also mentioned something which is what I’ve run into as well, where I go and see a lead I go and see a motivated seller, okay didn’t really make sense for me to buy a cash for it was way too far off like their house is in decent condition but not perfect condition.
And then I refer to a realtor I say, Okay, well a realtor is going to give you a call tomorrow. And the realtor calls and I’ve done this many 30 or 50 times like a lot And nothing like never, not even one has converted. Yeah, not one ever, never, never, it’s never converted. And just like you said, the communications honest, you know, cut off, and it’s a new person, and they’ve forgotten about them.
And they, you know, reach out and find somebody else. But I guess how you do it differently is while you’re there in person, like you either get a signing agreement for the purchase agreement or a signing listing agreement. How do you like think about that sort of sales process?
Chris Bounds 05:27
Yeah. So, you actually had to back up before that. So the way you frame this meeting, frames or expectations? If it’s only frame that you’re going to go out there to buy their house, and you don’t, but then you pitch them, option B, you’ve actually broken trust.
They trusted, that you’re gonna buy the house is going to work or not. But now you’ve got this other option that they had no idea about was never in their thought process. Now, depending on their personality type and all that, especially if they’re analytical, they this is a whole new set of calculations, they’re gonna think about it, which think about it means, you know, nice to see you, they’re not gonna talk to you again.
And then the same thing that you said before, when actually, that’s the same thing with the referring to another realtor, you just added another piece to the equation. So, I don’t frame the conversation that way. It’s, I let them know up front, “Hey, hey, Victor, I’m looking at your house tomorrow at three o’clock, we’ll just run over some options and see what the best way is to get your house sold.”
Maybe it isn’t as his cash offer. Maybe it’s traditional listing and there actually could be a couple other options that we find actually work better. But if we were to find a good solution that works for you, what does that next step look like? And then you’re getting them to verbally convert committed at that point to, well, I mean, I would like to move over the contract or I got hacked my sister and all that stuff, but at least frames the conversation.
Not that I’m gonna buy it, it’s we’re gonna we’re gonna unpack some options and then we’ll go over those. Now, if you don’t truly intend to go over those options that probably I mean you you that’s how I did it, I mean, depending on your actual value value propositions and all that you’ll tweak that because if you if you don’t want to list it and don’t say that.
If you do want to work the referral game because you’re not an agent then change up that type of pitch to include that kind of expectation but whatever it is, whatever you’re going out there to truly do and have all the options like just get they need to be up know up front. You’re setting that expectation, getting some commitments, and then you know everything else is done at the the actual appointment.