When was the last time you came across a seller that had a completely unrealistic expectations about what their house should sell for?
If you are a real estate investor, it was probably the last time you looked at a house. A big part of becoming a successful real estate investor is learning how to alter their expectations. The trick is to do this and have them still feel like they got what they wanted out of the negotiations.
So how do you change seller’s expectations?
One of the best skills you can develop and probably one of the hardest to learn is the skill of listening; really listening to what the seller is saying. And yes, sometimes it is very painful. It usually involves 30 minutes of hearing about all of the history of this house and all of the current problems they and their family are having. I can tell you from experience, if you sit quietly and listen you will get valuable clues about how to change their expectations. It is during these conversations that you will learn about their true motivation.
I have found that I usually need to do this in stages. At times, I am able to begin this process when I take that first phone call. After they have told me all the problems with the house, I simply repeat all of them back to the seller and comment that those repairs are going to be costly.
The second time you will have an opportunity to “reset” their expectations is when you see the house. Again, it can be as simple as going over everything that the house needs. I usually bring up the comps for the area at that time and tell the seller that “this is what similar properties in this condition are selling for”. Depending on the house, I may or may not make an offer at that time.
Making the offer
Last week I met with a seller at her house. This house was part of an estate and was in very bad shape. She told me that she knew pretty much what she was going to be able to sell the house for. This seller tried to put on a show of confidence even though she knew the house needed a roof, kitchen, bathroom and a lot of other repairs. This house also had some mold in the drywall in the basement. We both knew that she wasn’t going to get anywhere near this amount, but I just let her talk. Read the rest of this entry →