Epic Real Estate Investing - How to Make an Offer on a House without Offending the Seller | 766

Episode Date: September 5, 2019

This Thursday, Matt shares the 4 ways to make a deeply discounted offer without offending the seller. Grasp them, avoid causing resistance among sellers, and losing deals. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terrio Media. Success in real estate has nothing to do with shiny objects. It has everything to do with mastering the basics. The three pillars of real estate investing. Attract, convert, exit. Matt Terrio has been helping real estate investors do just that for more than a decade now. If you want to make money in real estate, keep listening. If you want it faster, visit R-E-I-A's.

Here's Matt. Hi, I'm Matt Terrio, CEO of Epic Real Estate, and I'm going to show you how to make an offer directly to a seller. And the main thing that we're going to focus on is how to present a deeply discounted offer without offending the seller. All righty? So when it comes to presenting discounted offers to sellers without offending them, we all know we need to do it very carefully, right?

As this is someone's house that you're buying in. And there's typically a lot of emotional attachment the seller has to their house. understandably. And the thing that holds most people back is that they're at a loss of how to even approach this type of conversation. And right there lies a huge hint to a big portion of the answer that I'm going to give you in just a minute. And I get this all the time. People are worried about offending the seller. They're worried about getting yelled at. They're worried about getting the door slammed in their face. And that makes sense because that can happen if you do it wrong. And here's the thing. The seller typically sees real estate investors like us, like you and me,

as greedy, money hungry, chomping at the bit, trying to steal their house type people. So their guard is up most of the time. And when you validate that with what they initially think about us by presenting a low-ball discounted offer, they naturally get offended. They frequently stop the transaction right then and there

and they tell you to get lost. But here's the thing. You are indeed a real estate investor. But before that, you're a problem solver. And the reason being, no property owner is going to sell you their property at a discount unless they need to. And this need is typically caused by a problem that's bigger than waiting around and getting

top dollar for their property through traditional methods. In other words, they've got bigger fish to fry. So with that being the case, if you align yourself with the seller as being there to solve their problem, the likelihood of your discounted offer offending them, as long as you are indeed solving their bigger problem, it drops considerably. It's like this. Sellers will exchange equity for peace of mind. And that's really what you deliver.

You're delivering peace of mind to distressed or motivated sellers as you hear them referred to. And in exchange, they compensate you. They compensate us with equity, discounted real estate. Here, let me show you the four different ways that you can go about this. All right. So this is what we call, or what I call the conversion quadrant. And the way that most people, most investors will go out and meet with a seller is they'll meet with them as essentially, for lack of a better term, as the bad. cop, meaning they'll go out there in an adversarial role with the intent to purchase this house

from this seller at as deeply of a discounted price as they can negotiate. And that's what the seller is expecting, and that's how most people do it. And you get this back and forth and someone's going to win, someone's going to lose. Then the other way that they present this offer, or the part two of how they do this, is it is going to be the buyer's idea. The offer is the buyer's idea. the price and the terms specifically. So I am out here to get this as deeply of this kind of price, and this is as much as I'm going to pay, Mr. and Mr. Seller, take it or leave it.

And what you get there with your sellers is you get a lot of resistance. In more times than probably should be, you end up with no deal. And this is where the majority of the people, the real estate investors, they operate from. And they get a lot of resistance from the seller, ultimately ending up a no deal. You can make money here, but it's difficult. It's a good recipe for burnout. So there's another way you can go about this. So if you have bad cop at one end of the spectrum, you've got good cop at the other end, right? You are the problem solver. You are there to help them just like a good cop would, right? And then the bad cop in this scenario is going to be the market. You're going to make the market the bad cop. You are going to be the good cop and align yourself

with the seller. Why are you making the market the bad cop? Well, ultimately, the market. The market is what controls the value of the house. Nobody else has control over that. Only the market conditions do. So you're going to blame everything on the market because you don't have any control over it. The seller doesn't have any control over it. So make it the market the bad cop. And as long as you can both get what you want, as long as the bad cop doesn't get in the way, you the good cop are going to help the seller get what they want in return you get what you want also. Okay? That's the other end of the spectrum, being the good cop. So if the way that the price in terms are presented is the buyer's idea at the other end of the spectrum there would be the seller's idea

because when it's your idea as the buyer the seller doubts the seller resists right when the offer the price and terms is the seller's idea is their idea of course they're going to be more agreeable to that okay so this is where most people operate the next portion of the population of real estate investors out there operate from this quadrant up here and typically it's going to be your brand new real estate investors or your investors that have been in a little bit of a drought, a little bit of a slump. And so they're really looking for that next deal. And what they do is they'll go out and they'll meet with sellers and they'll come across one that actually is willing to sell their house to them.

But it's still, it's the seller's idea. And they're out there trying to get it as cheaply as they possibly can. But just because the seller is willing to do it, they go ahead and they take it. So it's the seller's idea. And what you get there from the seller is you get essentially a boss. In this scenario, in this quadrant, the seller is in control. They're control on the show. And what your transactions up here, sometimes they turn out okay.

Sometimes the seller will have an idea of a deep enough discount for their property that it will pan out. And you will be able to exit this in a good way. Other scenarios, the market may bail you out. But a lot of times it can be a real struggle. And you go back and forth and you go in these really long transactions. And the seller's upset. Why haven't you sold the house? or why haven't you bought the house? Why haven't you closed yet? I don't want to do a price reduction.

And you get into these arguments. So it can be a real struggle. The transaction is going to be a real struggle. Now, the other way to do this or the third way is over here in this quadrant where people like the idea of getting into real estate as being a place from service. They want to help people with their problems. They want to do good and they want to make money doing it. So they sign up. I'm going to be a problem solver. I'm going to help the seller. And they take on this role, but they don't really have the skill or the experience or the knowledge and how to present the price and terms so that the seller thinks it's their idea. So it's still the buyer's ID in this scenario. And because you're the good cop, the seller likes you.

They want to work with you. But because you came up with the price and terms, they've got doubts, right? You're dealing with a doubtful seller. And what happens in those transactions because they've got the doubts, they've got concerns, they've got lots of questions. these transactions go slowly. They go slow. Now, the way the true rock stars do this and the way the people that make the most money

and they do it in the most enjoyable fashion is they're positioned themselves as the good cop, being the problem solver, and they present their price in terms so that the seller thinks it's their idea. And when the seller thinks it's their idea, they're much more cooperative. You get cooperative sellers

and you get easy transactions. So look at this quadrant and think about your last deal that didn't pan out. And, you know, whether you're envisioning the house or you're envisioning the street address, or maybe you can even see the seller's face, the last one that didn't work out, most likely which quadrant were you operating from? So if you can identify which quadrant that was in, then you've got an idea of what there is to do the next time so you can avoid that. situation or at least minimize those occurrences. So now, when it's time to actually present your

offer, it might sound something like this. And pay attention to the wordy because they're very intentional. So it might go, Mr. Seller, based on the market conditions, what you shared with me about the condition of the property. And after carving out a small profit for myself, what you're saying is we're right around $100,000. Is that right? So did you catch that? In that wording, you based your offer on the market. You made the market the bad guy. And then what the seller shared with you about the condition of the property. So that was all their idea because they gave that stuff to you. And you worded it. So what you're saying, Mr. Seller, Mrs. Seller, we're right around $100,000. Is that right? See, your offer is based off the market conditions and everything that the seller told you.

It's their idea. The market was the bad guy. Then, after you ask, is that right? Now it's time of you just be quiet. Wait for their response. I mean, don't open your mouth until they do. I don't care how uncomfortable it gets. Don't make a peep until they respond. So the first one that talks here is the one that loses. So don't say anything until they do. Now, With this, we've just begun to scratch the surface, but that's the gist. That's how you do it. See you next week. Take it.