The Science of Flipping - Episode 68: Know who you're dealing with…

Episode Date: June 17, 2016

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Welcome to the Science of Flipping Podcast. I'm your host, Justin Colby. What is up, guys? What is up? Welcome back to the Science of Flipping Podcast. I am your coach. I am the host. I am the person that's going to be giving you the knowledge, Justin Colby. I'm excited today because I'm looking out here and as you can see behind me, for those of you that are watching it, I am down in our La Jolla, San Diego offices. So it's a great day for me. Anytime I can get out of the extreme heat of Arizona, I try to get out of the heat of Arizona. So this is going to be a great episode as I'm in a terrific mood and I have a great topic to talk about. If you have not been to the podcast before, I really encourage you to get over to the scienceofflipping.com. Download

our free ebook, The 15 Most Costly Mistakes That You Can Make As An Investor. I am actually in the middle of writing another book that I want to be able to give to you guys. I will be uploading a different book there, but right now this is a great book for you guys to understand what are the most common costly mistakes real estate investors can make in today's economy? If you are not fully aware of who I am and what my background is, I've been investing, wholesaling, and flipping homes since 2007. I am located in Scottsdale, Arizona and been flipping in Phoenix for years now. We have done everything from fixing, flipping flipping to developing 79 townhomes to

wholesaling properties. We truly are a real estate solutions company, but it wasn't all puppy dogs and rainbows as the picture that you see me now and the video you're watching now, it wasn't always the case. There was very, very tough and slim times where I was sleeping on my friend's couch and I had no money. And we literally had to do whatever it took to get our first deal or our second deal. And it took us nine months to get that first deal. So what I have learned over the last, call it eight years now, since starting real estate investing, is we have to make sure that as investors we have systems and we have

organizations and we have strategies that we can implement live in our business that work. And so this podcast is all about the strategies. They're all about organization. They're all about tools and systems that you can implement and take action today on to make you a successful investor, whether you are looking to do your first wholesale deal, looking to buy your first flip or rental property, or even start developing, this podcast is meant to be able to provide you with all of the tools and systems that we have. Now, as you guys are seeing, I am not with my new co-host Kent Clothier today. Actually, the day that we have to record these episodes, he actually has his daughter's 11th birthday.

So he was not able to make this recording. He is still my co-host. So my buddy Kent Clothier will be back next week. Today though, I'm all alone, but that's okay. We did 66 episodes with just me, so I feel comfortable doing it. So let's just jump in today as I have an awesome opportunity to talk to you about something that is kind of near and dear to my heart regarding this world of real estate investing and something that I don't believe people take serious enough within their business. And that simply is the opportunity of selling, right? And how to sell people and who are the people that you need to be talking to and negotiating and selling, right? And what you are selling is the idea that you are the best buyer of their property. Now, let me take a step back and start from the beginning.

I'm a huge advocate and I constantly teach all of our students to use direct mail as their main form of marketing. Now, what that will do is the sellers or the property owners will be contacting me or you directly based off of the marketing that you sent. So that being said, these property owners are calling you regarding selling their property to you. That is the marketing strategy that we are using. Now, in that case, you now become a salesperson, right? So one of the key concepts here is for you to understand you are not in real estate. You are in marketing and you are in sales. And because of that, you need to hone your skills on marketing and sales. Now, if we choose to make the argument that you understand how to market and to send direct mail and you understand what your marketing

piece needs to say to make them call, what call to action needs to be on your marketing piece to make them call you. Let's say that you understand that component for the time being. The next step is to understand who you are talking to, right? And so there's a lot of different studies out there and there's a lot of different personality tests, right? The disc test. There's a lot of different personality scales, right? They do like a color, personality by color, red, blue, yellow, and green. There's an A-type personality, so on and so forth, right? And so I basically, what I was able to do is pertaining to our business as real estate investors, what I wanted to really hit home with was the simplicity

of breaking down what types of sellers we can encounter, right? And I'm not going to choose to pick the red, yellow, blue, or the color schemes, or the alphabetical A-type personality, B-type personality. I'm not going there. I'm basically going to categorize the type of sellers that you're going to encounter into five different types. And these types are, you know, I coined the name, right? There's no rule or law what you want to call these types of sellers, but most of all sellers that you speak to, you're going to be able to put into this one of these five categories. And so the first I want to talk to you about is the motivated seller. Now as real estate investors and marketers and salespeople, this is what we're really looking for. Someone who has deep motivation to sell their property,

someone who understands that they're in a financial difficulty or they have so much motivation, they just need to get out of it. And there's a motivation behind that. They need, they have a motivation, right? More often than not, that motivation is going to be financial, but it's not all the time. And so as a good salesperson would be questioning them, asking them questions to find out what that motivation truly is. It might be on the surface level, it might be apparent or what you think is apparent to be one thing,

but in reality, that motivation really is over here that you would never know if you don't obviously have the proper questioning when speaking with a seller. So as we go through, obviously, this podcast, we're going to have many different episodes, but this one, I'm just simply talking about the types of sellers that you're going to encounter. I'm not going to review every type of strategy to negotiate with them, to build rapport with them, to sell them. I just want you to understand who you are encountering and maybe give you one or two options to handle that type of personality trait, that type of seller, that type of motivation or

what may be. So again, if the motivation is a key component, they have a need. A lot of times, as I said, it's going to be financial and that's great because then you can figure out where they need to be financially, what kind of money they need to put in their pocket, and you can make an offer based around that, right? So that comes down to question-based selling. What is your true motivation? And the way that as real estate investors we get the deal right is you go in and you find that out and you be honest with them and you ask the questions that you need to ask to really, it's called question-based selling, to really find where are we as far as me buying your home? Is it price? Do you like me? Do you understand the process? Do you understand the

paperwork I've given you? Right? Why can't we get this done? If you say no, where do we need to be? I'm giving you a solution to your need, to your motivation, right? Or issue. Let's get this deal done, right? That's how you need to approach that person as a real estate investor. The second type of seller that I'm going to bring up is I call like the best price seller, right? They're the negotiators. These are the guys who, uh, they want to win the deal. They want to beat you in a negotiation. They want to feel like they won, right? These would be, you know, in common sales, these are the bargain hunters, right? If you think about flea markets, if you think about people who are constantly going and trying to bargain for a deal or negotiate for a better price. These are the type of sellers who really want to make

sure they feel like they won. They got as much money out of you as possible and you need to be able to have them believe that they did and maybe they did, right? But you need to come from a place of understanding that, oh, I get it. This guy's a big negotiator, right? This guy's someone who's going to try to win and beat me. Well, let him beat you as long as it's the number that fits your model, right? Let him beat you. He is that type of personality. He has that type of motive behind selling his home. So that's another component or that's another person, that's another seller that you're going to encounter over your months and years of real estate investing. A third type of seller is going to be the fed up seller.

Totally fed up. I'm done with this. I'm over it. I don't want to be a landlord anymore. I don't want to live in this home that is constantly breaking down and I have to put a new roof on or I have to put a new AC or my water heater or this or that, I'm totally fed up. Or if it is a landlord, I don't want to deal with the leaky toilet.

I don't want to deal with complaining tenants. I don't want to deal with all this stuff, right? I'm over this. Or maybe it's a brother or a sister or a son who inherited a property and they don't care about the money. They don't, they don't, they want their family member back and they just are, they're over this whole process. They want this whole process to be done. They're in mourning. I want to just sell my home. I'm totally fed up with everything. Just give me an offer. I'm going to approve it and we're done here, right? That is a type of seller. And you're going to encounter what I call a fed up seller.

Another and fourth type of seller. Again, I'm going to give you five today. And what I'm saying on this episode is this isn't the only types of sellers there are. But these are five of the major types that you could probably funnel the rest, the outliers into probably one of these types. Knowing the type of seller, knowing the personality or the motive behind them calling you is going to be a key component for you to hone in your sales strategy and win the game. Be understanding that we are both in this for a reason. I'm an investor. You need to sell. That's why you called me. I'm going to win this game, right? So the fourth type of seller is the why not seller.

Why not, right? So this is the type of sellers like, well, yeah, I don't know. I haven't really thought about, but why not give this person a call back, right? Let's see what they have to say. Maybe I would sell. I don't know. Why not, right? That's the type of person. These are usually the people who want to know the value of their home. They want to know more information about what the market is doing.

They want to know if you're willing to give them an offer that makes sense. They want to hear about it, right? That maybe there is an opportunity for them to cash out, for them to move on. These would be the type of people, you know, in more common society outside of real estate investing that we would say are window shoppers. These are window shoppers walking up and down the street. Like I said, I'm in La Jolla, California. I'm right on La Jolla Boulevard, a block off the beach. And there's all these nice little shops, right? Jewelry shops, restaurants, juice shops, surf shops, all these little shops that people can walk up and down La Jolla Boulevard,

shopping, window shopping, right? And the why not seller is what I would consider to be a window shopper. They don't know necessarily that they wanna sell. They don't know what the numbers would be. So they're going to give you a call and they're the why not personality. Just like when window shoppers walk up and down the street and they, something, you know, pretty enough, shiny enough, drags them into the store because it got their curiosity peak. And next

thing you know, they buy something that day, right? The same idea goes with these type of why not sellers where they're not super motivated. They don't necessarily need the money, but your marketing message struck them to a point where they called to say, why not? Let's see what happens. And then those are the type of people you usually have to put in a long follow-up system, you know, and they'll talk to you about follow-up systems in further episodes and whatnot, but that's the type of person you're going to have to follow up, build a great rapport with, you know, make sure that they see the value in what you're bringing, right? The value of what you're bringing. So that's the fourth type of seller. I would say the last type of seller

is the seasonal seller. The person who usually within two to five years sells their home. Now, they might be upgrading. They might be downsizing. They might be going out of state. They're a little bit vagabondish. They like to jump around from city to city, from state to state. There are a lot of different types of reasons people sell seasonally. And when I mean seasonally, I don, I don't really mean, you know, every summer,

winter, fall. I mean, they have a habitual state of selling or buying, right? Where they do things habitually. We can talk about cars, for example. I'm kind of a habitual car driver, meaning every couple of years I buy a new car. I don't need a new car. I have a very beautiful 2012, maybe it's a 13 right now, but it's three years old. I've been driving it for two and a half years. I bought it right after it was new. Nothing wrong with it. It has every whistle that I could possibly imagine from navigation to leather seats to cooling seats to heated seats to everything. It has everything, but I'm itching to buy a new car. I'm a seasonal buyer in that sense.

I'm saying the same thing about sellers. There are sellers you are going to encounter that are seasonal sellers. Every couple years they want to move. They sell. They upgrade. They downsize. Whatever that may be.

And you need to figure out what type of motivation does that mean. Does that mean I need to have a great follow-up situation here? Which obviously, again, as I mentioned, I'm not trying to teach you exactly how to handle each and every one of these sellers. This is more about how you need to understand who you're dealing with, right? So you can attack them properly. So I would say the five, again, to repeat them, the motivational seller. They have a huge motivation. More often than not, it is financial. That is not 100% of the cases, but it usually is a financial motivation. The second one is the best

price. This is the negotiator. This is, I want the top best deal, the best offer you can possibly make. Give it to me. I want to make sure I beat you in this negotiation. Then thirdly, you have the fed up seller. They are over it. They do not want to deal with it. They're just done. Get it sold. Hurry up. I hate this house. Let me out of it. They may need to, the house might be falling apart. Maybe they inherited the property. Maybe they're going through a divorce. They are just over it and fed up. The why not seller got a good piece of mail and they figured why not give this person a call. If the number's right, if the situation's right,

maybe I'll sell and I'll go move back with my family. I'll go move back to where the rest of my family is, my grandchildren is, whatever. They're the why not give them a call and why not see if we can sell the property? And lastly, the seasonal seller. These are the people who every couple of years make a decision. Maybe it's every five years, maybe it's every 10 years, you know, whatever it is, but they do it consistently. There's a habitual routine about selling their homes or buying homes. And that's the five people you want to get in front of.

So guys, that's the five types of sellers. Again, these are kind of my coined terms for the types of sellers. You have all types of categories, colored personality types. And at the end of the day, I'm just giving you the names of the type of sellers you're going to be able to come in contact with and you need to do a good job selling, negotiating, building a rapport, and getting the deal done. Get the deal done. Have a great follow-up system. So that is what I got for you guys today. Again, if this is your first time, welcome to the Science of Flipping. If you have any questions or need anything from me, you can email me at info at the science of flipping.com. You need to get the ebook I have 15 most costly mistakes an investor can make in today's market. Go to the science of flipping.com

is absolutely free. It's a free download. No reason not to get it. Understand what not to do so that every time you do something, you know you're doing it in the right way. That being said, guys, I'm going to sign off as your host, Justin Colby, and I will see you next week with my co-host again back on the episode with Kent Clothier. We'll talk to you then. Peace.