The Science of Flipping - Episode 70: Top 6 Ways To Close A Motivated Seller

Episode Date: June 30, 2016

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Welcome to the Science of Flipping Podcast. I'm your host, Justin Colby. What is up, everybody, and welcome back to the Science of Flipping Podcast. I am your host, Justin Colby, and as always, it is my pleasure to bring you episode number 70. My co-host, again, is out of town with family. Kent Clothier is out. I think he's in Florida right now enjoying some Florida sun and orange juice and things like that, probably a little vodka in that orange juice, just enjoying himself on the

beaches. Today, guys, I'm excited to bring another podcast, The Science of Flipping. If this is your first time at The Science of Flipping, I would really encourage you to get over to the website, thescienceofflipping.com. We have our free e-book that I really encourage you to get. It is the 15 most costly mistakes real estate investors are making today. It is absolutely free. It is put together by myself and several other of some renowned investors that you might know of, including Kent himself, Sean Terry, Cody Sperber, and others that we've found commonalities in mistakes people make and that we've made ourselves. And so make sure it's absolutely free. Get over there and download the free ebook, The 15 Most Costly Mistakes Investors Make. Again, if this is your

first time, welcome. This podcast is 100% about showing you systems, processes, tools to implement in your business so that you can live the life that you dream of. Like Kent Clothier on the beaches of Florida pounding some vodka and lemonades or whatever he likes to drink and enjoying time with his family and just really being a family man is what he enjoys. So this is all about helping you guys systemize your business, whether it's the fix and flip business, the wholesaling business, the developing business,

real estate in general. I'm here and Kent's here always to get you guys up to date with what's currently active, what's going on, things that you can use in your business today from how to find more sellers to how to find money to how to close more sellers, to how to find money, to how to close more deals, you name it, how to systemize your development, how to systemize the rehabs

that you might be doing, how to structure payments and scheduling payment, you name it, right? And so today, guys, I'm going to talk about sales and the importance in sales and very specifically the fact that as wholesalers and real estate investors, it is most important for us to get our own deals. Can you find deals at the auction? Yes. Can you buy deals from the MLS and realtors? Yes.

But where we make the most of our money is simply when we go directly to the seller. And so this episode of the science of flipping is gonna be about five, I think I have five, six. I wrote down six, what's up? We have six closes that we use that are instrumental in us getting deals. And so for those of you that are listening on iTunes, there is also a video component

that you can just go straight over to YouTube at and see me live recording this episode. So you go to YouTube, look me up, Justin Colby, and you can actually watch the video. If that doesn't work, then the scienceofflipping.com actually has each and every episode on there as well that has both the video component and the audio component. So we are surrounding you with content no matter where you go, whether it's video, audio, you can get it multiple places. So again, YouTube, iTunes, and the scienceofflipping.com. I think one of the things that I've really been focusing on and what's changed our business model greatly is this component or this idea of really being in sales and marketing. As a fix and flipper by nature, and then I've turned into a full-time wholesaler.

And in between those two business models, we were developing 79 townhomes, which we actually ended up selling off. We built all 22 of them and then just sold them and sold off the piece of land, the remaining piece of land, and got back to what we like to do best. It turned out to be a little bit of a headache, chasing cats, so on and so forth. We got back into just strictly real estate investing in terms of fix and flipping and wholesaling. Now, the majority of our business right now, quite frankly, is wholesaling. The paychecks come in hot and heavy. They come in

steadily. There's current cashflow. This is the model that we really believe is going to be able to help us stack some cash. So when the market does turn, which that's to anyone's guess, we're going to be out there buying as many rental properties and portfolios as we possibly can. So I'm going to stick to the wholesaling side. I'm going to stick to talking about sales today. And very importantly, the six closes, the six closes, right? And let's start with the first close, which I'm going to call, and some of these have been known, right? If you've ever studied sales, negotiation, persuasion, communication, some of these names are known. Some of them I've put a name to it because I have a certain style that we like to use.

And this is stuff we're actively using in our business today, right? I'm a very real investor. We do deals each and every day, each and every week, and each and every month. So I'm telling you exactly what is working. Write it down. Relisten to it. Save it. This is stuff that works each and every day.

We just had our mastermind, Kent Clothier, Sean, Terry, and myself run a mastermind. We had two back-to-back, actually. And since leaving there a week ago, all the way up to now, we have contracted seven deals and have sold six in the last week. So guys, this is stuff that we are currently doing. This is stuff that we are currently working on and utilizing. So listen up. This is great knowledge. So the first close that I want to talk to you about is what I call the if and then close, right? If I could dot, dot, dot, then would you, right? That's the idea behind it, right? And so it can be used in many forms and many fashions, right? So a simple way of saying this close would be, if I could make this the perfect transition for you, then would you be able to sign this agreement right here?

If I could give you everything that you wanted, then would you be able to move forward today? If I could make this seamless for you, then would you be able to sign this agreement? If I could get you the price that you want, then would you be able to sign the agreement right now? If I could find you a home to buy, then would you be able to sign this agreement contingent on that home? I mean, you can literally use it so many ways. I was just coming off the top of my head with examples of deals that we're doing. It is the if, then,

close. If, then, if I could help you move all of your furniture, then can we move forward today and open escrow? If, then, and write these out. Practice them. Get in the mirror. Rehearse them. As you are going through these deals and negotiating with sellers and walking properties and trying to purchase their homes, these are ways that you can get them to sign on the dotted line. Again, you need to come from the perspective that you're really in the marketing and sales business and you got to take that perspective and to understand that the better you are at these, the better you're going to be able to get more deals, right? The better chances you have.

I would also say all of these closes are done face to face. If you are an investor or a wholesaler who is wholesaling virtually or investing virtually or possibly even investing with homeowners who are absentee homeowners, people who own property out of state, then these can slightly change. There could be a variance. However, I'm really focusing on the majority of you who tend to be investors who focus on properties in their own backyard. So really, these all should be used face-to-face so that you don't, or they can be most effective, right? That's how you really should use them. They all should be used face-to-face so that you don't, or they can be most effective, right?

That's how you really should use them. They all can be used over the phone. So I'm not saying don't use them if you're virtually wholesaling. I'm just simply saying I'm really focusing this content as if you guys are in your own backyard and you're meeting with sellers. So the first close is the if-then close. The second close would be the option close, right? You're gonna give them the option.

In a deal that we're currently doing, we just got done this week, out of the seven deals, how my acquisition manager handled that was saying, he basically approached a seller saying, so I have two options for you. I know right now I can pay $95,000 for this property as long as you're able to close by July 30th. If you need more time, then I'm able and willing to pay $90,000 if you close by the end of August. Which one would you like to do? You have two

choices. Pick one and we can go ahead and move forward. And the reason why you use that is you give them an option, right? And obviously, you were able to go to 95 in August more often than not. Maybe you weren't. But the idea here is the argument that he made to the seller as we had our morning meeting was, it's an election year. You know, I only have so much money. I definitely don't want to extend myself too far. Who knows what's going to happen here as the year is finishing up and who knows who's going to be the president. I just don't really

want to put myself in that position to buy a home and be into a home, you know, moving into that time of year. So listen, I know where my money's at. I know what I can do. And if we can purchase this before July is over, I'm happy to pay you $95,000. If we need to move into August, I think I need a little bit more room. I'm not sure, obviously, if I'm looking to resell this property and I'm going to resell it after I fix it up and I'm going to resell it towards the holidays, then I think I'm putting myself a little bit more risk. So that extra 30 days really does quite mean a lot to me. And quite frankly, I'm happy to give you the 90. I have the extra money now.

So hopefully that incentivizes you and helps me because I feel a little bit more protected with this time of year. So what choice would you like? You give them the option. I call it the option close. There's other versions of the option close where you could say, I can offer you this number, cash close seven days. I can offer you this number, seller carry back and or wrap opportunity. And that could be another option you give them. I'll give you more money cash closed seven days. I'll give you, or I'm sorry, less money cash closed seven days. I will give you more money seller carryback close when the balloon payment is over and I'll assume the note. So that would be another version of the option close. The third close is the urgency close.

Sense urgency close, fear of loss close. Both of those somewhat are interchangeable, right? And so the way we actively use that is, Mr. Seller, Mr. or Mrs. Seller, here's the thing, I can make this offer right now, right here, because I know I have the money to do so, but I'm looking to buy a home before this month is over. It is the 29th today.

I basically have today and tomorrow to allocate my money to a property. I know I can do it now. I can't guarantee I'm gonna do it tomorrow because honestly, I'm going to see three other homes today, and I know the money's there right now. I can't guarantee I'm going to do it tomorrow because honestly, I'm going to see three other homes today and I know the money is there right now. So I want the home. You want to sell the home. Let me do this for you. Let me be solution oriented and fill this so that you can move where you want to move. I can lock up my money and allocate it for this property and everyone wins. So take it or leave it, but I need to know exactly where my money's going before the end of business

tomorrow. So why don't we do this now? Because I have three more properties I'm seeing today. So one of these properties I'm going to buy, I like your home, you like me, let's go ahead and let's do this. So that is the urgency close, sense of urgency, fear of loss close. We also have the Columbo close, right? And I don't know if it's officially the Columbo close, but if you've ever studied sales or purchased anyone's courses or read any books,

I'm sure there's other titles to it, but it's the clothes that is famous because Colombo would use it in his strategy when speaking with people is you kind of feel like you're defeated and you couldn't get the deal done. You're about to walk out the door and you've used every strategy that you know and you throw your hand on the door and you just say, one more thing, Mr. Seller, if I could get the price you want today and help you move, can we get this done today and open up escrow? You give them this one more thing line. I think it might even be named in books or online in courses, the one more thing, Colombo Close. I've seen it named different things I'm just gonna call it

the Colombo clothes my good friend Sean Terry calls it the Colombo clode but but basically it's you're you're right out the door you are ready you are gone you put your hand on the doorknob and you say mr. seller one more thing you know what was the main reason that this didn't get done today? One more thing. If I could get this all wrapped up today, and this is using a combination of strategies, if I could get this all wrapped up for you today, can we move forward? Or if I could find you a home, can we move forward? Or what part of this whole process had you say no? Or what part of this whole thing weren't you comfortable with?

I guess is a better way of saying that, right? It's a Columbo close. You're just your last shot before you walk out of the door. Keep them engaged and make them open up. What part of this whole day, what part of this whole time made you feel uncomfortable? Or what could I have done to help you move forward and open up escrow today? That's the Colombo close. The feel, felt, found close.

I think anyone who's ever been in sales, anyone who's learned about persuasion, negotiation, or sales in general has heard about this one. This is well known. You feel, you you felt and you found so for example you would say something like mr. seller you know I completely understand how you feel making such a big decision like this I myself too have felt a very similar way when making these big decisions. However, what we have found is the majority of our clientele realize this is such a great opportunity because we not only are

closing quick, you also no longer have to pay a realtor commission. So it's a feel, felt, found. So Mr. Seller, I understand how you feel. So you're agreeing. I understand how you feel. I too have felt this way making big decisions. We have found that our clientele doing over 400 deals or all of the sellers that we talked to have found that we were the right buyer for their property because of X, right? Feel, felt, found. This is where you want to relate to them, right? Show empathy, okay? And then lastly, number six, number six, uh, is what I call the benefit close, right? Um, and this, this is something that I kind of just termed, but you know, it's, it's a lot more of a, what are the benefits of working with you? And so when you're kind of feeling like this is, this is the time that I got to close this deal is,

you know, everything sounds good to you, right? You know, is closing times right? Price seems to be pretty good. You know, but before we finish this up, have I talked to you about the benefits of what else we can actually offer about helping you move, finding a new home? This is where they seem to be teeter-tottering, right? I call it the benefit close. What are the benefits? What solutions do we provide them? Listen, the reason why you want to go with me, Mr. Seller, is because

I'm the guy, right? I am it. I know I will perform on this deal. So did we talk about the other benefits that we also can provide? Not just the saving money on commissions, saving money on closing costs, but we can help you move. We could possibly give you some money up front to get a U-Haul. There's a lot of different benefits working with us.

If you don't feel like you wanna take the rest of this stuff, we're happy to take it for you and bring it to goodwill or trash it out ourselves. These are our benefits, right? So that is another close that you want to use and be direct with them when trying to get them to sign. If we can provide these benefits for you, can we get this done today? Let's do this, right? Those are the six closes we actively use almost day to day, guys. I mean, almost every single deal, one of these closes is being used. Now there's

so many different closes. I'll tell you a book that I had our guys read for those that are visual, you know, you're watching the video. It's called the closers survival guide by Grant Cardone. That's just one of so many books that you could go by. It's the most recent one I bought. There's so many, but the reason why I like that book is he actually kind of has a workbook in the back of it. And you can take, they're not all closes for real estate. Some of them are for product and they don't really pertain. Some of them are for home loans and they don't really pertain, but there's a lot of very good closes. Feel, felt, found was in there. There's another close called the scale from one to 10,

right? Which would go something similar, like on a scale to one to 10, how comfortable are you moving forward today? And they say, well, I'm at a five or six. And you would simply reply, okay, what would make that a 10 and let them speak and shut up, right? All of these closes, once you go for the close, you gotta be quiet. That's part of the secret of being a good closer is you gotta shut the hell up, man. And you gotta do that because then they open up to you.

That's the point here, right? So again, the six, and I'll give them back to you, but is the if then, right? If I can help you move, then would you be able to sign on the dotted line today and get this done, right? The if then. The option close. So I'm going to give you two options. I can give you a cash offer of $95,000 today as long as it closes by the end of July, and or we can offer you $90,000 if we have to close by the end of July and or we can offer you $90,000 if we have to close by the end of August right that way you obviously are incentivizing them to get

this deal done quick obviously 95 is a comfortable number for me you're just giving them two options the urgency closed the fear of loss close hey listen I need to make sure that I allocate my money for a deal I have three other deals today that I'm looking at I I'm going to buy one of them. My offer to you is here. You like me. I like you. I really love this house.

I would love to buy this house. But honestly, if you can't make a decision right now, then I got to go see these other houses. I'm going to buy one of them. So I only have enough money to buy one deal. I would like to buy yours. So why don't we just get this done now? Because if you pass, then I go see another home. I'm going to buy it if I like it, right? So let's get this done now because I only have enough money to buy one. Fear of loss, sense of urgency.

Colombo close. You feel like you can't get them to sign today. You go walk to the door, you grab that door handle and say, one more thing, Mr. Seller. What in the perfect scenario for you does need to happen for you to sell your home to me today? In the perfect scenario. One more thing, Mr. Seller. What was the main thing that made you uncomfortable so that we didn't get this deal done today? That's how you approach the Colombo close. The feel, felt, found. I understand how you feel. I myself too have felt that way when making big decisions and we have found with dealing with over 400 customers that they tend to love selling to us

because we provide this. Feel, felt, found. Number six I wrote down was the benefit close, forgotten benefit. So as you're in the kind of the middle of the clothes, they seem to be hemming and hawing. You say, listen, did I forget to mention to you the added benefit of working with us? We can potentially help you move. We can get you a U-Haul. We can potentially get you a U-Haul. We could help you find another property. We can help you move the furniture and or trash out the furniture. You don't need to

worry about it. Obviously, the benefit where there's no sales commissions, there's no closing costs. Those are the obvious benefits, but they don't know the other benefits, right? And then I just mentioned one that isn't written down for me to talk about, but the one to 10, on a scale of one to 10, how comfortable are you moving forward today? They say five, six, or seven. You say, okay, what would make that a 10? And then shut up and they'll open up to you, right? So those are very impactful closes, guys. You need to be using these every time you're speaking with a seller.

A version of them, right? Write them out. Get the book, Closure Survival Guide. Go online. As basic as going on Google and saying, what are some top 10 closes? What are top 10 closing lines? Just start writing them down and rehearsing them, and that'll help you.

That's what I got for you on this episode. This is our 70th episode. We have been doing this. I have been doing this for a very long time, and I love giving back, and I get a bunch of questions. Love to answer questions. If you haven't gotten that ebook, make sure to get it. It is absolutely free. And I look forward to seeing you guys on the next episode of the science and flipping. That is all for me. I'm signing off. Peace out.