The Titanium Vault hosted by RJ Bates III

Seller Psychology Mastery | Wholesaling Real Estate

• RJ Bates III • Episode 555

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If you’re new to my channel my name is RJ Bates III. Myself and my partner Cassi DeHaas are the founders of Titanium Investments.

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Speaker 1:

Let's get into the seller psychology mastery, all right. So the first problem that we're gonna talk about is what happens when a seller gets cold feet after signing the contract. Now, this is one of the worst circumstances, right? Because, honestly, you cannot force a seller to sell their property. Now, there are protection tools and elements, like a memorandum of contract, but, realistically, as more and more wholesale regulations come down, like states like Oregon and Pennsylvania, and I've seen some of the other ones come down the pipeline where sellers really have no recourse whatsoever Actually, the buyers have no recourse Us against the seller if they decide they no longer want to sell the property. So this is where those shady closing techniques are going to become more and more irrelevant inside of our industry, because sellers are actually now just going to have the right to say hey, you know what? On Tuesday I wanted to sell you my property, but now, on Friday, I don't want to sell you my property, I'm terminating the contract, and it's just. It is what it is.

Speaker 1:

Now, the way that I handle this is you have to truly understand the seller's motivation and I talk about motivation and though I'm blue in the face and I'm going to keep talking about it because it is the most important element of closing deals Truly understanding and putting yourself in the seller's shoes and grasping the concept that they are selling a piece of real estate a house or a piece of land for discount. They could sell the house for more money, but they're choosing to sell it to a discount to us Because if it wasn't for a discount then they could sell it for the same price that we're going to sell it for, or even more. So at any point in time they are taking a haircut on a deal that they sell to us. So you need to understand that motivation. So if a seller does sign a contract and they come back to me and they say, hey, rj, I no longer want to move forward with this, I can point back to that motivation. Mr and Mrs Seller, the other day when we were talking, you explained to me insert motivation. These were the reasons why you were wanting to move forward with selling me that piece of real estate.

Speaker 1:

What has changed since the last time we talked? The reason why you really want to get down to is you want to make sure that they're not just wanting to sell the contract or sell their property to someone else because someone else came along and offered them more money, because then that's a completely different type of objection to overcome If it's truly they just no longer want to sell the property. So, for example, say this is an inherited property a common motivating factor for us as wholesalers. There's been a death of the family, the property has been inherited, they want to sell the property. We come along, we offer the solution, but now the family has decided we no longer want to sell this property, we want to keep it in the family. We're not the solution. At that point you should absolutely release them from that contract, allow that property to stay in the family. That is what that person, that seller, needs. Now, if they come along and it's because Joe Blow Wholesaler came along and decided they want to give the White Glove Equity Protection Program, then that's a different type of objection that you need to overcome and you need to explain the difference between going forward with you in this transaction and what that person is possibly signing up for by moving forward with the competition. So really understanding that motivation early on during the initial contract signing. And then, if the seller comes along and says I've got cold feet, I no longer want to move forward, truly identifying the reason why they're wanting to cancel this contract. Is it a legitimate reason or is it because something else came along? More than likely, it's someone that wants to offer them more money or a different solution and kind of just close them on this picture perfect scenario. So this is how I always overcome that Pointing back to that motivation, asking questions.

Speaker 1:

It's almost like a reverse of the King Closers formula where it's like, hey, I needed to understand why you wanted to sell us. Now I understand. Now I need to understand why you don't want to sell me the property, sell me on it, explain it. Now. There's going to be situations where they won't give you those responses, they won't even give you the time of day. Listen, I don't want to move forward, cancel the contract. I don't want to do this anymore.

Speaker 1:

Here's my question to you Is it worth the headache to try to salvage that deal at that point in time, or is it more important to focus your efforts on just finding the next seller that truly does want to move forward with you? So it's worth that singular conversation. Don't get lost in the weeds. We're trying to have multiple upon multiple conversations, saving a deal that doesn't need you or want you anymore, all right, the next seller psychology issue that we have to overcome and this is one of the most frequently asked objections to overcome is the multiple decision maker. All right, what happens when we're talking to the seller and then insert oh, spouse, sibling, attorney, realtor, family friend. I need to discuss this with them to move forward, all right. So this is why it's very important to make sure that you go through the closers formula.

Speaker 1:

First question that we ask are you looking to sell this property? Yes, how much are you asking for the property? We understand their asking price. We understand that. We verify that they want to sell us the property. Then we discover their motivation and then we go for the close at the end, all right. So normally, this objection is going to come up towards the end. Once we've come to an agreement and we're trying to get them to sign the contract.

Speaker 1:

Now insert this multiple decision maker. Right, that comes along Questions that you need to ask All right, you want to discuss this with the other party? What happens if that party doesn't want to move forward with the transaction? What are you going to do? Is that person ultimately the decision maker? If so, can I have the opportunity to discuss this directly with that other decision maker. What happens if you guys disagree? Say, you want to move forward and your wife, your sibling, the realtor, the attorney, says no, who really is making the decision here? Because ultimately, there can only be one decision maker. So, really understanding who is that true decision maker?

Speaker 1:

At any point in time where there's multiple parties that are making this decision, you always want the opportunity to be able to speak to that person directly. The worst thing in the world that could happen is you go through the entire closer's formula. In the world that could happen is you go through the entire closer's formula, explain everything, come to an agreement and then rely on that person to relay the exact same information that you just gave, because, remember, they are not real estate professionals, so there's going to be questions that they cannot answer or they might not remember how you explained it exactly to that third party that is a decision maker in this process and you need to explain that to this person. Listen, I'm not trying to convince y'all to do anything. I just want to make sure I have a fair opportunity to be able to explain this to each and every person that's making a decision, and you can even point back to the original psychology that we were trying to overcome, which is getting cold feet after signing a contract. I absolutely don't want you guys to get cold feet. I want you to be completely comfortable with signing a contract with me. So I would love that opportunity to be able to explain this to your wife, your brother, your sister, the realtor, the attorney, whoever that other decision maker is. We want the opportunity to be able to speak to them. The next thing is ask this decision maker point blank is there anything that I did not explain about this process that could concern you to not want to sign the contract? Does this person have any questions and are they using another decision maker as an excuse? They using another decision maker as an excuse?

Speaker 1:

Now, there are types of people out there that are old school and, no matter what, they're not going to make a decision that same day. This is very common with the elderly. Listen the way my process works. I've lived on this earth for 75 years and I'm not going to make a decision today. I'm going to sleep on it. I'll make a decision. For example, my partner and good friend, nick Robbins. He does not make any important decisions after a certain time in the day. Now he says 5 pm. I'm going to call bullshit on that. Sometimes it's 4, 3, 2 pm, all right, he likes to sleep on it and then make a decision in the morning. That's just his process and it served him well.

Speaker 1:

Same things happen with sellers. You have to be understanding of their process, how they're really digesting this, what somewhat emotional experience can be, and make sure you don't step on their feet and try to convince them to do something that's out of the norm, because it can push them into that first bucket, which is getting cold feet after they sign a contract. The third one emotional hijacking a conversation. All right, this is where sellers get emotional. They derail the logical conversation that we're trying to have. Sometimes they can get, you know, they could cry about maybe a death or something that happened with the property. Maybe they can even get angry right, and you guys have seen this with my seller calls where it's been all over the place, pointing back to specific examples of where I spoke to the young lady in Alabama whose husband was murdered in a mass shooting and she needed to get rid of her property because she built it and lived there with her husband, and so she could not move on from this traumatic event. That was a very emotional conversation where there was tears and there was a lot of emotions going through her about selling her and her husband's property. Similar circumstance was the brother who called me in Fairbanks Alaska, who called me in Fairbanks Alaska, whose brother that I was speaking to and I made the offer to, was murdered outside of a bar in Fairbanks Alaska Again very emotional.

Speaker 1:

Going to the other side of things, when a seller can be extremely angry, sometimes we ask a question, it triggers them. Maybe they're just angry about the whole situation that they're in. Sometimes the anger might not even be pointed towards you To be pointed towards the county that's trying to foreclose on the property because of back taxes or the mortgage company that screwed them over that loan modification, and they're super upset. They're even facing foreclosure. There's a lot of different scenarios. One thing that I want you to understand is sit back and be patient. Allow the emotions to run their course during the call.

Speaker 1:

One of the worst things that you can do during this is interrupt and make the seller feel like they're not being heard, and this is a massive mistake that the majority of our industry makes point blank is not listening enough. Allow a seller to get to the end of their thought and give them even more time, because maybe they're still not done composing themselves to express everything that they need. So really sit back, allow them to express all of these emotions and, when that's done, give them understanding, give them empathy about their situation. Validate that you've heard everything that they've said. I'm so sorry about this situation. I wish that you didn't have to go through this. What I can say is, in regards to the real estate, I can be a solution, and maybe that's a small victory for you, considering everything that you had to go through. Now you've transitioned back to talking about the real estate, but they feel validated in the fact that you have heard what they've said.

Speaker 1:

It's a difficult conversation, and what I will tell you is anytime you have a very highly emotional conversation with a seller, immediately following that you should take time to decompress yourself. It is alarming how much these types of conversations can take a toll on someone that is doing hours upon hours of acquisitions. So don't get lost. Don't feel like you need to just keep beating the phones, because you need to be present for each and every one of your seller conversations. Case in point. There's nothing that promises that the emotional seller that I talk about about her husband getting murdered in a mass shooting at his job is not followed by the angry seller who's upset with the mortgage company who is stealing their property now. Now it's going to be really hard for us to shift from the emotions of dealing with someone's husband who's murdered to now dealing with someone that's upset about financial distress and a mortgage company. So you need to make sure that you yourself decompress so you can be 100% present during each of these conversations to make sure that you're listening, you're not interrupting, you understand their situation, you can show the empathy that is needed and then solve their problem by buying their real estate. That is how you deal with these types of highly emotional conversations, realistically coming out of them, what you should realize is that for the vast majority of the beginning of the call, you do next to zero talking. It's just listening, and then, when it's your opportunity, you make sure that you validate that you've heard what they say. You show them that empathy and then offer the solution. You might have to do that multiple times during the conversation, but if you do that, what I've experienced is, more often than not, you will see success.

Speaker 1:

The next one oh, this is a popular one, especially with the discounted PPL leads cold calling, direct mail. What happens with the competition? Oh, other wholesalers are calling me. I've been called by so many of you guys. Just make me an offer. All right, listen, defeating the competition in the wholesaling industry is not very difficult, as much as it might seem like it is right now. Because you're missing out on deals. It's probably because that other wholesaler is overpaid. That does not mean that you don't know what you're doing or you're being defeated by your competition. It's just a temporary setback. All right, I posted a live seller call yesterday on directly how I defeated my competition.

Speaker 1:

Here's the question that you should always to close the deal. Me and Teresa came to an agreement on price. Then she lets me know that she has two set appointments with the competition. I asked her a point-based question Is there something that my competitors are offering you or could offer you that I am not? Now see, this is a very broad, open-ended question. It has nothing to do with money. It has to do with is there something that they are giving you that could solve your problem better than what I believed I was doing with the offer I just gave you.

Speaker 1:

Now, this is very important because a lot of times we point everything back to money. We always think that whoever offers the most amount of money is going to win the deal. But that's not the case. That's us sitting in our seats as the real estate professionals and believing that money is the most important thing to each and every seller, and that's not the case. Sometimes it's the convenience, sometimes it's the timeline. Sometimes it's the convenience, sometimes it's the timeline. Sometimes it's also the willingness to just sit back and be very, very lenient on the time frame in which we are going to close. Now we set a closing date for on or before 90 days, but if it ends up being 180 days, that is completely okay.

Speaker 1:

And Teresa knows that, and I know that that was discovered during the motivation phase, asking her what is truly most important about this deal, and it was understanding her situation. So, in turn, what happened? I made her an offer. I made her an offer of $55,000 when she was asking $60,000. We settled on $57,250. I'm sorry, chris Voss, I split the difference. All right. I believe we can do that, especially when it's a deal. $60,000 was a deal. $57,250 is a better deal for me, so we settled on that price.

Speaker 1:

The competition then came along after me with their set appointment and offered more money to Teresa, but she decided to move forward with us for less money, and the reason why is because of the convenience and the understanding of her situation. This is one of the ways that you defeat the competition, but really, ultimately, the best way that you can defeat the competition is by point blank asking the seller what is the competition potentially offering you that I'm not? Ask that question and really sit back. Sometimes the answer will be well, they might offer me more money, and that might be the case. That might be the most important thing to that seller. But if you've asked the right questions earlier on, you will also understand all of the other motivating factors that the seller has, and you should point to each and every one of those and how you are solving those better than they will, and then that's where you can ask so what's more important? An extra one, two, three, $5,000 or making sure that these items also get taken care of? At the end of the day, I want you to understand our competition sucks. They suck real bad.

Speaker 1:

I just go watch videos on YouTube of listening to other wholesalers talk to sellers, some with big followings. They're very proud of these closings. When you really truly listen to them, they're not solid conversations. Very rarely are they really listening to the seller's needs. They're just fitting it inside of their script and their blueprint, trying to do the exact same thing over and over and over again. So understand that these are people with followings and putting it out on social media. Think about all of the thousands of people that are sitting back, that are not trained, that do not do this at a high volume level and don't have skill sets developed yet, that are attempting to close these exact same deals. These sellers that are getting cold called and direct mail over and over and over again. The reason why they're responding negatively is because they're not enjoying these conversations. If they're truly motivated to sell this property and they need us as a solution, they would have sold their property to the first couple of people that came along and offered them the right amount of money and solved their problem. So understand when they say oh, I've been getting a ton of calls from you guys, that's not a bad thing, that's a great thing.

Speaker 1:

I tell each and every seller when they say that, well, this is going to be the last one you have, because I'm going to buy your house, let's get down to what I need to do to buy your house right now. It immediately breaks the ice. It's a little bit humorous, but I'm also dead serious when I say that I plan on being your last conversation that you're going to have with any wholesaler. So let's get down to it. How much money do you need? What else is important to you? What's your motivation for wanting to sell? What's your timeline? Give me the details that I need and let's talk about what I actually need you to sell me the property for, so I can solve each and every one of your problems. So, going forward, don't look at oh, you're just another wholesaler, you're just another real estate investor. Look at it as a massive opportunity to crush your competition. All right, let's talk about another very common one that comes along simultaneously sometimes to oh. I've talked to so many of you guys which is the lack of trust because the seller has been burned by another real estate investor or another wholesaler previously. Now, if this happens, what a absolutely glorious opportunity it is for you to build credibility with the seller and stand out from the competition.

Speaker 1:

One thing that is obvious, especially if they use the legitimate term of wholesaler, is now they understand the process. We don't really have to explain it in layman's terms, we can just go right after Okay, so another wholesaler locked up your property and they weren't able to move it, so then they burned you and they terminated the deal. Let's talk about that. One this could mean that you were selling the property for too much. Two how did they explain that they were going to wholesale the property to you? Did they explain what they were doing to wholesale the property? How long did they have the property under contract for? Do you know what price they were trying to assign their equitable interest for? You're suddenly now with those five simple questions. You're suddenly now, with those five simple questions, building credibility as the real estate expert and understanding what's taking place.

Speaker 1:

So one of the things I love to get out of a seller is the price in which the wholesaler had it under contract for, because typically, if it's a deal and you're even a half-ass wholesaler you should be able to disvote Somewhere. Especially with the software that exists nowadays, you should be able to at least identify a buyer that will come along and make you an offer. So did the wholesaler try to renegotiate the price? Did they try to extend? What was the explanation that they gave you prior to terminating the contract?

Speaker 1:

All of these questions are vitally important because once you get the responses, you can now dive in and say let's see if, using the exact same process as that competitor who burned you and terminated this contract, maybe I can solve your problem. Maybe I can see where they messed up. And this is where utilizing our profit calculator can be enormous, right, all right. Well, mr and Mrs Seller, what I'm looking at is you have an after repair value of $150,000. How much repairs do we need? $30,000. All right, and you're saying that that wholesaler had it on a contract for $80,000 and they were trying to assign it for $90,000. If I were to do that, my end buyer only stands to make X amount of profit. Maybe that's the reason why this deal wasn't moving. Once you give that explanation, you have now explained more than what that other wholesaler probably ever attempted.

Speaker 1:

They probably came in with lies, manipulation and saying something along the lines of I needed a lower price because of my lender or my partner or the contractor bid came in too high and they weren't transparent and real about what was going on. This is how you can win over and over and over again and honestly stand out from the competition, because so few people in this industry are willing to have that actual conversation. This is the buyer's feedback. Mr and Mrs Seller, here's what we can do. If I were to get this under contract right now for $70,000 and I were to market it for $80,000, I can get buyer feedback. I can get offers from buyers and then tell you what that is. I'm going to know what an investor is willing to pay for this property. So if that's what you truly need, then I can offer that to you and then we can make a decision together. Here's what I would want. For that, I would want to make $10,000 or $12,000. Whatever that number is should be relative to the price point of the property, and once you explain that, that's your opportunity to then have a completely transparent transaction with the seller. Now this is going to become more and more necessary and mandatory for all wholesalers. As we see, regulations like Oregon come down on wholesalers that are making you register as a registered residential wholesaler. They're making you get background checks. They're making you do fingerprints. They're making you pay $300 annually. They're making you fill out a disclosure with a seller and the buyer. All this is saying is we want transparency, so it's going to become more and more common that we're going to have to have this conversation. So go ahead and get out in front of the curve and start having those types of conversations and leverage the weak-ass competition against themselves. Anytime I hear I've been burned by a wholesaler, I know I'm closing this deal. This is not something that should hold me back from closing this deal, because I can now have a completely transparent and forthright conversation with this seller.

Speaker 1:

All right, let's talk about the seller, self-destruction Sellers sabotaging their own deals with unrealistic expectations. Now, this one is a little bit more difficult to overcome than some of the previous ones that we talked about, because this is where a seller just is in outer space. Unrealistic right. I want 10% non-refundable EMD. I want no inspection period. I want a lot more money for my house. I want a 90-day lease back with no money held in escrow these ridiculous requests.

Speaker 1:

Here's what I ask each and every seller when they have these unrealistic expectations. If you were to take this property on the market and list it with a realtor. If you were to take this property on the market and list it with a realtor, do you think you would get these exact same unrealistic expectations? The answer is no. More often than not, retail transactions have pretty cut and dry, normal circumstances. Right, there's going to be an inspection period. It's probably going to be seven to 10 days.

Speaker 1:

Emd is going to be refundable during the inspection period, non-refundable after the inspection period. It's probably going to be seven to 10 days. Emd is going to be refundable during the inspection period, non-refundable after the inspection period. It's probably going to be closer to 1%, not 10%. A 90-day leaseback with no money held in escrow is not going to happen. The realtors involved would not be doing their fiduciary duty for their clients involved would not be doing their fiduciary duty for their clients. These are all easily overcome. So you just combat it with what happens during a normal retail transaction. Now we're dealing with normally a distressed property. So why? Because it's a distressed property when it probably needs even more due diligence done to truly understand what's going on with the property and to also solve all of the other seller's problems? Why would we not protect ourselves in this transaction If the seller is not willing to meet you on that level, then my question to you is why would you want to be in a short-term marriage with that seller? You should probably move on to the next one and embrace. No, the next one.

Speaker 1:

Seller, timeline manipulation, right. What happens when a seller says I want to wait six months to sell, or well, I've got to find another property and I need 90 to 120 days to figure out where I'm going to move to? We've all had those conversations and sometimes it's extremely frustrating. Here's how I immediately cut straight through that objection All right, so you need six months. What do you need during those six months? Hear what it is and say, all right, so you need six months. What do you need during those six months? Hear what it is and say all right. So my question is if we were to just put the closing date out for on or before six months, to allow you to do all of those things you just said you needed to do, wouldn't it give you peace of mind to know that the property is already sold and we're just waiting on you to accomplish those actions? Very similar. Going back to Teresa, yes, I had to beat the competition, but part of beating the competition was timeline. She needed 90 to 120 days.

Speaker 1:

A lot of wholesalers look at that and say I'm not going to contract it right now, I'll wait until you're 30 days out. No Time kills all deals, especially when we don't have any interest in the deal. Them filling out a form or you swiping your credit card on Property Leads or Leadsolo or Speed to Leads website does not give you interest in that deal. You having a conversation with the seller gives you no interest in that deal. You getting a signed contract, however, does it gets us our foot in the door and we understand where we stand in this transaction. We can begin doing our recon and even begin doing dispositions. So overcome that by saying one of the things that we offer is convenience, convenience on timeline. I don't need to close in any specific time frame. So whatever time frame you need, we can put the closing date down for that and close when you're ready, maybe even before the time frame you're anticipating today.

Speaker 1:

The last one is the seller fortress. What happens when the seller will not give me key information? I need? This is when you say well, tell me a little bit about what you got going on. They go well. What do you mean by that? You know I got a 3,200 square feet house. You know it's a good house. It's on a quarter lot. Well, what do you need to know? Why don't you come out here and look at it? Make me an offer?

Speaker 1:

I tell each and every seller when they do that. Well, I just asked you how much you wanted for the house. You gave me a price. Say it's $200,000. You want me to strike you a check $200,000. I asked you to tell me what's going on with the house and you say what do you need to know? Here's what I need to know. I need to know the condition. I need to know your timeline. I need to know the occupancy. I need to know why you're wanting to sell the property. I need to know why $200,000 is the price you came up with, why that's important, how much money you need to walk away and also, quite frankly, I want you to sell me on the house. Tell me why I should give you $200,000. Sit back and see how they respond to that. Here's what happens More often than not.

Speaker 1:

It shows how serious you are about the transaction and you also gave the seller your perspective. A lot of times, sellers are only thinking about things from their perspective. I want $200,000 because Zillow told me my house is worth $200,000. And last night, when I filled out this form and I went on Zillow, I told my wife Zillow says their house is worth $200,000. Being a hard ass has always worked for me when it came to negotiations, so that's why I'm being a hard ass right now. But you give them the perspective of $200,000 going to them for this house and not knowing the condition or the timeline which could be important to them, how they came up with that number, what specific amount do they need in their pocket from this transaction? That perspective change can really make a difference.

Speaker 1:

The bottom line is, if a seller is not willing to give you key information about the property, then we can't move forward. You should stand on that hill and be willing to die on it. Mr and Mrs Seller, if you're not willing to talk to me and give me key information, then I don't think we're the right fit. We're not going to be able to do business because, honestly, it's screaming like there's something wrong that you don't want to disclose to me. Facts are, if you start pulling away, if the seller is truly motivated, they will chase after you, and if they don't, then at the end of the day maybe they weren't the right seller for us, because the most important factor to each seller call is their level of motivation. So this is a great test of their motivation early on in the conversation. So those are my examples of the seller psychology. Hope you guys enjoyed that.