Are You Scared To Educate The Seller? | Newer Wholesaler Mistakes

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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.

We are nationwide virtual wholesalers and on this channel we share EVERYTHING that we do inside our business. So if you’re looking to close more deals - at higher assignments - anywhere in the country… You’re in the right place.

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Chapters

• 0:00 Common Mistakes With Motivated Sellers
• 1:51 Fear of Educating on Numbers
• 5:31 Embracing No and Avoiding Friend Zone
• 8:25 Breaking Down the Education Process
• 10:11 Closing Thoughts and Call to Action

Transcript

Speaker 1: 0:10

today we're going to be talking about a couple of different mistakes newer wholesalers make in regards to acquisitions with the most common type of seller, and that is motivated but incorrect price. The first one is they don't want to educate the seller on the numbers. Now I get it. This is a little bit uncomfortable, especially if you're newer, because you probably feel like you don't have a great sense of comping and underwriting. That's a very normal skill set to be lacking in, especially when you're newer, and so when you're talking to someone that wants too much for their property, it's really difficult to dip into. Hey, this is what I'm seeing, where your house could be worth once we do this bunch of repairs, and this is how my offer got to where it is. That is how I navigate those conversations. It's how I close those deals. However, you cannot be afraid to have these conversations early on. To be honest with you, all it is is a transparent reasoning and logic behind your offer. This is why I say we don't ever want to lowball offers, because if we're lowballing sellers, that's where they get offended and they get upset, and rightfully so, because you are not logically explaining to them how you came to that number. Now, one of the worst things that you could do is not even attempt to make an offer. Now, I saw this the other day with a newer wholesaler. I was listening to one of their calls and they asked them how much do you want for the property? Tell me a little bit about what you got going on? And then when the seller said, hey, this is what I've got going on. The house is in terrible condition, but I want to get what I owe for it it basically felt like full retail to the newer wholesaler. And so instead of looking at it and determining an after repair value how much small amount of repairs would be needed to achieve that after repair value and then explain where his offer needed to come in, he just said so you're looking to get full retail. Well, if that's the case, I'm probably not a good fit for you. You should hire a realtor. I'm probably not a good fit for you. You should hire a realtor. Now, unfortunately, as I dove into this, I took a lot more time of doing due diligence and analyzing the deal, and so during the implementation call, while I was listening to this call, I was able to determine a couple of different things with the help of other to you members that the property was previously listed on the MLS. It didn't sell, but that price was higher than what his asking price was of what that mortgage payoff was. At the end of the conversation, when the TU member said, hey, go hire a realtor they had already attempted that. So that wasn't a viable solution for them. That had already been that. So that wasn't a viable solution for them. That had already been attempted. Secondly, the price wasn't full retail. It was discounted for what the after repair value of that property could have been.

Speaker 1: 3:16

But he didn't take enough time. All he heard was good condition and he got lost in the weeds of the numbers and not listening to what the seller actually was telling him. In fact the seller was screaming motivation throughout the call but what he heard was good condition, perfect condition, livable condition, world of being riddled by condition and comping and underwriting. He got lost in that and wasn't listening to that motivation coming out of the seller. So there was no education. There was a fear behind that that he didn't go into that call as I would have, where I'm hearing a ton of motivation. Let's try to solve your problem. I see you just had this list on MLS. Clearly you didn't receive any offers. Let's see if we can come up with a solution for you in your situation.

Speaker 1: 4:14

Now, when it comes to actually explaining those numbers, you're going to have to slow down, you're going to have to take your time, because the lingo, the language that we use after repair value ARV they're not going to know what that means. So you're going to have to educate them on what that means. And then the amount of rehab that it would take to achieve that after repair value that's extremely important to explain to them. That is a variable right. Smaller amount of rehab, the lower the ARV, the more amount of rehab you can max out and you can get the maximum amount of value out of the property. And we base that off of facts what is actually sold in the area. Use specific addresses if necessary. Then you explain holding costs, closing costs, and this is amount of profit. Now, if you do not have our profit calculator yet, there is a link down below for the titanium profits course. You should absolutely have it because it will help you navigate this part of the conversation to truly explain to the seller where your numbers need to be.

Speaker 1: 5:22

Now the second thing that happens in these calls is you are afraid to embrace being the buyer and walk away from a deal. This is where those conversations go for way too long 45 minutes hour, two hours on the phone with a seller who's motivated, but the price is incorrect and we go into the friend zone. Right, we just keep talking to them because we feel like we're building rapport. It's not about that. You don't want to become their best friend or, even worse, their therapist during this conversation. You want to be a solution for a problem by buying their real estate. So, as much as we need to listen to their motivation and uncover those layers, we do need to keep the conversation on topic about how we're buying their piece of real estate. And so don't be afraid to embrace no and walk away from these deals when necessary. But there is a thin line between these two scenarios where, one, you have to educate them on the numbers and, two, you need to embrace no and walk away.

Speaker 1: 6:34

I feel like newer wholesalers really struggle in this situation. So here, let me make it easy for you. Struggle in this situation. So here, let me make it easy for you On each call, you should educate the seller.

Speaker 1: 6:47

If the price is incorrect, explain how you got to where you are and break those numbers down Worst case scenario. It is a solid experience for you and it's a rep that you have put in on educating the seller. That is necessary and it's needed because majority of the time when you do educate a seller on how their price is incorrect, it's not going to be successful. So even if it doesn't end up in a signed contract and you know that the numbers are way far off, at least you're getting more experience of breaking down those numbers and explaining the situation to the seller. Now, after that, when you've explained those numbers, you will probably have to repeat that situation because, understand, they're not real estate professionals like we are and so it's gonna take some time for them to digest and completely understand and comprehend what you're saying in regards to the numbers. So repeat that to them, probably two, three, four times. And if they still do not agree with the numbers, then that's where you need to embrace no and walk away. But it should be few and far between where you are literally walking away from the deal and not educating them on the numbers. If you're just on the phone and you're saying how much do you want for it and it's not a good price and you're saying, hey, I don't think I'm a good fit for you. You are absolutely leaving deals behind and it is your responsibility and obligation to do the right thing by these sellers and make sure that you're not doing that.

Speaker 1: 8:28

So, as a newer wholesaler, when you go into these conversations, expect that the majority of the leads that you're going to talk to fall into this seller bucket Highly motivated, incorrect price. Uncover the layers of the motivation. Educate them on the numbers. Always start with after repair value, then the rehab, if you can get them to agree to those two numbers. From there, the fixed cost of holding costs, closing costs and the end buyer's profit is fixed. Those numbers don't vary. So it's easy to explain those. You don't even have to go into the specific amounts, just the fact that they exist and then talk about where your actual offer is coming in. Do that over and over and over again and over the course of time you will become more experienced and that's where you could get to the metric of closing one out of every nine of those types of leads, because every now and then you're going to get the right price from the seller. So that is how you should be navigating these.

Speaker 1: 9:35

Do not be afraid to educate the seller. Do not be afraid of their emotion, their response or anything like that. Stay cool, calm and collected and just talk math, that's it. Explain to them why you're getting to where you are and, if you're truly a buyer, that is how those conversations should go. Do not fall into the friend zone. Do not elongate conversations with sellers because you feel like you're building rapport. To be quite honest with you, all you're doing is wasting your time and making your own business less efficient. Now I want to hear from each and every one of you, especially the newer wholesalers out there Is this something that you're currently struggling with? Would you like to see me do deeper dives into these types of seller calls? Is it something that you're struggling with? If so, let me know in the comments. Otherwise, show me some love, like today's video, and we'll see you guys tomorrow.