The Titanium Vault hosted by RJ Bates III

When The Seller Needs To Become The Teacher

• RJ Bates III • Episode 659

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SPEAKER_00:

Sometimes you need to educate the seller, but sometimes the seller needs to educate you. Now, see, this came about from a titanium university implementation call where I was doing a live seller call review of a TU member that you guys have seen a couple of times on a live seller call session, Trisha Gear. Now, I was reviewing Trisha's live seller call, and this was kind of a unique situation, and I made that quote. Sometimes you need to educate the seller, sometimes the seller needs to educate you. The chat blew up, and then everybody told me inside the group, man, you need to make a video about that topic. And see, this is the natural evolution of the closer's formula. As we continue to grow as a community, there's going to be things that we add. First year, we didn't have the four seller buckets. That's something we added last year. This is the first time I'm ever going to talk about the seller needing to educate you and what I mean by that. Now, what are the two most important things that we need to understand from the seller? Price and motivation. Now, when we talk to a seller about motivation, how do we pull that out of them? Through open-ended questions. Now, what most people struggle with is getting to the layers of the motivation through open-ended questions. They'll say, tell me a little bit about what you got going on. And then they feel lost because the closer's formula doesn't tell them what the next question is supposed to be. That's kind of what makes it a formula. You have to listen and react, and you have to be able to develop the ability to elongate the conversation through open-ended questions based off of the seller's response. So what happened in yesterday's call with Trisha was she said, How much do you want for the property? And the seller said they needed$140,000 for the property. And then she said, Well, tell me a little bit about what you got going on. And it was, I need the mortgage paid off. I've got a brother I've got to pay$10,000 to. And then I need to walk away with some money in my pocket. Now, one of the questions that I believe every single closer needs to ask a seller is, how'd you come up with that price of$140,000? So much so it's almost going to become a part of the actual closer's formula. That's where I'm at with that question because I think it's vitally important for us to understand their thought process behind why they need$140,000. Now, if you've ever asked that question before, there's various different responses that you will get. Sometimes it's as simple as it's what I want, it's what Zillow said my house is worth, maybe it's what a realtor told them the house could sell for on the open market. There's a lot of different answers that can come from that question. But then once you ask them, you understand how they came up with$140,000, you need to start the reverse engineering of how they came to that being the number that they need. So, how much money do you need in your pocket? How much do you owe on the property? Now, to us, because we are real estate professionals, it feels like if you were to ask those questions, the math is always just going to line up and be the same. But that's not the case. Many times when we start asking these questions, what we find out is they actually have no idea how the math is going to work out for them. Because in a typical real estate transaction, they have to pay realtor commissions, they have to pay closing costs. So if they say 140,000, they're not anticipating that they're going to receive$140,000. But when they sell to us, a wholesaler, that is the case. So what happened with Trisha's call was she started asking open-ended questions. She started uncovering layers of the motivation, but she kind of stopped and she never really understood why$140,000 was an important number. And so what she did was, she did the four seller buckets. I'm talking to a highly motivated seller with an incorrect price. What do we need to do then? We educate the seller. So she educated the seller based off of what the property could be worth, the rehab that she had to put into the property, and why her offer needed to be$110,000. Now, on the surface, if you were to look at this seller call, you would say Trisha did the right thing. She educated the seller when she fell into the bucket of highly motivated, incorrect price. But prior to you educating the seller, the seller needs to educate you on their circumstances and their needs and their true motivation. And if we had done that, there is a solid chance that the math would have lined up to show maybe not 110,000 was an appropriate offer, but I can almost guarantee it would have been less than 140,000. And this is the beginning stages of stair-stepping a seller down on their initial asking price. And so that's what led me to say sometimes you need to educate the seller, and sometimes the seller needs to educate you. That seller needs to teach us their needs. Because let's be honest, we are completely ignorant to their needs in order to sell this piece of real estate. And if they're motivated to sell this piece of real estate, it's really about us solving the problems. Our needs in regards to what we needed is somewhat irrelevant. If we aren't solving their problem, then why would they go with us? They're going to continue to find somebody else that can serve their needs. So before you start educating the seller, make sure that seller educates you completely on their motivation and their needs. So what I would have liked to have seen Trisha do is postpone the education of the seller and start asking the seller, how did you come up with$140,000 as your asking price? Why is that number important to you? How much do you owe on the property? How much money do you actually need to give to your brother? And how much money do you need in your pocket from this transaction? Now reverse engineer that. If I purchase it from you for this, I've got to put this much work into it. I'm going to have holding costs, closing costs, and profit. So I was coming in at a number of$110,000, but based off of what you're telling me right now, you need to be at$120,000,$130,000, whatever it is, I am fairly certain it was less than$140,000. This allows you to build more rapport with the seller to truly understand their needs. You now become a problem solver and you're on team seller. You're not on team investor. When Trisha educated the seller on the numbers and the after-repair value and the rehab and the purchase price, she did a great job. But to the seller, it fell on deaf ears. It wasn't what she needed, and she didn't understand. And quite frankly, she doesn't care about our situation. She cares about her situation. So she didn't understand how much money that was actually going to put in our pocket. The fact that Trisha did not know how much the mortgage balance was, what the brother needed, and what the seller needed did not fully equip her to be able to close this deal. So when you were talking to this type of seller, you have to ask all of these open-ended questions to get yourself in a position where you truly understand. Now, what Trisha did a great job was is finding out the motivation that she was motivated enough to sell the property for a discount. The numbers weren't that far off. But you have to understand financially what are the seller's needs, and then truly break that down. If you ask a seller, how much money do you need in your pocket?$20,000. Why is$20,000 an important number to you? Follow up. Continue uncovering these layers of the motivation, and that is how the seller is going to educate you on how you can see how you are going to close these deals. This is a next level layer of closing motivated sellers. I do not expect the majority of you to be able to do this right now. It's going to take time to be able to develop this kind of relationship with a seller, the rapport that's needed, and just the mental bandwidth that it takes to kind of sit in that pocket and really ask these questions. One of the other TU members that was watching this live seller, call review, said, I struggle with asking this personal type of questions to a seller. If you position yourself inside of the conversation where you are there to support the seller, mirror them, match their energy, and build that rapport or relationship inside of that conversation where you're not attacking them, you're not lowballing them, you just want to get a full understanding so then you can solve the problem. It really isn't that big of a deal to ask these type of personal questions. Is it going to work with every seller? No. And it shouldn't. It should only work about 10% of the time. But when it does work, it's a beautiful thing because it's a win-win situation. And now that seller knows they have been heard, their situation is being resolved. And that's what leads to you ending up being the person that they sign a contract with. Now, inside the comments, what I'd love to hear from you guys is a situation where maybe you have educated the seller after they've educated you. Let me know if you've done that and how it worked out for you. Regardless, show me some love. Like today's video. Shout out to my good friend, Trisha Greer. Trisha, I know you are going to be an absolute killer inside this industry. I'm so proud of the growth. And thank you for sharing that call with us. So now we can share it with everyone here on the YouTube channel. All right, guys, that's our episode. We'll see y'all tomorrow.