How To Approach Sellers?

Hey Nick,

In your post you said you’re “planning on doing wholesale, subject-to and L/O deals…”

Each of these methods are very fun to do and will allow you to make money with very little to no money out of pocket. However, the way you approach a seller will vary depending on your “exit strategy”. When I say “exit strategy”, I’m referring to the way you’ll make money as you’re transitioning from a real estate deal.

So if you’re looking to do wholesaling, like an “assignment of contract”,
you’ll need to have a list of qualified cash buyers lined up first before you
approach sellers. When you do an “assignment of contract” or a “double closing”,it’s imperative that you have buyers lined up AND you have a clear understanding as to what they want to purchase. This way you’ll be able to let the seller know that you can close within 10 days because you’re a cash buyer…therefore your exit strategy would be making money “assigning” a property. Again, it is so important that you’ve not just contacted a cash buyer but you’ve spoken with them in order to know what they want to purchase. This way you’re not wasting your time nor their time by bringing them properties they have no interest in purchasing.

This is one of the quickest & easiest ways to make money!

Keep up the great work and build up those buyers!!

When I call FSBOs for the first time my goal is to get to the motivation
I will call as if I am an interested home buyer looking for a home in the area
I will get the basic info or at least make sure I have it right
Address, sqft, bed / bath etc
I will ask about the condition
I will ask the owner about the area and home ( get them talking)
and as they talk I am very interested and excited with what they are telling me (this builds trust)
and when it finally sounds like they have nothing more to say about the home and neighborhood I will sound very excited on this sounding like a perfect home and neighborhood , "how come you are selling it?" which is my goal to find out, I am looking for motivation. I may ask a few other things such as "how long have you been trying to sell?" "is there a time you need to sell by?"
You can even ask things such as, are you open to Lease options / seller financing?
From there I thank them for their time and info & I will let them know if this is something I'd like to come look at and perhaps make an offer on.

Thanks Drew & Harold C. for your help.

As I mentioned I'm interested in buying houses using wholesale, Sub-To and L/O strategies.

I don't have any cash buyers yet. I need to work on getting cash buyers lined up to assigned the wholesale deals when I get them.

I've contacted sellers on Craigslist and Forsalebyowner.com with an email message ...."would you consider doing a lease option?" or "I will pay full price if you can be flexible on the terms of the sale?" A lot of sellers really don't understand "lease option" and some ask me "what do you mean" regarding "flexible on the terms of the sale?"

I thought the email contact would be faster that trying to make hundreds of phone calls. I wanted to use the email contact to find out if the sellers are even remotely interested in doing a terms deal or L/O deal before I called them to get more detailed information.

I want to do an assignment of L/O or a sandwich lease as an exit strategy.

My problem is that I'm not getting an seller that are interested in doing a terms or lease option type deal.

Any ideas on how to get this up and running would be greatly appreciated!

Thanks!!

Hi DG Family

I want to approach sellers to find seller motivation. I'm looking for motivation to see if seller's may be interested in doing a 'terms deal'.

I was thinking of sending a quick email to FSBOs. If the FSBO can't sell their house I would ask the following question to check for motivation without using terms that a lot of sellers don't understand, like lease option or subject to.

Would the following questions determine seller motivation for a 'terms deal' or are there better questions to use?

...would you take monthly payments to cover your mortgage until the house is sold and you're cashed out?

...would you consider taking payments for a while until the house is sold for full price?

Thanks All!
Nick

I would take the more laid back approach. I think you will have a lot of competition on CL with the same pitch QUICK CASH etc..

Hey im nick ive been looking to buy in this neighborhood for awhile can we talk about your property for a few mins... Get the appt or call and ask question and build a relationship if your options dont work now they might work in 6mths. Keep his info in your data base follow up keep in touch etc..

Once you get a FSBO or FRBO that may consider doing a lease option type deal with you, how do you let them know that you will not be the one living in the property but you have a tenant/buyer that the seller approves that will live in the house?

Many sellers ask for your credit report and they want to know if You will be living in the house.If they find out that you will not be living in the house then the deal is off. The seller will only do the deal if YOU are going to be living in the house? How do you handle this situation?

Thanks
Nick

Nick,
FSBO’s are one of my favorite types of properties to deal with. My approach may be a little different than some, but choose what works for you. On my 1st call to the owner, my goal is simply to set up an appt to see the property. I have found that if the owner can put a name with a face and start to build a repoire your success rate doing deals with them is much greater. Remember on a FSBO there’s no one running interference, so the seller will be more likely to make a decision based on who they like. So take the time as Harold said to find out their motivation, and build that repoire in the process. If they do ask you what you plan to do with the property, you can always tell them you are helping a friend find a property.

Nick, keep in mind what your purpose is with that initial email. You want to talk to the seller. It is very tough to excite someone through an email to accept terms. I agree with what Cory and Michael said simply set the appointment through the email. Once you have an appointment you can then begin finding out about the property. In fact, you can use the inspection of the property as your reason to make an offer using terms.

For instance, you could tell them that due to the condition their market will be greatly decreased because banks will often only loan on properties that are in pretty good shape (or whatever you need to say). Meeting the seller and negotiating is really important and it gives you options.

Again, the main objective is to set that appointment. You will seldom be able to convince someone to accept your terms through an email.

Some sterling information here, thanks to the many contributors who have provided such great information.
I've done quite a number of seller finance deals over the course of time, and I just want to provide my little slant on how I find opportunities. I call on rental properties.
1) There are lots of tired landlords out there who, if someone made it easy, will sell their property on a seller finance arrangement--I prefer lease options.
2) The time that the property is vacant is the most vulnerable time for a landlord, the time they are most likely to be negotiable.
3) They are willing to let a person come in and occupy their property for a month's rent and a deposit, so they are not in need of great sums of cash up front.

My conversation with them is very simple. I let them begin by thinking that I am just a standard renter calling. It goes basically like this.

"Hi, I'm calling about your rental house that I found _________________. Am I speaking with the right person?"
"Well, I know what it says in your ad, can you tell me a little more about the house? (They proceed to try to "sell" you on renting the property.)
At the conclusion of this, I say: "Wow, it sounds like a nice property, just what we are looking for. There is one important thing for me, though, and that is that I would ALSO like to purchase this property, maybe sometime in the future. Have you ever considered selling down the road?"

It is critical that the question be light and no pressure. There are only three possible answers. Yes, No, and Maybe. If they give you a yes or a maybe, they are open to negotiation, go see the property, and then see what they may be open to.
And here's another suggestion, if they say no, then all that means is they are not looking to sell a property. Ask them if they are interested in acquiring more properties, and you may be able to add them to your cash buyer's list.

My wife and I had a deal setup with a NON-DG investor, we found the property. Long story short, we didn't have him sign a ND/NC form. He went behind our backs and negotiated with the seller, cutting us out. We saw him marketing the property for WAY more than anyone would pay for it. Karma, and his greediness has come back on him and after 2 months, he's unable to close and the seller has a bad taste in their mouth from the process. We're trying to come up with ways to win back the seller's trust in us and the process in general. Any suggestions???

And yes, we've learned the hard lesson of getting the other parties to sign the appropriate forms before getting into details.

Thanks!

Sorry about what happened. I'm glad Karma got him. he was definitely a tire kicker for sure. there is this saying that goes like this "whatever is being done in the dark must come out in the light."
Here is the 3 rules which I learnt from from micheal (a top user on here)in screning your buyers
1. $5,000 non-refundable earnest upfront
2) No inspection or contingency (all inspection must be done before contracts are signed)
3) Contract not assignable

Always look at the your mistakes as as a stepping stone to your success.

when you say ND/NC what do you mean by that? from what you stated above I guess you were acting like a bird dog to this investor. Its all good.
Please next time make sure you lock it up under contract with the seller before you market it. Since you're REA you can have your wife put in an offer in her name or you can put in an offer under your company name (if the property is on mls.)

to answer your question on ways to win back the seller's trust in us and the process in general. I can't really weigh on that because I haven't been in that kind of situation before. I'm pretty some an experience DG member would be able to help you on that..
Also, I would you suggest you not to put your emotion in that property.just move on to the next deal. So deals out there.

Non-Disclosure/Non-Circumvent

Non-Circumvention Non-Disclosure Agreement (NCND):
An agreement between two or more parties specifying that none of the parties will go around each other to transact directly with the originator of the transaction, nor will any of the parties disclose the particulars of the transaction covered by the agreement. The terms of the agreement normally include a specified period of time during which the agreement will remain in force, and make allowances for disclosure on the part of one party to the agreement with written permission from the other parties. NCND's are enforceable in civil court.
NCND's are used for any type of transaction in which an agent wishes to protect his commissions and contacts, or when proprietary information needs to be kept discreetly between agreeing parties.

Thanks TC,
We didn't write an offer with the seller, because at time, we were just going to pass off the deal and be a bird dog. But then he wanted more information, pictures, etc. So when we started doing more work, we told him instead of bird dogging, we're now getting into multiple trips to the property, interviewing the seller, etc., so we need more than just a bird dog fee. We told him we could put it under contract and assign it to him but he had already found out about the property details and went to the seller. If we had him sign a NDNC form (Non-Disclosure/Non-Circumvent form, as explained by Kathy) that MAY have prevented him from taking that action.

As KAREN explained it, not KATHY. Sorry Karen!

Agenttoinvestor (or anyone else who reads this), if you have need of a form to use as a NC/ND agreement, please send me a private message, and provide me with an email address to send one. We've recently revised a form.
As a protection for the program, I am required to notify you that any contract form is a legally binding agreement, and we are not attorneys, and consequently, not allowed to provide legal advice. Any form will be provided for educational purposes only, with the proviso that you should have any contract form reviewed by your trusted licensed legal advisors.
The best time to provide a NC/ND agreement form to a cash buyer is early in the relationship as a way of solidifying the professional arrangement that you are creating. Once the document is signed, then you have a legally binding agreement that covers you for any property presented to the buyer as either a bird dog property, an assignment of contract, or as a purchase through double closing, or sale of an LLC. The agreement is reciprocal, which means that both you and they agree that certain information that you may share with each other is the property of the other party, and may not be shared or converted into profit without either a written authorization or a payment for the value that has been created.
Consider making this a follow-up to obtaining information from a cash buyer about what they are looking for as a protection for both them and you in your new business relationship.

Thanks for elaborating on it. I'm glad I learnt something new today

Ok now I get. It's all good.

We all make mistakes and sometimes in life we gotta pass through in order to succeed.

You got this

Goodluck

My experience with NCND agreements is indicative of someone who doesn't have control of a deal. You're basically saying "I know of a possible deal. If I tell you about it I want you to promise you won't go behind my back." What's to prevent the person you disclose the information to from divulging it to another party who can circumvent you? If you are trying to move a deal with a NCND agreement, chances are someone else is also trying to move the same deal because for some reason they can't gain control of it. I've attempted to use a NCND twice. Once, after I disclosed the information, the person said they already knew of that deal. Could I prove they didn't know about it before I divulged it? No. The second time, there were a number of other NCND agreements out, someone eventually tried to get me to buy my own deal. A simple 30 or 60 day option has more teeth than a NCND agreement. There is no substitute for control of a deal. Just my personal experience. They may work perfectly well for you.

What do you mean by A simple 30 or 60 day option has more teeth than a NCND agreement.

A 30 or 60 day option gives you an element of control over a property whereas a NCND gives you no control over the property. The option gives you the right to purchase the property but not the obligation to purchase it. If you have a NCND agreement with your buyer, what's to prevent the seller from selling to someone besides you or your buyer? Nothing. With an option, you don't have to worry about a shortened inspection period to find a buyer or come up with earnest money, you can have the full 30, 45, or 60 days. The only downside to an option is losing whatever you gave the seller for an option fee, which could be as little as $10 or whatever you negotiate.

TRSD, I'm really glad that you brought up these questions. The NCND that I use is actually a Non-Circumvent, Non-Disclosure, and Confidentiality Agreement, and is reciprocal in nature so that both parties recognize that their interests are being protected by the agreement. It contains clauses that prohibit sharing of information with others or using that information for gain without either a written permission, or a contract that provides compensation to the information provider. It binds the recipient and all direct interests they have, including their company and associates.
The NCNDC Agreement can be made into a stronger protection by recording a Notice of Interest on any property that you work with--obviously that would be any property where you hold an equitable interest by means of executory contract, but could also extend to properties whose names you provide on a bird-dog agreement. I personally think this second usage is a bit ridiculous and will probably cost more in time and money than you will earn, but I include it for the benefit of any who are overly concerned about circumvention. The Notice of Interest remains in effect on the property, and any closing agent attempting to complete a sales transaction on the subject party will discover this cloud and be obligated to contact the filer to understand the nature of their interest in the property. This would be your alert, and provide you with an opportunity to present your documentation and challenge any inappropriate actions.
No set of agreements is ironclad--there are always ways that people with creative minds can discover to cheat you out of some money. I personally do not always use the NCNDC agreement if my guts tell me that the people I am dealing with are trustworthy and honest. By the way, my guts are not foolproof, but they have been a pretty accurate guide for me throughout the years, and I encourage others to trust their guts.
Most of what I have written here is not directed to any one person, thanks TRSD for raising some important points, though. I also use option agreements as another form of executory agreement that gives me control over properties, and I really like them.

very good stuff to know...