I always try to prequalify potential sellers on the phone before I visit their house. When I’m talking to them on the phone, I usually ask a bunch of questions to figure out basic data about their home and their situation, including how soon they want to move, what their loan balance is, what their monthly payment is, the condition of their house, why they need to sell, etc. A question I like to ask is, “If we can come to an agreement that will work for you, would you be willing to make a decision about selling your house to me today?” They usually say “yes.” If they say “yes,” I know I have a hot lead.
Things I bring when I see a house:
A) Sales Agreement
B) Note pad and blue pen
C) Calculator
D) Tax Value & 3-5 comps from the MLS
E) Authorization to speak on the loan paper
I always go to their house with the sales agreement. After we chat and get to know each other, I will have them show me the house starting from the inside and continuing to the outside. Then I say, “if we can come to an agreement, would you be willing to move forward with selling your house?” They say “yes.” I try to lead them along to the conclusions I would like to get by using phrases like “wouldn’t you agree” and I also try to get them saying “yes” a lot. I try to build on commonalities and getting them to say “yes” is a good way to build rapport.
Finally, I say, “How would you feel if I could show you a way that you could sell your house and be out of all obligations and move on with your life?” They say “we would feel great.” Then I say there is a way to sell your house in which I take over the mortgage and buy your house for what you owe. You have no more obligations and can move on with your life. “How would you like to have no more obligation and move on with your life in as little as a week or so?” Then I say “would you like to see what the county thinks your house is worth and what houses are priced at in your neighborhood?”
Then I show them the tax value and the comps and I say, “did you realize houses were selling for that in your neighborhood?” They usually say “no.” Then we bond on how bad the economy is. Then I say, “what do you think your house is worth.” I can also ask if they have tried to sell it with a realtor and I can ask what the realtors have said. If the realtors don’t want it, then I can say, “it looks like nobody wants your house or nobody can buy it through more traditional ways of selling a house. However, we have an option that not very many people have. We can buy your house by taking over the mortgage payments? How do you feel to know that you’ve got some options and can actually sell your house when most people wouldn’t touch it? Then I can explain cash flow and what I would be renting the house out for. Then I ask, “If I could buy your house for what you owe and we could close as quickly as 3-5 days or give you as much time as you need, would you be interested?” They answer “yes”. If they answer “no”, then say “why not…help me understand your thoughts and feelings?” Then I overcome their doubts.
We continue to negotiate until they say “yes” or until it seems that they are saying “yes” to my questions and generally tend to agree with me. At this point, I pull out the sales agreement and I ask them how to spell their names. Then I ask them what the date is. Then I ask them what the balance on the loan is. I keep on writing things on the sales agreement. Each time they answer my question, they are consenting to what I am doing and in essence are saying, “we haven’t told you to stop yet, so we are in agreement and you can move forward.” Then once the first page is filled out, I say, okay would you simply initial here to indicate that this is correct? If they endorse the sales agreement, they agree and are in. This method of closing is called an “assumed sale.” Brian Belnap of Evergreen Solutions, LLC taught me this method and most of what I’ve written here about the sales process. Besides Brian Belnap, another good resource to study to help you close sales is the “How to Master the Art of Selling Anything“ by Tom Hopkins.
If they don’t endorse then they are not serious and have some doubts. I could ask, “Would you like to sell your house to me and be relieved from __________?” (whatever their pain is and whatever their reason is for wanting to sell their house). If they say “no” we need to think about it. Then I can say, “what is it that you need to think about?” If they say a doubt, then at least I know what it is and at least I can resolve it right then and there. If they say, “we need time”. Then I can say, “Thanks for helping me to understand you a little better. What is going to change with time?” They probably will say “not much.” If they answer, “we need to think about it…we need time,” I can say “what would it take for you agree to sell me your house today?” Usually they will tell me what their doubt is. They’ll say something like, “we need some money to put down as a deposit in the place we are going to rent.”
I find that many people are hesitant to sign the sales agreement because they don’t really want to make a decision but they want me to do the research for them and give them an idea of what their home is worth. I tell these people, I visit dozens of people a week that want to sell me their home. I am busy and would like to take on this project of buying your house but I’m not going to invest a bunch of my time if I don’t know your are serious and if I don’t have it in writing that you are going to sell to me. “Wouldn’t you do the same if you were in my position?” “How else can I know where to best put my time…I meet with dozens of people each week and need to focus my attention on people who are serious about selling.”
Some people have another doubt about selling. They want to do all the research and stuff before making a decision. I respect people like this and have no problem accommodating their penchant for “thoroughness” and their “we need to do our due diligence” decision-making style. For these people, I’ll give them the filled out sales agreement, I’ll show them a settlement statement and show them line 203 where it says “existing loans taken subject to” so that they know this is legitimate. I’ll tell them that it is a legal way of selling a house. It may not be the most common but it made it to the government HUD settlement statement whereas other things like “short sale” or “foreclosure” aren’t on the settlement statement. They didn’t even make it on to the statement. That should tell you something about what the government thinks about selling a home by my taking over the mortgage payments. Wouldn’t you agree? (These questions are taken directly from a mentoring session I had with Brian Belnap of Evergreen Solutions, LLC) Then for these “thorough” types, I’ll also give them a bunch of references or have them go to my “references” page on the website that has youtube videos of people who have sole me their house. I also commit them to calling 1 or 2 of my references and asking them about me. I want the sellers to know that I am the real deal and am honest and ethical.
What to do if I haven’t filled out the sales agreement and they want to see it:
If they ask to see the purchase agreement, I usually don’t like to leave it with them unless I’ve explained it and there is usually not enough time to explain it in the first visit. So, if they ask to see it, I sometimes say, “I’d love to have you look at it but I think it might be a bit confusing if I didn’t explain it first. When can I meet with you to go over the sales agreement with you?” Or I can leave them a blank copy and hope that it doesn’t confuse them. I think for some people, just knowing that we are not afraid to answer any of their questions or disclose any paperwork…I think for some people this makes them feel more trusted.
Anyways, since I live in Provo and that is 1 1/2 hours from the area I buy houses in, I like to try to prequalify potential sellers before I even make it to Ogden Utah (my area). I feel that if I do a good enough job prequalifying potential sellers, I have a good shot at getting the sales agreement endorsed on the first visit. If I can’t get it signed on the first visit, then I will always make a return appointment and I’ll try to do it within 1-3 days. It needs to be soon or they will forget stuff and things won’t be as fresh and they will likely lose momentum and not go through with things.
Another reason why you may not be able to get something under contract on the first visit would be that you need to do more research. For example, if they give you the mortgage statement so you can see if it is a good loan, many times you will not have enough info to make a decision with. You’ll need to perhaps call the bank and get more details. In this case, I get the seller to authorize me to call the bank using this form. For whatever reason, if the contract isn’t signed by the end of the first visit, I always get a return appointment within 1-3 days. I tell them, “I am going to do a little research and will come up with an offer. I can meet you Thursday at 4 pm or Friday at 6. Would Thursday at 4 work for you or would Friday at 6 be better?”
The biggest mistake I’ve made in the past is letting a week go by before our next appointment. They need to feel the urgency of their situation and the value of my time and nothing says this more than by confidently and boldly seeking a return appointment within 1-3 days.
Tips in the Sales Process:
I never say “subject to” when talking to sellers. It just confuses them. Instead I say “buy your home by taking over the mortgage payment.” I never say contract and I never say sign or signature. Instead I say “sales agreement” and “endorse.” We need to make sure our language is non-threatening and so I like to use words that have positive connotations. (this is taken from John Burley’s mp3 “Words that Sell”).
As part of the qualification process, I always make sure I make an appointment with the key decision makers. I’ll usually ask, “Who are the people involved that can make the decision?” I will also check the county records website to see what name is on the title of the house. I need to make sure at the very least that these people will be present during the appointment. Also, if the person is married, their spouse needs to be there as well as any people that will be involved in the decision like a Dad or close friend. There is nothing worse than getting into the closing stage of the process and have the person say that they need to check with their Dad. The problem is they can never explain it to their Dad in a way that cohesive, clear, and convincing. It is better to have the person they go to before making a decision there from the start.
Mark is the author of Utah Rent to Own Homes, Sell House Utah, Sell Home Utah, Rent to Own Homes Utah, and Rent to Own Utah.
