There’s one thing that we as investors often forget when dealing with distressed sellers. And that is: it is never about the house. Rather, it’s about the situation of that seller and the solution that you as a real estate investor can provide.
It’s an important message to keep reiterating because it is very easy in our world of real estate investment to slip away from this realization and fall back into the trap of “I am a real estate investor and I am focused on houses—on buying houses, and buying more houses.” When you find yourself going down that path, you likely are going to find yourself actually buying fewer houses because you have lost touch with the solution that you provide.
Sellers want you to solve their distress
The solution that you provide for distressed sellers is incredibly valuable. It is what they are seeking from you. When you stay focused on their situation and on providing a solution for their distress, your odds of buying more houses dramatically increase.
You may have heard in the sales industry the common adage of “always sell the solution, not the product.” Though we are in an industry of buying—buying distressed real estate as investors—that same adage applies, because we also are selling. We are selling a solution to these distressed homeowners. And just like the salesperson who focuses on selling a solution, not a product, we too have to stay focused as real estate investors and property buyers on selling a solution. Therefore, it is not about the house, it is about the situation.
As real estate investors who can pay cash, buy as-is and close quickly, we have the unique ability to eliminate the fears of the sellers with whom we are working directly and whose houses we hope to purchase. The key for us is to stay focused on the solution we can provide, which in turn eliminates their fears.
Learn to recognize your seller’s fears
A real estate investor wears several hats. Most important, not only are you an investor, but you are a problem solver and solution provider. When you stay anchored in that mindset, it will change the way you approach your business, your investing and those distressed sellers. Therein lies the key to unlocking your business and your ability to buy more homes. When you realize that your approach to your sellers is critical, and when you have the approach of a solution provider, a problem solver, a fear eliminator, you will separate yourself from other investors, and you will buy more homes by solving more problems, by providing more solutions and eliminating more fears among your sellers.
I have been in this market for more than 10 years, first as a part-time investor and now a full-time investor in Dallas, and I cannot think of a single instance where I bought a house without providing a solution to a problem or eliminating a seller’s fear.
It’s important for you to be able to recognize and identify those fears of your distressed seller so that you ultimately can eliminate them.
Those fears are going to come in two forms: a fear of the unknown, and the fear of the known.
Sellers often are afraid of the ‘unknown’
Let’s talk about the fear of the unknown. This is very common among distressed sellers of real estate, who typically are afraid of three things.
First, they are afraid of the process of selling real estate, which is very complicated, very overwhelming and very scary to many people, especially those who don’t do it often. They know they will have to deal with a multitude of people and components of the process: Realtors, title companies, lenders, appraisers, surveyors, repairs, negotiations, contracts and commissions. And the list goes on and on. Whether you have done this many times, or only once in your life or perhaps never, it is an incredibly scary process for many people. At the root of it is the fear of the unknown, an unfamiliarity with all its different aspects.
You can also have sellers who fear the unknown aspects of repairs. They may say to themselves, “I have no idea what repairs are going to be required of me in order to sell this house. I have no idea what the costs will be, and I have no idea whom I can trust to do those repairs in order to sell this home.” Those are all very viable and common fears for the seller.
The final bucket is time. Many sellers are completely overwhelmed with the fact that once they attempt to sell their home, they have no control or idea on when it will sell. That is very scary because they may be under a very strict timeline, whether it is a mortgage that has fallen behind, another house that they would like to purchase, a move they need to make, or a financial obligation they need to satisfy. The unknown of time and how long the process of selling their property is going to take can be incredibly distressful to a potential seller.
But you, as an investor, can eliminate those fears of the unknown. You can eliminate the fears of the process by being that one individual they deal with who will take care of the entire transaction. They don’t have to worry about showing, lenders, bank loans falling through from buyers. You are the one individual who will buy the home for cash and take care of the entire process.
They don’t have to worry about repairs because you are going to buy it as-is. They aren’t going to have to pay for the repairs; you are. You are agreeing to take that complete burden upon yourself as an investor.
Finally, you can eliminate their fear of not knowing how long it will take because you are going to specify an exact date at which the transaction will close. Right up front: “We will close in 10 days.” Or, “We will close in 14 days.” You will name that date in writing in a contract and completely eliminate the fear of the unknown timing.
Fear of the ‘known’ is similarly solved
You as an investor also have unique ability to address the fears of the known—because they fall into the same three buckets.
Many people have sold so much real estate in the course of their lives—for whatever reason—they know the process. They know all about what’s involved in dealing with Realtors, surveyors, inspections, bank loans, commissions, contracts, title companies. They know so much about it, they fear it. And they don’t want to go through it again.
Many people, too, have sold so many homes they are familiar with what’s involved with repairs. They know the costs. They know the difficulty of finding trustworthy contractors to make the repairs in order to successfully sell a house. They don’t want to go through it again. That is another fear of the known.
Finally, many people know how long it takes to sell a house—to find a good Realtor, to clean up the house, to make the repairs, to list the house, take the pictures, to do the showings, to negotiate the contracts, to deal with buyer’s lenders who fall through, to relist the house, to go through the closing process. They know how much time that all involves, and they are afraid of having to experience that again. For whatever reason, they cannot afford to go that route and take that time.
Once again, you—as a real estate investor—can provide that seller with a solution and address those fears of the known just like you are able to address the fears of the seller with the unknowns. You can simplify that complicated process that these sellers have been through so many times, in a refreshing way. You can eliminate the repairs that they have done on so many other homes and the costs they have incurred and the contractors they have had to deal with by taking on the burden of doing those repairs yourself and paying for them yourself. You can reduce the time that they are so familiar with that it takes to successfully sell a house by defining that closing date, putting that date into writing in a contract and managing the process in order to meet that date.
Examples from personal experience
I can tell you from my personal experience, within the last 30 days I bought a house from some sellers who had a fear of the unknowns. Time was of the essence with these sellers. They had no idea how long it was going to take to sell their house. They had already picked out their dream house. They were afraid, “If it takes too long to sell our house then we may never get into our dream house.” I was able to find the date that met their timeline, and today they are owners of their dream house. Today I own their previous house as an excellent investment property.
Also within the last 30 days, I was able to provide a solution for sellers who had a fear of the known. They were the owners of a rental-property-gone-bad. Their tenant didn’t pay rent. The tenant damaged the house and left these landlords with property needing repair, missing rent and a monthly mortgage payment that they were paying out of their own pockets. They knew what a bad tenant could do; they experienced it. They knew what a bad tenant could cost them; they experienced it. They knew the burden of a monthly mortgage payment on a vacant rental; they were experiencing it. I was able to eliminate all of these known fears by buying that house quickly, as-is.
So, to sum up: Eliminate your seller’s fears—unknown or known—by focusing on the situation. When you as a real estate investor are able to provide solutions for your distressed sellers, I guarantee that you will find yourself buying more houses.
Listen to Kevin’s podcast here:
http://www.blogtalkradio.com/kevinguz/2016/04/29/want-to-buy-more-houses-provide-more-solutions
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