Most real estate investors have no clue what their Seller really wants—they just assume it’s the highest price. But as Thoughtful Real Estate Entrepreneurs, we know that each Seller is unique and wants different things. But while it’s great to understand WHAT the Seller wants, it’s even better to also understand WHY the Seller wants what they want. In this episode, Jeff discusses and explains how understanding not only what your Seller wants, but also why, is critical for getting more proposals accepted.
If there was just one single thing that we could cite as like the single most important thing that you need to do in order to get a seller to say yes to your proposal to buy their piece of real estate, it would be understanding what they want. But there is actually a layer deeper than just understanding what they want. And then that’s understanding why they want what they want. So in this episode, we’re going to talk about why it’s so important to understand the why behind what they want, and give you some examples of what those things might be so that you can listen for them and get more deals done. So let’s cue up that theme song; we’ll jump right in.
Welcome to Racking Up Rentals, a show about how regular people, those of us without huge war chest of capital or insider connections, can build lasting wealth acquiring a portfolio of buy and hold real estate. But we don’t just go mainstream looking at what’s on the market and asking banks for loans, nor are we posting We Buy Houses signs are just looking for “motivated sellers” to make lowball offers to. You see, we are people-oriented deal makers, we sit down directly with sellers to work out win-win deals without agents or any other obstacles, and buy properties nobody else even knows are for sale. I’m Jeff from the Thoughtful Real Estate Entrepreneur. If you’re the kind of real estate investor who wants long term wealth, not get rich quick gimmicks or pictures of yourself holding fat checks on social media, this show is for you. Join me and quietly become the wealthiest person on your block. Now let’s go rack up a rental portfolio.
Hey, hey, thank you for joining me for another episode of Racking Up Rentals. Show Notes for this episode can be found at thoughtfulre.com/e107. Please do us a big favor by hitting the subscribe button in your podcast app. It really helps fellow thoughtful real estate entrepreneurs to find us. And of course, make sure that you don’t miss any upcoming episodes; onward with today’s topic.
And in today’s episode, I want to talk with you about this idea of understanding what your seller wants. But more importantly, understanding why they want what they want. So first of all, we just have to step back and acknowledge that your seller wants something now we’ve talked about recently on this show, they might be going away from something in their life, they might be moving towards something else in their life, but they definitely want something. And it’s really easy for us to assume that we know what they want. without really verifying it, it’s very easy to assume that they just want some cliche thing, like they just want the highest price they want the most cash or they want what we would want if we were in their shoes.
So step one is really to make sure we don’t make any assumptions about what it is they want. But I feel like I need to point out, we’re already talking about stuff that’s very different than traditional real estate investing, especially when you’re looking at buying properties that are on the market, you have no clue whatsoever, what your seller wants, you don’t even really have much of a channel to try to even figure that out. So we’re already starting in a different spot than most investors. So we want to understand what it is that the seller wants. Now, as you know, because you’ve heard me talk about this about 800 million times on this show, we need to solve the person before we can solve the deal. And perhaps the most important part of solving the person is what I like to call the one big thing.
Now we actually talked about this in great depth in The DEALS Workshop. And the one big thing is the number one thing that is the make or break. The number one thing that is the most important thing to the seller that if that itch does not get scratched, there’s no way this deal is going to come together, there’s no way you’re going to get a yes. So we have to understand what the seller’s one big thing is, and that one big thing, it could be anything; there’s a million different things that it could be, it might be a price, it might be but don’t make the assumption that it’s a price, it might be a price, it might be something to do with timing. And when a transaction has to happen. It might have something to do with the structure of a transaction. Like for instance, they’re one big thing might be avoiding realtor’s fees, they’re one big thing might be selling it in an installment sale with seller financing to defer capital gains. It could be something structural about the transaction like that. It could certainly be something about ease and lack of effort or a requirement to spend money fixing the property or spend the time and energy fixing the property. It might be that they want to feel really good about their buyer to know who the buyer is and to make sure the buyer is not going to do something that they wouldn’t like you know, like say tear property down or ruin a neighborhood that they have an emotional attachment to. It could be anything, their one big thing, but once you know their one big thing is that enough?
Well, it is a massive, massive start, it’s a very important thing for us to know, downright critical. But once we know that we do need to try to go one layer deeper whenever we possibly can, because it’s very important to know why they want what they want. So now you’ve identified their one big thing, but why is it their one big thing? Now, I want to point out, your job is not to judge why they want what they want. It’s not for you to question them about understanding why they want what they want it simply to know and understand it for yourself. And why do you need to know their why this is a lot of saying the word Why, why do you need to know their Why? Because their Why is what hits on their emotions, the Why is the connection between their head and how they might be thinking about their real estate and their heart of what they’re really trying to accomplish. And if we don’t understand the pathway between the head and the heart, it’s going to be very difficult for us to create a proposal that is going to feel right to them in both their head and their heart. And ultimately, when you present that proposal, you do want your proposal to hit on the emotional aspects of enabling what they really, really care about. So I’m going to give you two examples here that I think will illustrate this point really well. And you’ll be able to use this now in your own negotiations.
First, I’ll tell you the story of a woman named Shirley, who I met several years ago, she was the seller of a property. And I quickly discovered that she owned a second property, as well now surely was an older lady. And she had been in kind of a little chapter of bad health, but she felt like she was kind of on the mend, and was going to be able to start resuming a little bit more of her normal life and the things that she loved to do. But she was selling her rentals, these two properties in order to kind of get out of the responsibility of dealing with tenants and dealing with properties. And it turns out, she had not really been very proactive about maintaining her properties, and they weren’t in great condition. So it was pretty quick and easy for me to understand that her one big thing was that she wanted to be done quickly and easily with these rental properties. She didn’t want to have to make repairs, she didn’t want to have to mess with getting a tenant out or even having an uncomfortable conversation with a tenant about selling the property or anything like that. She just kind of wanted to be able to wash her hands of these two properties and walk away. So that’s great. And that’s a very, very important insight.
But I needed also to understand why this was important to her. Why was it so important to her that she get rid of the responsibility of these rentals and not need to worry about dealing with the properties themselves. And as I talked to her, Shirley told me that, you know, before she had gotten sick, she had traveled a lot, she had done a lot of things that she thought were super fun, she would say she would go to Las Vegas, like once a quarter. And she would go on cruises. And she would go to Hawaii and things like that. And she was not able to do those because her health wasn’t in a great spot. And so she was now really motivated to try to get back out into the world doing those things that she loved. And getting rid of these properties was a key component for her of making sure that now her health was getting better, she would have the freedom and flexibility to get back out there.
So what does that mean for me? I remember literally as I was presenting my proposals to Shirley for my purchase of two rental properties. My proposal was articulated something like this, it was like Shirley, here are the ideas that I have the recommendations I have for how we can get you back out on that cruise ship and back to Las Vegas. And by the way, I’m going to hand you a $20 bill and I want you to put it on red for me in Las Vegas and tell me how it goes. But in the meantime, we need to get you freed up so you can get there. Here are my ideas. How do these ideas sound to you? And when I connected my proposal, which is like numbers and dates and all that kind of stuff, to what she really cared about, which is getting back to you know the craps table or back on the beach in a nice chaise lounge so she can tan herself, that’s what really mattered. And she said yes to both of my proposals.
Let me give you a second example too. Let’s say you are talking to a seller who is interested in selling their own home that they live in, and they are in their 60s, and you talk to them, and they want to move in order to get a couple states away, they’re trying to move from one state about 1000 miles away. And so you talk to them and you find out Well, why do you want to move to this other place? What’s, you know, what’s relevant or significant about that location? Oh, our kids just moved there. Our daughter and her husband just moved there. And our grandkids. Oh, okay. Well, that’s cool. So you just you want to be closer to your kids and your grandkids? I said. Yes, that’s why we’re moving. Okay. So we understand that their one big thing is they want to easily and quickly, mostly quickly, be able to move to be closer to the kids and the grandkids. So okay, so we might be tempted just to stop there and say, Well, I guess we understand our seller. And we do to some degree, but there is a deeper level.
And so as you continue to have this conversation, you’re wondering, Well, why is it so important to be close to your kids, and your grandkids? And as you talk to them more, you find out they’ve got these two grandkids, one of them is about 15. And the other one is about four. And these grandparents feel regretful that they were not closer to their first grandson when he was growing up, they missed out on the special moments, they missed out on the soccer games, they miss out on the swimming lessons, and they’ve discovered for themselves that they can’t feel good about letting that happen. Again, their granddaughter now is growing up quickly. She’s already four. And they don’t want to repeat those same things that they consider to be mistakes.
Wow, now we’ve got a real why; not only do we understand the one big thing, which is a quick and easy move, we understand why it’s so important to them, because they see themselves as being better grandparents then they’ve been so far. And they need to correct that. Now, as we put our proposal together, and we share it with them, we’re framing our proposal in light of what we know, in their hearts, they really want to accomplish. So now you’re sitting down and you’re saying, okay, here’s the proposal I put together, let me tell you about how this works. Because I think this is the best way to get you to the swim lessons of your granddaughter’s as soon as possible. Now you’ve connected your proposal to their heart, and to really why they’re doing all of this. And now you’ve made yourself and your proposal very, very relevant to them.
So here’s the takeaway. keep poking and prodding, and asking why until you really hit the heart of the issues, the heart side of the issues. And so of course, in order to do this, you have had to build great rapport. You’ve got to listen closely, you got to listen and read between the lines and ask great follow up questions. But you’re already a mile ahead of your normal real estate investing counterparts or competitors. However you want to think about it, because you’re focused on the seller and understanding the seller. But don’t settle for a surface level answer like Oh, the seller’s one big thing is price. Why is the sellers one big thing price? Oh, it’s because his neighbor four houses down, he’s always considered to be a rival for the last 40 years, these two guys haven’t really gotten along. They felt like rivals. And that guy recently sold his house for $412,500. So by golly, this seller is not going to take a penny less. In fact, he needs to best his rival competitor down the street because that’s what his ego demands. That’s a why and when you tune into that why you can get a lot further in your proposal negotiations.
That’s it for another episode of Racking Up Rentals. So again, Show Notes for this episode can be found at thoughtfulre.com/e107. Please do us a big favor by hitting that subscribe button in your podcast app and take just a second to rate and review the show. I so appreciate seeing this. Did you know that we have a Facebook group for Thoughtful Real Estate Entrepreneurs as well? It’s called Rental Portfolio Wealth Builders and we would love to have you join us over there. Just look up rental portfolio wealth builders in Facebook or type group.thoughtfulre.com into your browser and the magic of the internet will take you right there. If you liked this episode, please take a screenshot and post it to Instagram and tag us; we’re @thoughtfulrealestate. I will see you in the next episode. Until then, this is Jeff from the Thoughtful Real Estate Entrepreneur signing off.
Thanks for listening to Racking Up Rentals where we build long term wealth by being win-win dealmakers. Remember: solve the person to unlock the deal and solve the financing to unlock the profits.