The Danger of Confusing the Seller

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Let’s face it, real estate is a complex topic. From numbers to forms and documents, to terminology, there’s a lot that has to be discussed between Buyer and Seller. In the world of sales and marketing, it’s often said that “a confused mind always says no.” The same is true for Sellers. You can have the best offer or proposal in the world, but if the Seller feels at all confused by any or all of it, their default response will be to say ‘no.’ In this episode, Jeff discusses the importance of not only making a great proposal, but presenting that proposal in a way that the Seller can follow and understands well.

Episode Transcript

Okay, so we’ve been talking to the seller for a while now we feel really clear on what they’re trying to accomplish. We feel really clear on our own plan of what’s going to work for this deal. And we have got something that we are ready to present to the seller, you know, in the thoughtful real estate entrepreneur lingo. We call this a proposal, not an offer. But when we sit down to present that proposal with the seller, is it just the stuff in the proposal that matters the most? Or is the way the proposal is delivered? A big part of our potential success equation? Well, I’ve probably given away the answer with my leading question here. But the way we make our proposal is super duper important in terms of our overall success, because it doesn’t really matter how great the elements of our proposal are, if the seller is not 1,000%, clear, and understanding and following us because a confused mind always says no, that’s what we’re going to talk about. In today’s episode, Let’s cue up the theme music and we’ll jump right into it. Welcome to racking up rentals, a show about how regular people, those of us without huge war chests 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, we’re just looking for, quote, 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 are 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, thank you for joining me for another episode of racking up rentals show notes for this episode can be found a thoughtful rt e.com/e 154 Please do us a massive favor. And I really mean this. If you could take just a second right now to do this, I would so appreciate it, hit the subscribe button and your podcast app or the Follow button or whatever it’s called and whatever app you use, and that would be so appreciated because it really sends a message back to those platforms that people are listening and people want to hear this. It makes those platforms want to spread the message. Thank you so much for that. Onward with today’s episode. So I had this funny experience the other day, that reminded me of such a critical lesson in business and sales specifically. And I would argue that when we’re talking to sellers, we’re kind of in a sales, sales mode. And so I as you might know, don’t have kids. Kids are not really my wheelhouse, overall, but we have some really good friends who live just up the street. And they had a babysitter cancel and they needed to go out for a couple hours to do an activity. So they texted my wife and I and asked if we could come over and spend a couple hours have dinner and hang out with their son, who is about seven years old seven and a half. And so I wrote back, you know, it’s sort of said, well, Jessica’s out of town. It would just be me. I mean, do you feel comfortable with that? And they wrote back? They’re like, Yeah, of course we feel comfortable with that. I of course was trying to give them an out to same Yeah, you’re right, you’re probably right, this maybe this isn’t a good idea so that I could, you know, not have to go do that. But they said sure. Of course we’re okay with that. So I reluctantly said, Oh, great. All right, I’ll be over at 530. And so I went over at 530. And the punchline is that it ended up being a totally fine evening. But it was so funny that they had made a homemade pizza. And so their son and I were cutting the pizza, and I dish it up and we sit down at the table, and he looks at me and he goes so the first thing you need to know about Minecraft is bla bla bla bla bla bla bla bla bla. And I was like, Wait, whoa, what? Minecraft. Okay, this is have heard the word before? I don’t know anything about this. Why? Why are you telling me the first thing I need to know about it? I don’t even know why I would need to know about this. Where did this come from? This is out of left field. What the heck are we talking about? And he dove in to explaining this thing to me at like the 1000 foot level. I consider myself kind of like a 60,000 foot first kind of guy. I need somebody to give me like the dead simple overview first before then we get a little more specific. Then we get a little bit more specific. And he hands me this book. He’s like, okay, read this page here. And then read this little section here. And I’m kind of looking at him and I’m like, okay, and I read the read the pages and I was just like, What the heck is going on here? I have I’m having a hard time following this what you know, so he’s seven. He doesn’t realize that Maybe there’s a certain way that he could unpack this conversation with me in a way that would kind of a get me interested. But but be give me some context. So I knew what the heck was going on. And it made me think about this expression in the world of sales. That says it confused mind always says no. And I thought to myself in that moment, like, I am a confused mind, and I am sort of like energetically saying, No, you know, like, energetically like, I’m sort of leaning back. And I’ve got my arm outstretched, like trying to hold this topic back, because my mind was confused. I’m like, I didn’t know we’re talking about this. I don’t even know what this is, can you start with a higher level explanation of this thing to me, before we get into the specifics, a confused mind always says no. And what I think is really important to understand there is it doesn’t matter how good the proposal is, it didn’t matter how much I actually might like Minecraft, and might, it doesn’t matter how much your seller would actually appreciate the benefits of the proposal you’re giving them. If they’re confused, our immediate human reaction, this has nothing to do with real estate. But human reaction is a confused mind always says, No. And that puts a premium on making sure that what we talk to our sellers about is so unbelievably clear. And that means that the way we present our proposal not deliver a proposal, the way we present our proposal, and the way we unpack that conversation is really just as important as the content of the proposal itself, the price, the downpayment, the terms, whatever it might be. This also reminds me of a famous story within my kind of community of peers, where I learned to do this type of real estate entrepreneurship. And there was an event where the attendees were given a call from a seller, but it was staged, and the recipient of this call didn’t know it was staged, and didn’t know it was being recorded. So it’s kind of like, yeah, it’s just like a stunt call to record them. So that there would be something to listen back to. And to go through into, you have lots and lots and lots of teaching moments. Right? So this particular student of this program is brilliant. I mean, like, brilliant person, really brilliant. Real Estate mind has read the zoning code books frontward and backward in, in his town, he understands deal structure, like just about nobody I’ve ever met. He is just unbelievably technically gifted. And he also is has good people skills, but he didn’t really realize how important the use of people skills were in this case. And so here’s how the call goes, you know, the, the seller, the suppose that seller calls and says, Yeah, I’ve got I’ve got your name from so and so I’ve got this property, I need to sell it. Here’s the situation. And then, as the story goes, this this person, my friend, the student, proceeded to wit barely even taking a breath for about 30 straight minutes, just started unleashing an unbelievable torrent of knowledge and deal structure and possibility on this, suppose its seller, right? So you know, just just just unbelievable, like, Okay, well, you know, what we could do is we could set up this trust, I had this trust was owned by that trust. And then there was this LLC, but you actually, we might want to have to LLCs. And then we do a land sale contract from here to here with, you know, kind of a down payment that split between this and this. And I think we’d advertise this for the first 10 years probably be like a 45 year am scheduled, there’d be a small balloon, and that just this unbelievable kind of explanation that was not meant to be a flex to show off how much technical knowledge he had. But just because he had the ability like Einstein to solve this problem, to solve this equation to create a solution for this, but the seller on the other end was just like, oh my gosh, like they’re just stunned. They didn’t get a word in edgewise, as my mom would say, for, you know, half an hour. And at the end, it’s just like, oh, okay, well, that gives me a lot to think about. Right. And if that had been a real life, seller meeting, that seller just would have said they probably would have been polite about and said, Okay, we’ll think about that. But what they really were saying was like, no, not because the solution was wrong, but because they couldn’t follow it. Right. They had no idea what was going on in the conversation. And so, here is my takeaway for you from this. It’s Not that we want to treat our sellers like their kids, or or talk down to them in any way. But we do absolutely need to a understand our audience, what is the level of sophistication of this person, we need to meet them where they’re at is sort of another expression that’s used about this, right. So if this is a person who has sold one or two properties in their life, they’re simply done being a landlord, we need to sort of speak in terms that are, are nice and simple, and a benefit driven that connect back to what they’ve told us. They want, right? So instead of talking about, like, oh, this, these technical details, well, this is called an installment sale, and you’re, you know, we’re gonna use this escrow company, they’re gonna card charges $6.25 a month, we’re gonna do this and this, and that, we might just say, every month, just like you’ve been getting a check every month from your tenants over the past 10 years, every month from me, you’re gonna get a check for the following amount, right, we have a conversation that sort of in plain English, that meets them where they’re at. And so a we need to know our seller. But B, also, we need to present the information in an order. That makes sense. And maybe not everybody’s brain works like mine does. But I would say that it’s usually a safe bet, when you start at a high level with kind of a 60,000 foot, kind of, you know, recapping of where we are, and then we move into a little bit more detail at the 30,000 foot. And maybe we never even in that meeting, get down to the 1000 foot, maybe we get down to 10,000 feet, right? So the conversation might be like this, you know, Bob, through our conversations so far, what I understand you’re really looking to accomplish is to move on from this previous chapter where you’ve been a landlord, like spin a good chapter for you, but there’s new things you want to be doing. You want to be taking this particular fishing trip to Florida, every year, and you don’t want to wonder if your phone is going to ring with a maintenance request. Is that Is that right? Right. So Bob says yeah, okay, so we’ve started super, super high level. And then I might say, and Bob, you mentioned that you really enjoy the part of being a landlord that you enjoy, though, is just the sort of, in your words of mailbox money of the check that shows up or lands in your bank account each month. And so you’re kind of hate to see that part. Go away. Is that right? Bob says yes. I say great. So here, I’ve put together some thoughts on how I can buy your property from you in a way that keeps that check lending in your bank account, you know, on the first of every month, is it okay, if I share the details of that with you right now? Bob says yes. So now we’ve gone from 60,000 feet to maybe 45,000 feet. So I say great. Okay, so here’s what I’m thinking about Bob. I’m thinking I should give you a downpayment at closing. And then I think the rest of our of our of our balance, which we’ll talk about in a second, I think I should make monthly payments to you for that for the next 20 years. Because you mentioned that that’s how you want to spend your time you want this this income, you see yourself doing this fishing trip for the next 20 years. We’ll talk about numbers in a second. But conceptually, does that seem to make as much sense to you as it does to me? Now, Bob says Yes, great. Now we’re getting we’re slowly getting more and more specific, but we started very conceptually. Right. So now I say, Okay, Bob, I’m thinking from our conversations, I’m thinking that I should buy this property from you for $300,000. And I think that I should give you a $20,000 downpayment. Now, I’m sure Bob, you know, I didn’t just make that number up. So here’s where I came up with $20,000. You mentioned you had $10,000 on your truck left that you wanted to pay off, you’ll have a couple bucks in closing costs, of course, and I want to make sure that you’ve got enough money to buy the fishing gear for this next trip. So I was thinking maybe about $20,000 would make sense. Do you agree? Bob says yeah, that makes sense. Great. So then Bob, that leaves us with $280,000 that we would have on a promissory note. That’s the balance from which I’d be making monthly payments to you over time, right. So we could go on and more and more depth on this conversation. But that is the big idea. If I had started that conversation with Okay Bob, I want to do an installment sale monthly payments to you are going to be you know 4% interest only or more on you know, principal balance of 280,000 That’s because I’m gonna give you $20,000 down at closing on a 300,000 our purchase price he might have just been kind of over whelmed because we would dove right into the weeds instead of starting at a high level. So my friends, a confused mind always says no And you have to be really, really careful that even if you’re presenting the best proposal in the world to your seller, if it is presented in a way that they find confusing based on just who they are their level of experience, they’re, you know, they’re they’re just overall savvy, how much they’ve had these types of conversations before. If we, if we don’t match, where they’re at, they’re gonna get confused and confused. People energetically reached their arm out to stop whatever is coming at them. And we don’t want that we want them to open up their arms and embrace it. And that means we have to be presenting not only great proposals, but actually presenting them greatly as well. That is it for today’s episode of racking up rental. So again, shownotes can be found at thoughtful rv.com/e 154 Please do us a big favor by hitting that subscribe button and your podcast app and rating and reviewing the show. I so appreciate that. I see every rating and every review. And I really personally appreciate that. Did you know also that we have a Facebook group for thoughtful real estate entrepreneurs. It is true it’s called the rental portfolio wealth builders and we kind of need you in there. So please come and join us if you’re not already there. You can search that on Facebook of course or we set up some magic on the internet if you just type group dot thoughtful rt e.com into your browser. You will be taken right there and you can hit the join button. If you liked this episode, please take a screenshot of it. Post that screenshot to your favorite social media profiles. If you go to Instagram tag us, we are at thoughtful real estate. All right, I’ll 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 a win win deal makers. Remember, solve the person to unlock the deal and solve the financing to unlock the profits.

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