One of the primary reasons this blog exists is to help you save time as a real estate investor.
Time is our most valuable resource. If you haven't realized this yet—believe me, you will. It took me a few years to grasp how valuable my time actually was.
Why I Needed to Manage My Time
In mid-2011, I started experiencing some significant time constraints in almost every area of my life, and it all seemed to be happening at the same time.
- I had just enrolled in an MBA program.
- My business activity was starting to explode at an exponential rate.
- My automated systems were generating more leads than I could handle.
- I had gotten involved with a few other joint-venture projects that were requiring some significant attention to detail.
I hardly had any time to sleep, and my most important priorities (my wife and family) were having to compete for my attention.
Things were getting crazy, and my time was getting pinched in ways I had never experienced before. After getting pushed to the point where literally every minute mattered, I had to make some changes to start managing my time effectively.
Identifying the Biggest Time-Suck
One of the most time-consuming areas of this business was the research process. Unfortunately, this was an important step in every real estate transaction, especially when I was about to invest a significant amount of money into a deal.
In a perfect world, I would be able to invest only as much time as necessary to accomplish only what was needed at present. Since I know it's impossible to work at 100% efficiency, I tried to avoid in-depth research on each property UNTIL the seller has accepted my offer. Once this happened, then I could justify spending a lot more time digging into the details of each property.
But how could I possibly know what to offer for a property until I thoroughly researched it?
RELATED: The Fastest Way to Research Any Property in the United States
That's a good question, but a more important one is:
How can we know if we're dealing with a motivated seller in the first place?
Wouldn't it be great to know up front whether a seller is willing to work with us? I mean, let's get to the point here! Are they motivated to sell or not?
Finding a Motivated Seller
As I found out, it is VERY helpful to know this sooner rather than later. Instead of blindly researching dozens of deals and sending out 20-30 offers just to get one acceptance (playing the numbers game), I didn't have time to fish around for motivated sellers and hope for the best. I needed results fast!
If you want to know whether you're dealing with a motivated seller, you need to get very direct with them.
RELATED: What Do You Say When A Seller Calls? How To Ask The Right Questions Of Your Prospects
Whenever I start a conversation with a potential seller on the phone, I only have two objectives in mind:
- Objective #1: In the Seller's opinion, what is the FULL market value of their property? At this point in the process, accuracy doesn't matter. I'm just trying to nail down a starting point for understanding what the seller thinks their property is worth (if they have any opinion at all).
- Objective #2: Is the Seller willing to sell their property for 10-30% of their property's FULL market value (whatever number they quoted above)? I know, 10-30% is a ridiculous offer price. That's the point. How they respond to this question will tell me quickly whether or not they are willing to cut their losses and knowingly let their property go.
In other words, my brief conversation (3-5 minutes on the phone) would go something like this:
Me: “Tell me, in your opinion, what is the full market value of your property?”
Seller: “Oh, I don't know… maybe $200,000?”
Me: “Okay. If we could pay you cash, pay for all of your closing costs, and close on this transaction in the next 2-4 weeks, would you consider selling your property for $40,000?”
There are a couple of ways a seller could respond to this, and whatever their response is, the following steps are pretty simple.
Scenario A
Seller: “No, I won't take $40,000.”
Me: “Alright, if we could pay you cash, pay for all of your closing costs, and close in the next 2-4 weeks, what would be the absolute minimum that you would accept for your property?”
Seller: “$160,000.”
Me: “Thanks for your time. I hope you're able to find a cash buyer elsewhere.”
HANG UP.
Scenario B
Seller: “Yes, I'll take $40,000.”
Me: “Alright, we'll continue to do our research on your property and if we can make you an offer, we'll send it to you within the next 7–10 days.”
HANG UP.
Note how we're not making a commitment here. This ultimately boils down to a screening call. It is short and to-the-point; we aren't hiding the fact that we intend to buy properties for dirt-freaking-cheap prices.
If the seller isn't willing to play ball (and believe me, many of them will make that clear), they won't! As soon as you know the seller isn't willing to take your low-ball offer, get off the phone and move on to your next prospect.
RELATED: How to Deal With Nasty Sellers and Angry Responses
Saving Time by Hearing “No”
Once you realize how much time you're saving by simply knowing whom you're dealing with upfront, you won't mind hearing the word “No” anymore.
Getting turned down quickly is actually a blessing in disguise because it means you can STOP wasting your time chasing after deals that will never happen. Instead, you can focus your energy on sellers who are actually motivated to sell.
Getting these answers quickly will save you a TON of time. You'll also find that your acceptance rate (when you actually do send out the offer) will go through the roof.
Why? Because you already know the seller's answer before you send them your offer.
RELATED: The Ultimate Negotiation Technique That Nobody Talks About
I used to avoid these kinds of “direct” phone conversations because, frankly, I was scared. I didn't want to offend the seller or deal with their wrath on the phone. It wasn't until my time was being seriously threatened that I learned to start getting very direct with these people.
I am a serious buyer, and I don't waste people's time (especially my own). If the seller and I are never going to see eye-to-eye, it's in both of our best interests to figure this out as soon as possible. That way, both parties can stop holding out for something that is never going to happen.
Great post!
This is really big. It amazes me when people tell me they found dozens of vacant houses and have researched the deeds for each house back to the 50’s or whatever. WHY!??!!
What a huge waste of time. That time should have been spent getting in contact with the owners of those houses, finding out who is motivated and trying to make a deal.
Nice blog, Seth.
Thanks Danny! I appreciate you stopping by. I can tell you’ve been in this game for a while too… your experience really shows. Thanks again for your insights.
You made some nice points there. I did a search on the subject and found most persons will agree with your site.
Great blog again Seth!
I especially like the line regarding the answer NO being a “blessing in disguise.” I’ve never thought about it that way and it was pretty enlightening. Thanks again!
Glenn
Thanks Glenn, for your comment. It’s good to hear you weigh in on this. As crazy as it sounds, I’ve almost learned to love the word “No”. Anything that gets to the point and saves me time is a good thing in my book!
Excellent post!
I have been wasting time with sellers that are not motivated enough. Thank you for opening my eyes to this and the need to stop wasting my time and the sellers.
I know your pain Jason – I’ve been there many times myself. Luckily, I’ve learned to filter them a bit better. 🙂
Glad you found this post helpful!
Hi Seth – I love how this question cuts to the chase.
Question for you: I’ve been doing drive-by farming and am now reaching out to owners by phone, what have you found is the most effective way for opening up the conversation about them selling their property to me?
Thanks for your help and insight!
Hi Hayya – that’s a great question. I personally haven’t targeted many of my properties this way (I usually start with a letter and wait for them to reach out to me). However, one guy I know who is really good at initiating these kinds of phone conversations is a guy named Claude Diamond. You can see an example of how he does it here: http://youtu.be/aZoywcZ3t_k
Hope that helps!
It does. Thanks Seth!
Hi, Seth. From all houses that you bought, could you name 3 main sources of leads?
Hi Pavel, it’s really just been two primary sources – direct mail and my buying website.
100% American cut-throat rubbish.
Gosh, lucky you that you’re not asking for a sales job in my company, I’d just ask you:
How much do you think your job is worth paying you?
You’d say 5K a month
I’d say: Are you willing to start today for 1.2K a month?
You’d say No.
I’d ask, how much is the minimum you’d expect to be paid?
You’d say 3K
I’d kick your ass out of the door and with a typical American smirk on my face say; “good luck finding a job”.
Wanker!
LOL! Thanks for the morning laugh Mitch!
I’m not sure if it’s an “American” thing or a “free market” thing, but the bottom line is – you or I can demand whatever we want in life (e.g. – I can demand a high salary, and you can demand a cheaper employee), but it’s all meaningless unless we’re both offering a viable solution that the other person is willing to pay for (either in time, money or both).
In your scenario above, I would never be asking for $5K a month unless I had verifiable proof that someone else was willing to pay me just as much… or that the size & scope of your problem warranted such a price tag – (and that I actually had the solution). If you did kick me out the door, that would certainly be your prerogative – but it also wouldn’t be difficult for me to move to my next best option or find someone else who was willing to pay me what I know I’m worth.
I’m curious to know what Mitch’s company is? Isn’t paying someone 1200 a month “Cut throat”, too? There is no such thing as cut throat. Everyone accepts what they get. If they say they don’t, they are a victim. There is always a choice. At least in this country.
Thanks for chiming in here Jason. I’m glad to hear someone is thinking with some perspective. 🙂
I am looking to stop urban decay in my neighborhood. Thank you for giving me tips on how to find cash buyer so that I can buy and rehab these vacant properties in my community. If you know some investor that want to help they can contact me on my website.
Hi Seth,
What do you reply to when they say, “Well, how much are you willing to offer?” People who refuse to give you their property’s price
Hi Daniel – this is actually pretty common, and regardless of what they say (or what they think their property is worth), it never changes my offer price. It’s almost always around 10% – 30% of their property’s market value (whatever I determine that to be).
Hope that helps!
Mr Williams will you explain what is the point ?
I mean if someone post an ad for a land for 200k, and i call for quick closing with all cash, and he says “you know what, if it’s cash and 1 week closing that’s a deal – in 60% lower then asking price”
dosent it means something is wrong with the land? who will lose 60% to close a deal?
Hi Josh – there could be something wrong with it – but if you’re looking for motivated sellers the right way, you’ll find that there are MANY people who are happy to sell a perfectly good property for pennies on the dollar, simply because the property is a problem and their life and they want it gone (and you’re making it easy for them). Check out this blog post for more details.
Seth,
I just sent out my first batch of mailers, and I’m absolutely terrified of someone calling me. I have no experience in any aspect of this whatsoever except purchasing my own first home six years ago, and having relatively decent people skills. I’m devouring your articles left and right (and thank you so, so much for making your insight available).
My question is twofold: If I’m buying a property that is relatively remote from where I am, and I have no knowledge of the market in that area, how can I know what it’s truly worth? And how can I buy it without being physically present—or do I have to drive there in person?
I’m starting small and safe—properties that are only (or mostly) land, assessed at under $20k by the county—but I have very little cash to my name, only an excellent credit score which I’m afraid to ruin by taking out excessive bank loans to kick-start my investing. If you could address my question, and any other factors I’ve overlooked, I’d be most appreciative! Thanks!!
Thanks for your comment Alex! Here are a few blog posts you may find helpful:
https://retipster.com/when-seller-calls-ask-right-questions-prospects
https://retipster.com/overcome-phone-anxiety
https://retipster.com/valueofland
Specifically – check out the last one with regard to the land value. I hope those help!
Thanks a million!! By the way, I also just finished reading the article on angry/nasty responses, and thank you so much for including audio clips of people’s responses. Just listening to them made me offended and inflamed and a little intimidated, and I’m not even the one they were talking to. Made me realize I need to harden up my nerves a little in advance.
Extremely helpful!