Would You Rather be Right or be RICH?



Would You Rather be Right or be RICH?

 Community of Real Estate Entrepreneurs



There’s an old piece of advice generally given to husbands regarding arguing with their wives that goes, “Do you want to be right, or do you want to be happy?”.

And the longer I’m in the wholesaling business, the more I realize that nearly the same advice applies to negotiating with sellers—only it’s, “Do you want to be right, or do you want to get the deal?”

This was a little tough for me at first, as an Engineer, I'd know the Answer and it was the only one.

Don’t get me wrong: I have more than my fair share of gotta-be-right-ness. In my younger days, I often found myself debating with sellers about the “facts”—how much their house would sell for fixed up, how much their neighbor’s house sold for last week, what it would really cost to re-do the roof and gutters, and on and on.

Back in those days, I think I had some of the same psychology I see in you folks when you say to me, “I’m afraid to talk to sellers because I’m afraid they’ll be able to tell that I don’t know what I’m doing, and I’ll lose all credibility.”

This assumption that sellers sell to you because you’re intelligent, experienced, or a bigger expert than they are about houses in their neighborhood is just dead wrong.

Sellers sell to you (at the crazy prices and terms that you offer) because

  1. Your offer solves whatever problem they think they have, and
  2. They like you enough to be able to listen to you about how and why your offer solves their problem

Why would a Seller take that Offer?

The latter is what negotiation experts mean when they say, “build rapport.”

And guess what slightly older, exponentially wiser I know about building rapport now that I’ve talked to 10,000 sellers or so?

Even if the seller is clearly, provably in the wrong, arguing is not a good rapport builder.

So today, I NEVER argue with sellers. Instead, I try to gently lead them to understand their SITUATION's realities, which is more important than the “facts” anyway.

So, when a seller says, “This house will sell for $150,000 fixed up, so $100,000 is a great deal” (and I know that it’s a $125,000 house at best and that only after $50,000 in work), I no longer try to prove to him with comps that he’s wrong.

Instead, I say, “Huh, I was just looking at some houses that sold in that neighborhood, and I don’t think other people are getting those prices; what about yours makes it worth more?”

Or “Let me ask you this: why don’t you just make the improvements yourself and sell it for $150,000?”

Or “I’m just not seeing those $150,000 sales. How did you come up with that number?”

I use a very powerful Technique "The Tell Tale Heart" by Edfgar Allen Poe

Asking instead of challenging is much more helpful in getting into the seller’s mindset. A lot of the time, in a situation like this, it turns out that the seller depends on the tax appraisal or the Zestimate as a way of estimating the value. This allows you the opportunity not to argue but to educate and suggest.

My automatic response when the seller says that he’s based his value on what “the tax people” say it’s worth is, “So, honestly, if you fixed it up and put a sign in front of it, do you think someone would come along and pay you $150,000?”—and 75% of the time they’ll admit that they don’t believe that at all, and you can start talking about real numbers.

If the seller says, “Zillow says it’s worth $150,000”, I’ll gently laugh and say, “Yeah, Zillow is sort of famous for giving us the values we all WISH our properties were worth. It says mine is worth $210,000, and I’d sell it right now to anyone who’d pay $175,000”.

Sellers aren’t going to respect you more or be more likely to sell to you because you prove to them that you’re right and they’re wrong.

If you think it’s better to build rapport than be right, you’ll find gentle ways to let sellers know that you don’t accept their assumptions or assertions while still making the seller like you. Here are some more examples that I find myself using all the time:

Seller (typically a landlord): “The kitchen, bath, and furnace haven’t been updated in 50 years, but they all work great, and the roof is 25, but it doesn’t leak, so it’s basically in move-in condition, and you won’t have to do anything to it.

Me: “Well, I don’t know about you, but I’m getting lazier and lazier in my old age, and I like to take care of anything that’s going to NEED to be done in the next ten years when I buy a house, so I don’t have tenants calling me and whining about how it’s cold in the house or they don’t like the countertops. Know what I mean? So, I’m guessing that even though the house doesn’t NEED work, I will want to do some right away anyway.

Seller: “It needs walls, plumbing, electric, roof windows, kitchen, bath, roof, furnace and central air. My brother-in-law is a contractor, and he says he can do it all for $12,000, so the house is a great deal at $xxx, xxx.

Me: “Is your brother-in-law a GOOD contractor? Because if he is and you think he can do all that work for $12,000, I’d like to meet him there and contract him to do it. If my guys do that, it’ll easily cost $50,000 with labor and materials. But if he can do it right for $12,000, I’ll pay $xxx, xxx”.

(This usually leads to the seller either admitting that his brother-in-law is an idiot, that this was a labor-only bid, or that the BIL has never actually seen the property, and we can start talking about real numbers again.)

Seller: “I’m not selling for less than $40,000 because I want to buy a truck, and that’s how much the truck is.”

Me: “Well, I’m not sure if your shell in a warzone will buy that truck for you. Do you have a plan B for getting the truck if your house doesn’t sell for that?”

(This usually shakes the seller a little but makes him consider what his other options are).

You get the picture—don’t argue, ask. Don’t make someone you want to do business with feel silly, disrespected, or wrong. Even when you’re positive, you're right, and the seller either has his head where the sun doesn’t shine, is crazy, or is lying.

You can be right, or you can be rich.

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