Talking To Sellers Doesn't Have To Be SCARY...
You know by now that in order to be a successful real estate investor, you have to get on the phone and talk to people. If you’re new to this business, this may be one of the most difficult parts for you. It can be time consuming and inefficient if you don’t have a system in place that gets you the information you need on the first call. And what if they say something or ask a question and you're not sure how to respond? Don't get too nervous... we've all been there.
If you read my Seller Script post, then you know how important it is to have a seller script that you use every time you qualify a new lead. The more you use it, the more comfortable you’ll get with the questions you ask and the flow of the conversation.
You’ll also start to notice a pattern.
Even though every seller you talk to is different, you’ll see that almost every one will have some kind of objection during the call. And as you talk to more people, you’ll begin to see a pattern develop where more people object to certain questions, and other parts of the conversation are very easy.
Now that doesn’t mean you should stop asking those questions, it just means that those topics make certain homeowners uncomfortable and you need to be able to overcome their objections for the conversation to move forward.
After hundreds and hundreds of calls and conversations with homeowners, lots of mistakes and time wasted, I’ve compiled a list of the most common real estate investing seller objections that I've come across and how to respond to them. Once a seller objects, your response is going to make or break the rest of the conversation and the deal.
OBJECTION 1: I’m going to file bankruptcy instead.
RESPONSE: I know bankruptcy can seem like an easy way out, but it will negatively impact your credit and will severely reduce your ability to buy another home for years to come. There are even some government jobs that won’t consider people who have a bankruptcy on their record.
OBJECTION 2: I’m just going to let the house go and let the bank take it back when they foreclose.
RESPONSE: I can understand how that can seem like the easy thing to do. However, letting the bank foreclose and take your house back is going to negatively impact your credit and severely reduce your choices in the future. You may not realize this, but you will probably still end up owing the bank money, there may be tax consequences, you won’t be able to buy another house for years, and you could end up having to declare bankruptcy down the road. Foreclosures can also take a long time and, most likely, your house will end up sitting vacant for several months or even years, which will also have a negative impact on the neighborhood.
OBJECTION 3: I’m going to try listing it with an agent again.
RESPONSE: There are a lot of great real estate agents out there, but the market is very competitive right now and homes aren’t selling as fast as they once were. You also have to look at the numbers - how much do you owe, how much can you list your house for, and how much do you have to pay an agent? Unfortunately you will probably end up owing money at the end. (Showing them an example here is very powerful)
OBJECTION 4: I’m going to rent it.
RESPONSE: That’s a good plan if you can get someone who will pay enough to cover the mortgage payment, taxes, and utilities every month. You will be in good shape if you can also find someone who is trustworthy and won’t treat your home like it’s a “rental.” Remind them that their renters will expect them to perform all of the upkeep and maintenance on the house, repair anything that breaks and, in most cases, the homeowner is the one who pays the taxes on the property. Also, ask if they owe any back payments to their lender. If so, they will be responsible for bringing the loan current and if they’re paying a mortgage and taxes (on their existing house), rent (on their new place), and maintaining 2 places, coming up with that extra money will be very difficult.
OBJECTION 5: I’m going to find someone to buy it from me and then rent it back to me OR I want to stay in my house.
RESPONSE: I understand that moving out of your house and moving on is very difficult. And this sounds like a great option, however, I am not able to do this and either is any other real estate investor because of your circumstances. The lender’s guidelines won’t allow this type of situation to occur and, if they find out that this is happening, you will have more trouble than it’s worth. I know it’s hard to imagine now, but I think you’ll find that you’re relieved to be out from under your house and getting a fresh start. I can suggest a website where you can find great rentals to get you started if you like.
OBJECTION 6: My lender won’t let me.
RESPONSE: I can understand your concern, but it’s not up to your lender whether or not you sell (or whatever the situation is) your house. You are not able to transfer title without first paying off your existing loan, but that, of course, wouldn’t happen here. (Explain the process of what you plan to do again at this point)
OBJECTION 7: Another investor said they would give me money when we close.
RESPONSE: That sounds great… BUT based on my experience, I don’t know how another real estate investor can promise to give you money if they haven’t talked to your lender or worked out the terms of the purchase yet. If I were you I would ask them to sign a promissory note stating that they will pay you $X,XXX at closing. If they won’t sign it, then I think you have your answer. Unfortunately there are some investors out there who tell sellers in distressed situations like yours what they want to hear.
OBJECTION 8: Why should I trust you?
RESPONSE: That’s a great question and I don’t blame you for being skeptical. It’s normal and I completely understand it. What I can tell you is that I’ve worked with dozens (OR hundreds) of homeowners in very similar situations to yours and have been able to help them get out from under their house and move on with their lives. Unfortunately nothing is 100% guaranteed until we get to closing, but I will do everything I can to help you. If you don’t want to lose your house to the bank, you’re ultimately going to have to find someone you trust, right? I’ll do everything I can to help you, just like I did with everyone else that I’ve helped before you. Sound good?
OBJECTION 9: We’re not ready. Don’t we need to fix up the house before you buy it?
RESPONSE: Absolutely not. We buy houses in any condition. You don’t need to do any repairs, or even cleaning, before I buy your house.
OBJECTION 10: I want my attorney to review all of the paperwork.
RESPONSE: Absolutely. That’s perfectly fine and, in fact, I highly recommend it. I want you to be comfortable with everything that we’re doing here and it’s important that you understand what’s happening and trust that what we’re doing here is the best thing for you.
OBJECTION 11: Is this legal?
RESPONSE: Yes, absolutely. We’ve helped dozens (OR hundreds) of homeowners just like yourself and we wouldn’t still be in business if we were violating the law. (Then explain the process that you’re using again and how it complies)
OBJECTION 12: I want to get more for my house.
RESPONSE: I completely understand that you feel your house is worth $X, but I’ve pulled comparables and I want to show you exactly what’s happening here in your neighborhood. (Show them the comparables for similar houses within a mile of their house that support your offer price) These houses are all within a mile of your house and have sold recently for $X, $X, and $X. Now, by factoring in the amount of work that your house needs (show them the repair estimate that you've done), you’ll see how we arrived at this number. Our goal is to get you out from under your house so you can walk away and get a fresh start and this is how we can do that. Unfortunately, with the market, and for me to be able to make this worth my time, I can’t give you what you feel your house is worth, but I can give you [what you’re offering] and this will be a win-win.
Remember, as you’re talking to sellers, the most important thing is to listen to them, mirror their communication style, and truly understand what their concerns are. As you build rapport with them, you will also build trust, and as your relationship develops, moving through the different parts of the deal will become much easier.
The more sellers you talk to, the more comfortable you will get with overcoming their objections and tailoring your message to meet their needs and goals. Not all sellers are the same. They have different motivating factors and different end goals, but the one thing that you can always be sure of is that what you’re doing can help their current situation.
Have some other common seller objections that you’ve come across? This is a learning community, so I’d love for you to share them below so we can all learn from each other!