Do you know the 7 Sins of REI? So many people spend so much time worrying about the how to, they forget the why. If you know why something is happening, you are in a far better position.
It’s sometimes called the WHY TO. Why you do anything. Marketing experts have broken it down, but basically, if you know the seven deadly sins, then you know WHY people do anything.
SLOTH = LAZY
GREED
ENVY
WRATH
GLUTTONY
PRIDE
LUST
If you can figure out WHY someone wants to buy or sell something, then you will know what position to bargain from.
Right now is the best time to get involved in real estate. Sure, you have the doom and gloom prognosticators predicting two or three years before a recovery begins. But it could turn around in the blink of an eye, and you could leave thousands of dollars on the table. Imagine that if you are thinking about investing in a neighborhood (market) then there are other investors thinking the same thing. All of them are waiting for some divine signal to trigger their buy. It could be the house you’re thinking about making an offer on. You could be the trigger of the turnaround. That’s playing into the investor’s GREED.
The Homeowner may not want to sell at the price you’re willing to pay. That’s GREED also. They think their home is worth pre-bubble burst prices. They don’t have a realistic view of the market. Realtors use Comparative Market Analysis to determine if the price is correct, and if their COMPS are from the bubble timeframe, they will be very unrealistic. Again GREED (the realtor’s) is coming into play.
PRIDE may prevent them both from allowing the Sale to happen. As an investor, you can’t afford to get emotionally involved with any deal. Just run the numbers. A good rule of thumb is using the 70% FACTOR. If you can buy a home for 70% of what you could sell it for, then you will make money on the deal.
But how do you find those deals?
One of the tools you must have in your toolbox is the question WHY. Why are you selling now? Why aren’t you holding onto this property until the market turns around? And when they answer, turn it back on them and ask why again.
Why are you selling now?
I want to move.
Why are you moving?
I’ve got a job offer in another city. (Now you know they’re willing to negotiate)
Why did you get a job offer?
I’ve been out of work for six months. (Now you know they may be behind on their mortgage)
By asking the WHY questions, you can determine what motivates the seller. Start your conversations by asking permission to ask them questions. “I’ve got a little questionnaire I fill out on every house before I make an offer, would it be all right if I asked you a few questions so I can discover what’s best for both of us?” You’re creating a win -win situation. Who is going to say no to that?
If they say, “No, you can’t ask any questions,” then you can be comfortable in assuming they aren’t going to budge on the price.
If I got that response, I would ask, “How flexible are you on the price?” and segue my why questions in the follow up.
Real Estate Investing is a relationship sales game, and creating a relationship with your seller is only going to help you get the best deal possible. Your seller doesn’t want to be taken advantage of (FEAR) and will be operating from that position. It’s up to you to ease their minds and create the best deal possible.
Most people won’t consider other options because they don’t know about the options. You need to be educated enough to teach the seller what their options are, and the only way you can get the education you need about a particular property is to get answers to the WHY questions.
