Getting leads for your real estate business is one thing…
Closing those leads is quite another.
You can run a sub-par Facebook or Google ad campaign and generate some leads in the next few days. But getting those leads on the phone, building immediate trust, and making a low-ball offer that they are willing to accept…
Easier said than done.
Fortunately, expert salesmanship and negotiation tactics are things you can learn. You might only be turning 1 in 20 or 1 in 25 leads into deals right now, but that doesn’t mean you have to settle…
Top performing salespeople consistently learn from their experiences, improve their negotiation tactics, and increase their conversion rate. In the words of Mark Hunter, “It’s not about having the right opportunities. It’s about handling the opportunities right.”
With that in mind, here are 10 real estate negotiation tips that will help you close more deals.
Tip #1: Invite the seller to tell you “No”
It sounds counter-intuitive…
I want the prospect to say “YES!”
Of course you do. But sales isn’t that cut ‘n dry. In fact, pushing a seller to say “yes” before they’re ready is a sure-fire way to kill trust and lose the deal. What’s far more effective is inviting the seller to tell you “No” so that they trust you, they don’t feel pressured, and they gain control.
Example (from an actual land investor that I know — the example is with a land buyer, but the principle is the same):
Salesperson: What are you wanting to do with the property? Build?
Prospect: Well, we want to put a trailer there for a while and build when we get a chance.
Salesperson: Ah. I see. Unfortunately, there is a restriction for parking your trailer on the property. You can be on for 45 days and then you have to be off for 15 days, rinse and repeat. So I’m not sure if this would work for what you’re needing.
Prospect: It may work. Not giving up yet.
The buyer later explained that they could make that restriction work with what they are trying to do. My friend went on to close that deal. By inviting the prospect to say “No” to the deal, he showed empathy, built trust and, more importantly, he encouraged the buyer to solve his own dilemma.
Try it for yourself and see what happens!
Tip #2: Follow up with sellers for an entire year
It’s hard to overstate the power of consistent follow-up for your business.
Every big, profitable, wildly-successful real estate investing business I know has a system for following up with sellers, regardless of how motivated they seem at the point of first contact.
In Ryan’s real estate investing business (the founder of Call Porter), he has an automated text system that follows up all year long with seller leads that he’s received.
Here’s one story he tells on his Facebook Page that perfectly illustrates the impact of consistent follow-up for real estate negotiations.
“I got lucky because I never gave up the search. Are you quitting too soon? Or are you willing to pursue luck with a vengeance?” — Jill Konrath
Tip #3: Find the real decision maker
The person you’re talking to on the phone, the person you’re making a low-ball offer, the person you’re trying to get to say “Yes”…
They might not even be the primary decision maker.
In Start With No, Jim Camp explains…
“Who’s calling the shots? Who are the real decision makers within the adversary’s bureaucracy? This might seem, at first glance, to be a fairly mundane issue, but it’s not. It is critically important…”
That’s a necessary question to ask. Before you can make real headway in a negotiation, you must determine who the real decision maker is (where the buck stops, so to speak) and cater your questions and answers to that person’s needs. When dealing with sellers of distressed properties, family members often play a massive role in the decision making process.
Ask questions like…
- Who can help you think through this decision?
- What do your family members think of my offer?
- Is there anyone else who you’ll need to consult with before accepting my offer?
Tip #4: Create a mission statement for your negotiations
You probably already have a mission statement of your real estate investing business, but do you have a mission statement for the negotiations you engage in?
In fact, the more thoroughly you understand your goal for negotiation — your desired outcome — the better you’ll be able to… well, negotiate. The more comfortable you’ll be to walk away if needed and the more confident you’ll be to stick to your original offer, no matter how much the seller argues or disagrees.
Jim Camp writes…
“Effective negotiation is effective decision making, plain and simple, and the foundation of effective decision making is a valid mission and purpose to guide it. This is bedrock in my system.”
Tip #5: Determine what pain the seller is experiencing
Amateur negotiators are needy, they’re entitled, they struggle to see past their own eyelids.
Expert real estate negotiators, on the other hand, show empathy to prospects, listen closely, and put themselves inside the seller’s world. Because when you listen and understand the pain that the seller is experiencing, why they called you in the first place, and the future that they dream of, you become their guide in the decision making process.
When they ask you questions, you now know why they’re asking those questions and from what angle you should respond. When they object, you know why they’re objecting and how you should sooth.
Matt Heinz explains…
“Filter everything you’re doing, saying and pitching through the customer point of view, and you’ll improve just about every metric you care about today.”
Tip #6: Put the power back in the seller’s hands
No one — your prospect included — likes to be forced into buying something or selling something.
(That’s why there’s such a thing as buyer’s remorse)
And in the case of real estate negotiations, it’s unlikely that forceful sales tactics will work anyways since it’s such a big-ticket item which requires lots of thought and consideration.
Prospects probably won’t sell to you until they’re completely convinced it’s their best option.
One of the best things you can do, then, is get out of the seller’s decision making path and encourage their internal dialogue to take place while you’re nearby, able to guide them.
Ask them open-ended questions, propose solutions, and allow them to make their own decisions.
The more in-control that your prospect feels, the more capable they’ll be of making a good decision, and you’ll be right there to help guide them along the way.
Tip #7: Explain your offer, but not too much
When making an offer to a seller on a distressed property, the first thing out of their mouth is almost always…
Or some other filler word which indicates that it was far less money than they were expecting to receive for the property. In fact, Ryan claims that over 90% of the leads he receives respond this way to his first offer.
It can be helpful to explain why your offer is what it is and even the other benefits of working with you.
(“Yes. My offer is less than if you sold with a real estate agent. But we can close in as little as 7 days. It’s a trade-off and I totally understand if you’d rather go with a real estate agent.”)
But don’t overexplain or become talkative. Talkative-ness is a sign of neediness, and neediness kills more deals than anything else.
Tip #8: Determine the seller’s lowest acceptable offer
Before you make your low-ball offer, try and get an idea for how much the seller is hoping to receive for their property.
This will help you determine how motivated they are and how much time you should spend negotiating with them.
Almost every time, what they want to get for their property is wayyyy more than you can actually afford to pay them. Don’t let that discourage you. Just explain your business model to them and how it’s unlikely you’ll be able to come anywhere close to their desired number.
Then pay attention to how they respond.
If the person is tight-lipped about how much they want to get for their property, make a lower-than-usual offer to see how they respond. They’ll likely spill the beans with something like, “Oh! No way. I’m not going to take less than $150k”. Now you know what their lowest acceptable offer is and you can use that to determine how motivated they are and how much time you should spend trying to convert them.
Tip #9: Pre-qualify leads before spending too much time with them
I’ve seen it before…
You’re answering phone calls in the middle of dinner, when you’re supposed to be on vacation, even when you’re trying to go to the bathroom. You don’t want to lose a deal because you didn’t answer the phone.
(After all, it’s impossible to get a prospect back on the phone after you missed their initial call)
I don’t blame you.
I would do the same thing.
Unfortunately, about 90% of those phone calls lead nowhere — you end up talking to tire-kicking sellers who have nothing better to do (it seems) than to ask you pointless questions and then hang up the phone after a quick “let me think about it and I’ll call you back.”
(They don’t call back)
Want to become a more effective negotiator? Spend more time talking to sellers who are actually motivated to sell their home and have someone else (like Call Porter’s expert trained, U.S.-based reps) pre-qualify those leads for you.
To pre-qualify leads, they can ask questions like…
- How much are you wanting to get for the property?
- Why are you wanting to sell?
- When do you need to sell by?
- How much did you buy the property for?
Tip #10: Don’t answer unasked questions
Like I discussed earlier, talkativeness is a sign of neediness, and neediness kills deals faster than anything else.
When you’re needy (when you talk more than you listen), prospects don’t have time to work through their internal dialogue — their objections, desires, fears, needs. They feel rushed and shoved in a direction that they don’t want to go.
So slow down a bit.
When you’re talking a lot, much of what you’re saying might not even be of interest to the prospect, meaning it’s simply a distraction from the real decision making factors (not good for the negotiation).
Listen to what the prospects says — what they ask you and what they object to — and then patiently address only the issue that they brought up (or dig deeper if you need more information).
Don’t start listing all the benefits of working with you and how you can solve every problem under the sun…
If the prospect has a question, answer it and ask a new one to keep the negotiation moving forward, but don’t bombard them with unwanted information.
How are you going to close more deals without generating more leads… with the same number of leads that you generate right now?
In other words, how are you going to become a more effective real estate negotiator?
It’s a question that you think about a lot…
And the above 10 real estate negotiation tips will help you close more deals in less time, build immediate trust with prospects, and even grow your business.
Those things won’t happen overnight, to be sure. But with consistent practice, implementation, and experimentation, you can close more deals and become the salesperson that your business needs.
Time to start training.