Not much frustrates wholesalers more than having a motivated seller reject their offer outright. It feels like all the hard work and time have been wasted.
It’s at this point that many new wholesalers give up and say they have “tried everything.” All of those videos of RJ Bates III and Brent Daniels must be fake, right?
But they’re not. Successful real estate wholesaling involves a lot more than making a single offer on a distressed property and then cashing a check for $100,000. In fact, almost every wholesale deal you’ll ever close will require negotiation. So to help you get ahead of your competition, here are three time-tested negotiation tactics you can start using to handle objections in real estate today.
Build rapport with motivated sellers
If you can build rapport with a property owner before making an offer, your chances of dealing with an objection drop significantly.
When you understand a seller’s situation and the problems they’re facing, you can craft an offer that fits their needs and solves their problems. If you make it clear how your offer will help, you’ve done 90% of the negotiation work already.
However, don’t confuse rapport for friendship. While you should be friendly and conversational, wholesaling is still a business transaction. You’re trying to buy a house, and the seller knows that. In fact, if you spend hours chatting, you’ll hurt your chances of closing the deal because you’re wasting the seller’s time. Remember, you’re solving problems, not looking for a new best friend.
Ideally, rapport-building should follow these steps:
- Start with a great conversation opener, especially if you’re cold calling
- Develop a general understanding of the problem
- Learn how the seller has tried to solve the problem
- Outline how you can help solve the problem and how the seller will benefit
- Make your offer
Sometimes you’ll need to break out of this sequence, but it’s a great guide to follow. Just be sure not to include too many steps when you’re outlining the process for the seller. Including more than three or four can be confusing and make the process feel overwhelming.
The foot-in-the-door technique
The foot-in-the-door technique is one of the most effective sales strategies of all time. You may not know what it is, but you’ve almost certainly bought something because of it.
It’s an especially great option if you suspect that the seller is going to reject your offer. Here’s how to use it.
If you know that the seller is going to reject your offer, start with an initial, low-ball price. When they reject it, counter with the price you actually want them to accept. The contrast between the two offers will make the second one seem much larger and more appealing.
This technique makes the seller feel like they’ve gotten a deal and gives them a sense of control in the negotiations. By raising your offer, you basically show them that they’ve successfully talked you into a better price.
Traditionally, salespeople have used this by quoting a higher price and then backing down to a lower one. The buyer often jumps at the lower price because of the contrast and because they feel like they’ve won the negotiation and gotten a great deal.
There’s a crucial factor to remember when using this technique, though. Your initial offer has to be believable. If your first offer is for $20,000 and your second is for $100,000, this strategy won’t work. The values have to be close enough to create a believable level of contrast. Once you master the art of contrast, though, you’re going to start landing deals faster than you ever imagined.
The limited-time discount
One of the most common seller objections that real estate investors hear is some variation of “I’m not ready to sell the property or make a decision yet.”
Many wholesalers think that the only way around this objection is to apply pressure and work hard to convince the seller. Sometimes this works, but it can quickly turn into a bullying and begging situation. Not only is that unprofessional, but it can also hurt your business, because it can make you look like a scammer, especially if you do it over the phone.
Instead, you should follow another classic marketing and sales strategy: give the seller a time-limited discount.
Let’s imagine you’ve made an offer to someone who wants to sell, but at the last minute, they develop cold feet. You can say, “Hey, I understand why you’re having a hard time signing a contract. Selling your home is scary. But I’ve helped X number of people who were in similar situations, and they always got through it. So here’s what I’m going to do: if you sign this contract today, I’m going to bump my offer up to [New Number]. But I’m looking at several other properties tomorrow, so today is the only day I can make you that offer.”
The key here is to pour both empathy and authority into your counter-offer before you reveal the discount. Empathy puts the seller at ease and shows them you understand their situation and authority shows them that other people have accepted your offer in the past and been thankful that they did so.
When you follow that up with a time-limited discount, it puts pressure on the seller, but not in an aggressive way. Now the seller has a “use it or lose it” situation without being forced to make an immediate decision. This is especially effective if their objection involves talking to a spouse or family member.
Does giving them time to think about your offer hurt your chances of closing the deal? Not really. By pairing some thinking time with a ticking clock, you’re letting them build the pressure themselves.
Here are a few crucial factors to remember:
- Stand by your time frame. Offering your special price after you said it would expire will hurt your credibility. If the seller calls back after you said the deal would expire, offer them your initial price.
- Don’t bait and switch. If they call back and accept your offer within the time frame you promised, stick with it. Sure, you’ve cut into your profits slightly, but you might not have closed the deal otherwise, and using a bait and switch tactic is another way to lose credibility.
- Never lie in your authority statements. Not only can this land you in legal trouble, it will also put your reputation at risk. If this is your first deal, either skip the authority statement or use your knowledge of wholesaling to explain how selling has helped other property owners. But never lie about the number of deals you’ve done.
If you’re serious about wholesaling, you’re going to encounter objections from motivated sellers. But these three time-tested closing techniques can help you move past objections and lock down more deals.
Just remember to stay confident, calm, and honest. You may need to spend hours practicing each one in the mirror or writing different scripts, but if you learn how to handle common real estate objections, you’ll have the sales skills other wholesalers only dream of. Then you’ll be ready to find cash buyers and use these same negotiation techniques to earn your well-deserved assignment fee.