This is an Email exchange between one of my coaching clients and myself.  My coaching client had a string of Emails from a client who was complaining .  This buyer has had every excuse of why not to buy.  This is the return email that I asked him to write to get him off the fence.  Maybe it will help you, too.

Question:

Hi Walter,  See the e-mails that I included. This guy keeps up with his negativity on the market. How do you think I should respond?

Thanks!

Answer:

Your buyer has every excuse in the world…as to be expected.  I see some mistakes on your part.  You do not remind him what the finish line looks like and you do not add any coals to build a fire under him.  Here is my response to him:
Joe,

I go to sleep at night, because I use my experience to energize my crystal ball.  Here are the facts so you can make a decision:
1.  You can make an offer subject to your “orders” coming in.  This puts us in line and gives us a chance to stay in the game if another offer comes in. 

2.  Remember when you told me you wanted ________________.  This property meets all of those requirements and more such as: _____________________.

3.  Replacement value on this property based on current construction costs is $_____________, which is pretty much a bottom on this property.

4.  If you miss the November tax credit date, you pay $8,000 more as it stands today.

5.  Your after-tax cost of owning is way less than the true cost.  You are not getting the benefits of owning until you own.

6.  The onslaught of additional foreclosures has been known about for a year.  There are private investors and investment pools ready to buy them when they hit.  Properties are less than replacement value and rents are higher than payments.  When this has happened in the past, we were at the bottom.

7.  Rates are going to go much higher in the future.  Lenders will not allow low rates when inflation comes roaring back.  Have you seen gold lately?

8.  Moving in the snow is really annoying.

9.  When markets turn, they turn quick.  Look where your payment goes if we recover 10% of the 40% drop in price and rates go to 7%.  Pigs get slaughtered.

10.  For these reasons, I am buying investment property for myself and my family.
If this is the home, my direction would be to make an offer today.

I have had many agents ask me what thirty years of hearing the same objection over and over again will allow you to do.  My answer is below, but I do have one caveat…you really need to help these people to not make a mistake when they consider renting high priced residential property that was never intended for the rental market.  Here is a recent objection that a coaching client needed help with.

Question:  I have a new objection.  “Our house is no longer for sale because we’ve leased it out for a year.”  How do I come back for that?

Answer:

My response to them would be: “I understand.  Have you signed the lease yet?”

Their response: “No.”

My response: “Well, many owners have appreciated my rental analysis prior to to leasing.  Because of negative cash flow, vacancy factor, maintenance factor, and other expenses, many owners find this to be a losing situation.  This situation compounded with lost opportunity cost and the possible further erosion of equity can be a real eye opener.  May I ask you some questions to get the information so I can work the analysis for you?”

Here is the analysis.  Take the rent being paid and subtract 35% for all the expenses of the property except for P and I.  Then subtract P and I from the total.  $3,000 rent less $1,050.00 less a P and I payment of $4,000.00 is a gross negative of $2050. per month.  That is a loss of $24,600 per year. 

Let’s say the “one-time seller” had $200,000 equity.  If he could get a 4% return, that is a loss of another $8,000 in lost opportunity costs in a year.  Plus if this $600,000 home lost another 10% in total value in the next 12 months which is the prediction….that is another $60,000 off the equity for a total loss of $92,600 or almost half your equity…and that is only in one year.  This little dip may last 2=5 more years and not look like a V recovery.  It may skip at the bottom for more than 7 years.

Right now we have buyers who are buying.  Why?  Because we loan them our commissions toward their down payment and can take a note against their new property. We market harder.  We keep a great database of buyers.  We have the best SEO strategy.  We use a team approach, and we educate the agents known to have an interest in your area and price range.  We research their names based on their production for the last 3 years and make sure your property is on the top of their showing list.

I would be happy to show you this in writing and also a plan to accomplish your goal (main core value goal).

You now have a script that works when the deadly “I’ll just rent it” objection comes up.

Here’s a question that maybe you were too afraid to ask or too afraid to hear the answer!

Question:

What are the methods, strategies, and best practices for motivating buyers in this challenging market and one that will perhaps return to a new normal in 2010?

Answer:

One of the largest challenges that average producing agents have is following up on leads that are not moving forward.  Some agents spend all of their time following up on bad leads instead of producing new one. 

Motivated buyers will appreciate your great services (see July ‘09 Illinois REALTOR® magazine).  If the buyers do not appreciate the services, my thirty years of experience tells me that they are not low-hanging fruit.  Low-hanging fruit buyers answer questions, have an idea of what they want, get excited when you look beyond the MLS for property, will get pre-approved by your lender team member, and sign a loyalty agreement. 

The under-motivated buyer will not do most of the above.  Generate more buyer leads and get rid of the ones that won’t follow the plan.  If a buyer that I am following up on would not complete the system after about 3 tries, I would say, “I don’t know that I have the necessary tools to complete your goals, but (agent’s name) in the office has been very successful in the type of property and service you are looking for.  Let me get you two together.”

I would then collect a referral fee and go out to develop some listing leads, make a better listing presentation, and increase my inventory.  We all know the least expensive and most effective way to find more buyers is to have more listings!

Question:

Hi, Walter.  I’m an agent in Naperville, IL.  Just thought you’d get a kick to know that last weekend I was at a thrift store and found some real estate materials. One of them was your ‘The Modular Listing Presentation” video and manual. I think I paid $3 for it. I liked it and really like some of the letters you had in that packet. I’m going to change them around some to fit my own needs but thought you’d get a kick out of this story.

I also found a book of cassettes that were one hour interveiws from six of the top producers in California. They were from around 1980. That cost me $1 and they were really interesting to listen to.

One thing is a constant in this business and that is nothing really changes. Technology did but it is always going to be a people business!

Answer:

Hi, Jackie!  Those items are classics and sell on Ebay for over 150!  Congratulations on your find!  The concept of learning about a seller before you go over there is huge and very few agents get this concept.  If you know what they want to accomplish and then give them a plan to accomplish it, you get your commission, the listing, and most of the times the price — if they are motivated.  If they were not motivated, you would not have gone in the first place.

Here was a question sent to me about creating packages for specific neighborhoods. I thought I’d share to give you some good ideas from Christopher and hopefully a good “gem” or two from me!

Question:

Hello, Walter. I missed you at the Marriott the other week, but I’ve already got all of your kits anyway! Quick question. I’m designing a website in my neighborhood that is going to have:

Neighborhood Information
Homes For Sale (including FSBOs)
Garage Sales
A section for networking (people with homebased businesses can advertise, like snow removal, lawn mowing, Mary Kay, REALTORS®, etc.)
Current real estate market information and past solds in the area
Neighbors names, addresses, phone number, email addresses
Other pertinent information to the neighborhood

My question for you is — have you ever had one of these “packets” of information that you pass out to farm specific neighborhoods? It seems like among your documents on your CDs there was something that was specific to what I’m trying to do. Maybe not…It might have been through another source, but just checking to see if you had anything like that!

Thanks, Walter! Hope you and your family are well! God bless!

Christopher Smith
Traditions Real Estate

Answer:

The only vehicle that ever advertised my neighborhood website were the “just sold” cards from that particular neighborhood. When I ran out of “just solds,” I would retrieve the information from the recorder’s office (not the MLS) then notify the neighborhood of those closings. Sometimes, the receivers assumed that I sold these homes.

Don’t forget to add to your site these important ingredients:

1. Tell me what my neighbor’s home sold for.
2. The 48-hour free phone value analysis
3. The neighborhood dream home search
4. The “pull out some equity and invest” service.
5. Local business coupons
6. Baby sitting leads
7. Open house section…even let other REALTORS® use it.
8. Awards for best neighborhood pumpkin and best decorated home for Christmas.

Go get ‘em!