I have a strategy that I use in all of my sales presentations. I have perfected this strategy over the years, and it works. The steps are Presentation, Education, and Negotiation (PEN) and when used correctly they can lead to closing more deals and mastering the real estate investing process.
I cover the PEN strategy in-depth during our Foreclosure Investing Mastery course but will give you an outline of the steps here. With the PEN strategy, you know what you are going to say at every step of a meeting with a seller, and have answers mapped out to common objections you may get.
The presentation phase is where you build your credibility with the seller. You can give them a short presentation about your company, your methods, and why it would be beneficial for them to work with you, as opposed to a conventional sale with a real estate agent.
In the education portion of the meeting you use the research you have done on the property to educate the seller. In the methods of real estate investing I teach, we deal a lot with highly motivated, or distressed sellers. One of their main goals is probably going to be a quick close. In this situation, you must explain the difference between selling with a realtor versus the quick close method you can offer.
At this step, you will also give them the Fair Market Value (FMV) that you have calculated using comparable sales and condition of the home. Then, you go over the costs that come with listing their home with a realtor. These costs include commissions, closing costs, holding costs and back payments. Once these figures are subtracted from the FMV, the seller can see the reality of what their net proceeds would be if they did a traditional transaction.
The seller also has to consider that the traditional sales process can take months. At this point, it becomes clearer how your method with a quick close would benefit them. By educating you can get the seller closer to a number that will benefit you both, without even being to the negotiation phase yet.
Hopefully, in the education phase, you have given the seller enough fact-based data to help them see how closing a deal with you is more advantageous than with a real estate agent. Now, if you haven’t already, you need to get them to a final sales amount. It will be a number that will help them move out of their current house, and that gives you a nice profit as well.
There are a few phrases I always avoid. “What is the least amount you will take for the house,” or when they give you a number asking, “Is that the best you can do?” Asking them if that is their best offer can offend the seller. By posing the question in the right form, you can get the seller to give you their “must-have” number, not their “want” or “need” number. I have well-scripted questions that you can ask to get the number you are looking for in our Foreclosure Investing Mastery course.
In the negotiation portion of the meeting, after they have seen what their NET proceeds would be in a traditional transaction and you agree on a realistic amount they need to move out of the home, there will be one of three outcomes:
• Immediate Cash To The Seller – this will be a lesser amount than one of the other two options.
• Seller Carry Back Note – they will get money after the home has sold.
• Combination – the seller will get some cash now, and the rest after the house is sold.
Following the PEN strategy has proven successful in my own real estate ventures, and those of my students. I have testimonial after testimonial of how these strategies lead to wealth through real estate investing.