In this stage of the conversation with the seller you take a little bit longer. In this stage what you want to try to develop what is the seller motivation?

Understand the Motivation for Selling

One of the things you would do to get into stage three – the motivation stage – is simply to ask them. “What are you hoping we can do here today?” Basically you’re asking that person, “What are you trying to accomplish here?” That will start the conversation.

Maybe they’ll tell you what they’ve done so far to sell the house. Maybe they’ve had it on the market for a while and it did not sell. Maybe they tried to rent it and they couldn’t rent it. Maybe they can’t afford the payments and they fell behind and the foreclosure documents have arrived.

Let that person explain that process as to what is going on and why they’re motivated to be talking with you. You want to tease that out a little bit. You want to find out if they’ve fallen behind on payments.

Ask a few simple questions. “What’s going on that you can’t afford the mortgage?” They’re going to tell you, “I lost my job, my illness,” or whatever. “My daughter’s in trouble and I had to cover some expenses.”

Whatever the process is, at that point you want to try to understand their motivation for selling. In your mind you’re starting – just starting – to put together an offer, or a possible offer even. At this point you may do what’s called floating some ideas out there.

Trial Balloon

Let’s say it’s a pre-foreclosure situation. You’re comfortable enough and you know enough of the facts to at least tentatively make some thought process in terms of an offer. You might do what’s called a reluctant buyer and make what’s called a trial balloon.

Many of you are aware this happens in politics a lot. In fact, it happened this weekend if you follow politics. President Obama made some announcements before he was elected that he would not raise taxes on anybody making below $250,000. Lo and behold, this weekend two of his top guys come out and made some announcements about the possibility of raising taxes. “We’re keeping all things on the table.”

That is a classic floating a trial balloon. What they were doing was in a very soft way throwing the idea out there. It’s the same way with making offers.

If you want to float a trial balloon, the way you would do it would be let’s say you have a partner. You’d say, “Hey, I’m just thinking out loud here and I’m not sure my partner would approve of this, but maybe we could try doing it this way. Maybe we could buy your house this way.”

It’s not really an offer. It’s not really anything. You’re throwing it out there almost as a trial balloon. You can do that once you’ve developed some motivation.

It takes some practice. If you need to work on it little bit, work on some ways to do that. Have somebody that you would refer to – a partner, financial backer or something of that nature.

You could say, “You know what? I’m thinking about this. I have no clue whether my financial backer would approve this, but why don’t we think about maybe doing this. Is this something you might consider?”

Do you see that very soft language? It doesn’t put you in a corner if you’re making the offer and it doesn’t box them in. It’s a discussion point that’s floating out there. It’s very subtle the way you do it and it’s very important that you do it right.

If you do it wrong, what will happen is you’ll move into a negotiation too early. You don’t want to do that. At this point you’re “floating a trial balloon” to see what their reaction might be. You don’t want to make any commitment, so the language has to be just right. “I’m thinking about this…. Maybe my partner would consider something of this nature.”

Again, if you get a negative response from the other person, you can pull back and then the conversation continues on for a while. Then you would obviously go a different direction the next time.

I invite you to learn more about Real Estate Investing and join our FREE weekly tele-seminar class where we teach tips and strategy on how to grow your real estate investing business and how to raise Private Money by going to http://www.realestatewealthtoday.com/TuesdayTipsSignUp.html

Mike Lautensack is a full-time real estate entrepreneur, coach and mentor in Philadelphia, PA and creator of the Private Lending Presentation Kit. This powerful done-for-you kit is loaded with tools and techniques to attract and develop a consistent stream of private investors into your real estate business. To learn more about this kit and receive your FREE eBook go to
Real Estate Investing Blog.

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