Real Estate Marketing: Phone Screening
In sales, there is an expression that a salesperson should not “pit polish.” This expression means that they shouldn’t spend their time trying to turn a pit (someone that is not interested or qualified) into a piece of fruit. Obviously, this is a waste of time and not the best way to get a deal.
In a very similar way, investors do the same thing. They are so happy that someone called them as a result of their marketing that they make one of two mistakes. Either they waste their time scheduling appointments to look at properties that are never going to amount to a deal, or they spend a lot of time trying to convince the seller that they should be motivated. You can save a lot of time by qualifying the home and the seller on the phone with effective screening techniques.
The whole point is that we only want you to spend your time with properties that really are deals instead of trying to force a deal.
The call-screening process is split into two parts. First, determining if the seller is motivated or not. Remember to always look for highly motivated sellers. They will be willing to accept a lower offer and/or more preferred terms for their house. If the seller is not motivated, you are wasting your time. So when someone calls you as a result of your marketing, the first thing you ask is how he or she found out about you. Find out what part of your marketing is working so that you can do more of it. Track your results and spend your marketing dollars where you are getting results.
After they have answered, ask how you can help them. Usually, they will say something like, “I need to sell my home.” At this point, ask an open-ended question like, “Tell me about your home.” You want them to talk for a little bit about how great their home is and all of the reasons you should buy it. This will soften what you are going to do next, that is, determine their motivation. There are three questions that you should ask to determine a seller’s motivation:
1. Why are you selling? This is why we want them to talk about their property for a little while before we ask this question. If you ask this question first, it can sound like you are asking so that you can use that information against them. If you find out about the property first and then ask this question, it sounds like you are saying, “If I had a property like that, I wouldn’t sell. Why are you selling?” Even if they do not give you an honest answer to this question, the other questions will flush out their true motivation.
2. When do you need to sell by? Time can be a motivating factor in why they are selling. If they respond by saying that they needed to sell the home “yesterday,” then that is the type of person you want to work with. If they respond that they are just checking to see what people are paying or it doesn’t matter when they sell, it probably isn’t the person you are looking for.
3. What are your plans if you cannot sell the property? This is the big question. If they respond that it won’t matter and that they could refinance or find another answer, this should be the end of the call. They are not the motivated seller you are looking for and it is okay to tell them that they are not the type of person you are normally able to help. However, if they don’t know what they would do if they couldn’t sell or don’t want to think about it, then that is exactly who you want to work with.
All you need to determine at this point is motivation. If they are not motivated, end the phone call and move on. It would not amount to a deal anyway. If the motivation is there, then move on to the second part of the screening process.
The second part of the process is to determine whether we would approach this with a cash offer or a terms offer. There are three questions to ask to determine price versus terms:
1. If I were to pay all cash and close quickly, what is the least you could accept for the property? Try to see what their bottom line is. No matter what the response is, follow it up with, “Is that the best you can do?” You will be surprised how many people lower their figure just because you asked. If they come down $10,000 or more, they are flexible on the price.
2. If I were to make your payment until I could find a buyer for the property, would that work for you? With this question, you are looking for a lease option scenario. If you ask a seller if they would consider a lease option, most sellers do not understand what that means and would say no. With a question like this, they understand the situation and can answer either yes or no. The point here is not to negotiate a deal, but to find out what the seller is open to.
3. If I were to make you a small down payment and then paid you the rest of your equity over time, would that work for you? You are looking for a seller financing deal by asking this question. You would make a down payment and pay their equity in monthly payments to the seller. Again, the point is that you cannot ask the seller if they would carry financing. Most do not understand what that means. You have to ask the question in a way that anybody can understand.
After you ask these questions, you should have a pretty good idea whether to approach this deal from a cash standpoint or a terms standpoint. If the deal looks like it could be profitable, schedule an appointment with the seller to meet at the property. The sooner you can meet with them the better.
If the seller is open to either price or terms based on the questions, make more than one type of offer. When you arrive at the property, you may say that you could buy the property under any of the following situations. Write down the cash offer, the lease option offer, and a seller financing offer. Then ask the seller which one of these would be best for them. Let them choose and often they will choose a solution that will surprise you. As long as all of those scenarios are profitable for you, it really doesn’t matter which one they choose.
If you screen calls this way, your phone calls will be a lot easier and you will not waste your time on calls that will not amount to anything. The better job you do at screening the call, the easier it will be for you to locate a motivated seller.