 President's
Corner
Continuing from last two weeks on negotiating with Note
Holders I pulled some more
information from my research and
experience to share with you
some of the typical reasons and
excuses Note Holders give us and
what the best responses might
be. This will give you
better understanding of what
Note Holders might be thinking
and how to negotiate with them.
See if you have heard these
reasons and if you have used
these responses.
More Reasons for
Not
Selling:
1)
- I am not having any
problems with the note right now, everything is fine
2) - No Current
need to sell
3) - I really
don't need the money right now
4) - I like the
monthly income
Best Proven Responses:
1) I appreciate that Mr. Seller and that
is why we can make you a great offer on your note today. If you begin
having "problems" what do you think happens to the risk and value of your note?
Do you think the value of your note will go up or down? (Pause) That's
correct (or not correct) - your risk increases and our risk also increases which
would mean that I would have to pay you less than I can today if you start
having "problems" with the note.
2) & 3) & 4) This one can be tough
or it can be a fun one. I might joke with them and ask if they would give
me some money. Then I tell them how it would benefit them to sell now and
get the money into something that will make them more for their kids, their
retirement, etc.
What typically stops them in their
tracks here is asking them what they do with the monthly income. Are they
paying bills, are they saving it, or are they just blowing it? Then you
gently point out that at the end of the note unless they have invested it, they
will have zero. Whereas if they take a large lump sum they will more
likely invest it and watch it grow. Or even pay off their own debt so any
income they earn will be theirs to do with as they please.
Even
More Reasons for
Not
Selling:
1)
- The offer is lower
than expected
2) - Need more
money, owe money on home
3) - Wary of the
companies legitimacy
Best Tried and True Responses:
1) & 2) First of all if you do not set
the seller's expectations on the very first phone call you will hear this type
of reason many times. You should not hear this on the second phone call, if you
do you need to re-examine what you say on your first contact phone call then do
it and make sure they know right up front where their expectations should be.
If this still comes up when you present the options then ask lots more
questions. How much were you hoping for? What were you planning on using it for?
How long would it take to come up with the difference? If they need more money
due to a wrap-around or AITD, remind them of the reasons they don't like the
current wrap. Tied up credit lines, being left with large debt if buyer
defaults, less buying power due to debt to income ratios still on their own
credit. Sometimes you can show them that they are better off selling the
note and bringing money to the table to walk away from the situation.
3) This doesn't come up too often.
Explain the initial mortgage purchase agreement and the purchase contract.
Explain to them that we actually obtain a title policy at closing and would not
be able to just randomly claim ownership of the note if we had not provided
money. Simply state that "even if we were to have you send us the
originals in the mail and not send you your money, you would simply instruct the
borrower not to pay us. You would have an executed agreement that you
signed in front of a notary that would show we were liable." Talk about paper
trails and offer to close at a title or escrow company or real estate attorney
of their choice (and at their cost) if that makes them more comfortable.
Again, the bottom line with all of these
responses is to keep the seller talking. There is no one response or
one-liner that I can give you that will make the seller says yes every single
time, no golden phrase. I think the key to being successful in the note
business is getting to know the seller and "really" listening to what they say.
In return the seller begins to know and trust me. When I get them to let
their guard down I can typically find out what the real reason is they called.
Once in awhile they really are "just curious". However, most other times
they aren't. Sometimes you will find out the real reason for their call on
the first phone call and other times it may take several conversations.
Sometimes when I call to follow up I just call to check in on them and say hi
without even bringing up their note and I let them bring it up. Then we go from
there.
I hope these last three
weeks of insight will help you in your negotiating and in getting more
transactions
Remember, Success Demands
Action! Keep on marketing, it’s going to
work! TWITA!
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