 President's
Corner
Continuing from last week 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 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 tried
any of these tested responses.
More Reasons for
Not
Selling:
1)
- The property is
worth more than what I sold it for and I'd love to get it back.
2) - The property value is much higher
now than when sold and if the buyer defaults I can sell it for much more than
before.
3) - They say the property is worth way
more than the unpaid balance.
4) - If I get
the property back I can resell it for more than your offer.
Best Proven Responses:
1) & 2) & 3) While that may or may
not be true today, only an appraisal can determine that, do you have one? After
witnessing the burst of the housing bubble in recent years it is highly
doubtful. Very few areas of the country right now are experiencing any
kind of rise in property values. And as to getting the property back, have
you ever had to foreclose on someone? It's not that simple. There are
several hundreds if not thousands of dollars and a great deal of time to invest
in the process of foreclosure. In addition, your borrowers may be afforded
the legal right to live in that property, rent free, during the process.
The borrowers may use delay tactics, such as declare bankruptcy, which would net
them even more time in the property and more expense for you. What kind of
condition do you think the property will be in if you get it back? Are you
also willing to invest several more thousand dollars of your own money to fix it
up to sell it?
As with any kind of investment, you have
to look at both sides of the situation. I do not know what is right in
your situation but being in this business I have heard countless foreclosure
horror stories over the years and I wouldn't want yours to be the next one.
4) How likely is it that the borrowers
will default? Have they made all their payments on time? Most people will
pay their house payment before they pay their cell phone bill, cable bill or
other bills because if they don't pay their house payment, they don't have a
place to live? Are the borrowers currently employed and still have their jobs?
(A barrage of questions like these will sometimes quickly diffuse this type of
objection.)
Even
More Reasons for
Not
Selling:
1)
- I have no reason to
sell it because I do not need the money
2) - Feel like
they are losing money
3) - I'm losing
money if I sell for that amount
Best Proven Responses:
1) There are several ways to respond to
this that will get the seller thinking before they give me a definite answer.
One is being in control of your money versus depending on the borrower to send
you payments. Another that will work is bringing up their own debt and
what rates are they currently paying. And that by paying off their debt
now, they will be better off and make more money in the long run. You could also
point out what the cost of gas is today versus when they started driving and ask
them what they think the cost of gas will be in 5-10 years (or when the note
stops paying). Then move on to how the cost of everything in general will
be more expensive in the future compared to today, yet they will still be
receiving the same small payment amount.
2) Remind them they are not handing over
an account with the balance of the note in it. Remind them that while they
may be losing potential future money, they are receiving 10-25 years worth of
future income immediately, and while they wait on that income to trickle in they
are losing opportunities to make more money with what we pay them. Try to
get them to talk about what the money today could accomplish (could they pay off
enough debt to more than account for the loss of the monthly payment?).
3) You are not really losing money if
you consider that you could put the amount we are offering in a different
financial vehicle that will make you more money over the long term. This
gets them asking how, then I show them they are really only "earning" an
interest rate of about half of what they think they are (if you account for
taxes, servicing fees, long term etc.).
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.
Next
week we will
have the final segment of Note Holders reasons for not selling and the best
responses. Remember, Success Demands
Action! Keep on marketing, it’s going to
work! TWITA!
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