The REI Sales Systems requires specificity - clear action steps that both parties understand and are able to look to in order to know what to expect and when to expect it. This session covers the clear steps - the minor commitments - that you need to put in place in order to lead your seller through the process so they are clear about the way forward.
As you work with potential sellers you need to keep in mind that your primary goal is to help hem solve their problem with the property - tax issues, estate issues, whatever - your job is to help them fix the problem by getting them out of the situation. With that in mind, make sure you don’t cause them problems by being unclear about the process. You’ve got to be clear and in control. This coaching session walks you through how to do that through the use of minor commitments.
The verbal commitments you make with your seller are what keep the process moving forward. If nobody in the process is being asked to do anything concrete, the sales process will stall and you won’t get anywhere. On this coaching call, Justin shares how you can discuss the way forward with your seller in a way that gives them specific things to do and enables you to know what to expect and how to follow up. This is valuable stuff so make sure you don’t miss it.
In order for your transaction with a seller to happen, you need to make sure that both of you are doing what is needed in order to keep the ball moving forward. That means every time you talk with your seller you work to clarify the details and chart a way forward. But don’t hang up the phone until you reiterate everything you’ve talked about and clarify who will be doing what - and when you will talk again. This enables you to ensure that you have the same expectations as your seller and will avoid any roadblocks. Find out what Justin suggests you do to make this happen, on this coaching call.
One of the most common hesitancies sellers have when dealing with an investor is a sense of skepticism or mistrust. They’ve never worked with an investor before so they aren’t sure if what you’re doing with them is legitimate. That’s why you need to make sure you are making commitments to them - and following through on what you commit to. It builds trust and enables them to feel comfortable working with you as the process moves forward. Find out more in this coaching call.
Outline of this great episode
The Monday Mindset & Wednesday Wisdom calls are group coaching calls included in the REWW Academy. These live calls are hosted bi-weekly by Justin Colby and Pat Precourt and cover a specific topic each session - ending with live Q&A at the end of each call.
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Below is the full transcription of the Step 5 in the REI Sales System Wednesday Wisdom call with Justin Colby.
What is up, everybody? What is up? Welcome back to our Wednesday Weekly Wisdom. I am Justin Colby, as always, here to help you through the real estate business, the education side, and very specifically, we're going to be continuing our training on the sales system we have developed. These systems have come from a lot of studying in sales, have obviously come from what we do in our own business, and I, myself, am huge on understanding the marketing and sales side of the business, so I'm constantly investing in sales training, reading sales books ... and so a lot of this is not necessarily new material for some of you, if you've ever been in sales or gone to sales trainings, but it is very specific to real estate investing. So we are going to continue rocking it out.
Today we are on the fifth step, which is the minor commitments. With that said, let's just jump into the first slide and we're going to review the commitments, right? So the minor commitments are done throughout this process, right? Your completed sale really doesn't come until everyone has signed off and there's been a series of actions that have been taken by both of us and everyone signs off that everything's good to go and move forward. The part that we see, as real estate investors, or that we don't do well, is we don't really define what those very specific action steps need to be for us to get to that part of the result. Excuse me. We don't actually define what those action steps are.
So what happens is, we go through this process and we're really just kind of spinning our wheels. We're really just kind of moving, right? Creating stuff to do and trying to get our best things done, but we don't have any clean layout. We don't have very specific systems that we can implement, there's no guidance, and what today's all about is to give you guys som guidance on how to get those commitments from your sellers, right? From the prospects. Then you can close those deals, right?
The key that we do, as entrepreneurs, a lot of times we create busy work. We create things that we have to do so we feel like we're doing something, and that's a mistake, right? 'Cause you're not actively doing what we call RGAs, Revenue Generating Activities. If you don't get these commitments, you're not actually pushing the deal forward, you're ultimately wasting your time and their time and no one's ultimately going to sign off on a contract, because these minor commitments aren't being upheld. It's very important for you to go into every one of these negotiations with the seller, or maybe you're co-wholesaling a deal that these minor commitments need to be made, right? It's very, very specific.
If we go into slide two, the seller wants to be led through this process, okay? I have yet to meet a seller ... I can tell you a deal that we're doing right now. We do our weekly meetings every week, and so I review each deal with my team. I have two acquisition managers, a project manager, a disposition manager, and then two, full-time follow-up managers. We review each and every deal and the scenarios, and what I can tell you is, no seller ever necessarily leads what happens. I always lead, or my team, my company, always leads the process. Even a deal that we reviewed Monday that we're working on, the seller so much didn't want to lead the process and so much wanted to follow, they actually brought a realtor involved, which is a whole nother process.
I bring that case to light just to really emphasize how much sellers do not want to lead the process. They want to be led, right? Primarily because they've never done this before. Primarily because they're terrified. They don't know if they're doing the right thing, the wrong thing ... they need to trust something, right? 'Cause they may have owned the property for 35 years, they might have bought it 30 years ago and have lived in there this whole time and they're not accustomed to selling homes, you know? They bought it 35 years ago, they probably forgot the entire process anyway, so for us as investors, we got to do a good job of directing and leading through this entire process.
The next component is, if they've never worked with an investor, a lot of times they can be pretty timid. They might feel like the deal that I brought up, the reason why I bring it up is because their hesitancy was so strong they thought that investors always give an offer amount, we sign the contract, and the day before closing, they always go back and they always renegotiate the deal. That's just simply untrue.
But they don't know because they've never sold their home. This is the first time selling their home, this is something that they've heard through some grapevine, someone told them that this is what happens. They've never even experienced it, and a lot of times that can stop them completely from doing the deal, or even get very scared throughout the deal, and if you're in the deal and they're starting to get scared, you could be in a world of trouble, because things start to fall apart without you having these commitments lined up. So they get frustrated, or they kind of want to call it quits. They get over it. They get tired of this whole scenario.
You're here to solve, right? I talk about this all the time on our trainings, I talk about it all the time in our weekly meetings with my team. You're here to solve their issues, not create more. You're here to solve all of their issues, not just one issue, right? So often, as investors, we always want to harp on price, price, price. It's always price. Well, honestly, it's very rarely only price, okay? Price obviously is an issue that needs to be addressed and it needs to be handled appropriately, but very rarely is it only price. You need to be there to solve all of their issues.
You know, I've had problems in here. I don't even like the word problem. I don't tend to use the word problems, I use issues. So the more clear you can be about what's going to happen next in this system and the step-by-step process that you need to guide them through, the more comfortable your seller's going to be, and the more issues you're solving for them, the more they are willing to be flexible and amicable and comfortable in that your system that you want to run can run smoothly. So a verbal commitment is something that the seller must do in order for the sale to continue.
There's many different commitments. Most often those commitments start verbally and then they follow up with contractually, but verbally, some examples would be getting an appraisal done, talking with family members, friends, or other decision makers. We've talked about this through these sales trainings. People might say, "Hey, I need to talk to my wife or husband." They might say, "Hey, I need to talk to my accountant or my lawyer or ... " I think last week I gave an example of the property was going into a trust and they had to talk to the other six or seven members of the trust.
Now, a way to get that commitment solidified is to say, "Okay, I understand you got to talk to your wife, your husband, your accountant, your boarder, your trust, whoever. Let's get this done ... is it fair to say today is Wednesday, let's say by 9:00 am Thursday, tomorrow, we will discuss again after you speak with your family member. You're good to talk at 9:00 am, now you're making them make a commitment to get back to you, right?" They might want to meet with a realtor, attorney, CPA, other advisor, talk to tenants, whatever their issues might be, you need to get a commitment for them to get back to you. You need to get a commitment from them to sign a document. You might need to get a commitment from them to open the property for you to view.
You need to get a commitment, these minor commitments, all along the way, right? We call them minor commitments because the major commitment is signing the document, right? That's the major commitment is they sign your purchase contract and agree to your terms. So these minor commitments of opening a house at a certain day, certain time, speaking with any other decision makers and then getting back to you on a very specific time, a very specific date, is huge, right?
And you hold them to it, because at the end of the day, if they don't do that, then you say, "Hey, listen, I'm trying to get this to be the best offer I could possibly make for you, but you're really not holding up your end of the bargain. I want to make it so that this is of value to you and I'm solving all of your issues, but you seem to be kind of lackluster when it comes to getting these things done in a timely manner or at least, at very minimum, upholding your commitments to me. Is this ... let me shoot you straight, do you not like me? Do you not understand what's going on here? Are you not interested in sell?"
Then you can press them, because just like kids, just like adults, when you say you're going to do something and you don't do it, and the person calls you on it, you have a sense of guilt. You have a sense of almost shame, to some level, because you know you were supposed to do it. You know you said you were going to do it. To question why they didn't puts them on the defensive.
Now you're in control, and to say, "I allowed you to talk to family, friends, decision makers, CPAs, whoever, I understood it. I was accepting of it. But then you're not actually doing it in the manner that we both agreed upon. That's not really how I do business, right? I want to buy your home. I like you as a person. I think we've built a pretty good rapport here. But now you're not really following through with what you said you were going to do, so tell me, what's up? What's changed?" I'll ask them exactly that: what has changed? Now you're in control again, and maybe you've been in control the whole time, so maybe it further solidifies your control of the situation. I would really say, be very aware of these minor commitments that you're making them do, set a day and a time for them to be completed, and follow through with them, right?
So, steps to setting a verbal commitment. Ask the sellers exactly what have to happen in order for you to do business. "Hey, I want to do business with you, I really like your home. What has to happen here? Do you need to talk to anyone else? Because at the end of the day, I want to tell you, I want to buy it, I want to buy it cash, I want to close this quick as you possibly could ask. The number we agree upon will go into your pocket, and so if you need to speak to someone, if someone ... who else would be a decision maker that needs to be a part of these conversations? Are you married? Do you have a spouse that needs to be a part of these conversations? Do you have a CPA, accountant ... who else would you need to speak to or maybe I should speak to to continue this process going, right, to do business together?"
Then confirm with them what's absolutely necessary in order to move forward. "I do need to talk to your wife. Why don't we set up a time, 2:00 pm today, to speak, everyone get on the phone so I can talk to both of you so we can continue this process?" Confirm what's necessary. Getting the commitment by determining when the seller will take this action and set a date and time to speak after. Again, if they need to do something, anything, for that matter, you need to set a date and a time that will make sense to them, right? You always want to reiterate this back to them.
Part of sales ... again, we're reviewing how to be the best salesperson in real estate investing. And this is only going to grow, by the way. I continually educate myself and always trying to be better at sales, and so there's even stuff I'm going to add to this. One step of sales is, you always want to repeat back to them what you heard. "You told me that you're married, you need to speak to your wife about this. You're going to speak to your wife today at 5:00 when she gets home from work, so why don't we set up, we agree that 9:00 am tomorrow morning would be a good time for us to get back. Is that correct?" Is that what I understand? Is that a correct understanding? Is that what you understand?
That's how you want to approach that. You never want to end a conversation unless both of you are on exactly the same page, you know exactly what's going to happen next. If you just replay what I was just saying, it's, "Hey, I understand you have to talk to your wife today at 5:00, everything sounds good to you but you still need to speak with her. I totally understand that. You know, when Mom is happy, life's happy, right? So you're speaking at 5:00 and we've set a conversation to happen at 9:00 am tomorrow morning. Are we on the same page as that?"
You got to make sure you guys are on the same page. You got to let them know that you're holding them to this, right? Then to find out what needs to happen in order for those things to move forward. "I understand you're going to be talking to your wife. Does she need to sign on the contract? Does she need to be a part of our conversations? Does she need to be involved in this at all after you have these conversations?"
Then you also want to show them what commitment level you're going to have, what you're going to be doing in that time. "So while you're speaking to your wife and giving me a little bit more time, I'm going to run my analysis a little bit deeper. I understand, I like your home, but I want to know exactly where I need to be. I'm going to look at some comparable properties that have been selling. I'm going to do some more research, and quite honestly, I'm going to speak to my project manager about timing and availability and cost. So that's what I'm going to be doing. I look forward to talking to you at 9:00 am tomorrow morning, Mr. Seller." The more you can reiterate those things, the better off you're going to be.
Don't be afraid to ask questions. If the seller wants to reconvene at a later date but you're not sure why, ask them. "Oh, well, Justin, I got to talk to my wife, and then why don't we talk Friday?" "Well, today's Wednesday, so can I ask you why we wouldn't just talk Thursday?" And let them answer, don't ask anything more, don't follow up with anything, just say, "Why can't we talk Thursday? Is there a reason we wouldn't talk?" They might say something that you're unaware of. They might say something that's an excuse. Whatever, let them speak.
You don't even want to make weak commitments, right? You must mutually agree that the commitments are going to be fair and you know exactly what each other are doing. It's very important that those commitments are ... people are on the same page. Very, very, very important. What ... I thought I had one more slide.
So we will just go back to this. This is a strategy that is in any industry. This is something that if you have been following the first four steps, is your next logical step, and it's throughout the process, right? As you are going and as you are going through the process of meeting them over the phone, then meeting them in person, then writing the contract. You know, for those of you who might do everything over the phone, some of our coaches are in Canada. They do absolutely everything over the phone, then they create minor commitments for their team to do that they're boots on the ground, and they make minor commitments for the seller, who is handling everything over the phone.
This never stops, right? If something ... 'cause ultimately, all these minor commitments are building up for the major commitment of them signing your offer. That is what you're building to, and so reviewing, again, if we go back here ... let's just go back to the main one here. If you review the first four steps, right, building rapport: incredibly important for them to like you. We always talk about there's four main criteria for a deal to get done, likability, price, process, and paperwork? So building a rapport is incredibly important.
Setting proper expectations, letting them know exactly what's going to happen and what the process is going to be and what they can expect. Doing a probe, understanding more about the property, more about their motivation, more about them. Starting to get some minor closes, finding out, "Hey, are there more decision makers I need to talk to? Who would be getting in the way from us doing business today? What could possibly stop or halt this process if we both agree?" Knowing what other minor closes you can get so that all of their excuses are out of the way.
Now, fifth are these minor commitments along the way, all the way across this, right? Get minor commitments out of them, whether it's they have to speak to someone else, whether they have to get an appraisal, whether they have to review the paperwork ... Whatever, and then confirm you guys are on the same page. "So what I understand, Mr. Seller, is that you need to run this offer by your CPA, your CPA needs to review it, but if your CPA is a green light, then you're a green light, is that a correct understanding, Mr. Seller? Great. Why don't we talk at 9:00 am Thursday morning, does that sound fair? Sure does? Wonderful. I'll talk to you at 9:00 am, I look forward to doing business with you." Making sure you reiterate the commitment, the understanding on both sides, and that the time and date are there for you guys to follow up. This is very, very important.
Next week we're going to start going into soft closes, very important as well. Then you're going to start going back over, once you start going into soft close, making sure you've rebuilt your rapport, reviewing your commitments, getting that offer into them. That's what we got for this Wednesday. Again, I'm Justin Colby. We are going to continue with the real estate investing sale system over the next coming weeks. We have one, two, three, four, five ... five or so more weeks of learning how to be a great salesperson, and it's going to continue to get bigger, continue to get better, and that's it. I'm signing out. I will see you next week. Peace.
Kent Clothier is President and CEO of Real Estate Worldwide (REWW), a highly sought-after speaker, the owner of three multi-million dollar a year Internet marketed brands, and proud husband and father. Kent is motivated by his love of family and freedom, creating products that enable people to live their lives the way they choose.