A common saying in real estate investing is, “You make your money when you buy, not when you sell.” Meaning that the purchase price is the main factor that determines your profit later on. However, if you time it right, you could end up paying less property taxes over the lifecycle of ownership and generate a higher ROI due to a lower base. And the real estate investment market is quite an interesting place because it allows two people with opposing views to swap assets at an agreed upon price.
Most people are trying their best to sell you something, right? But real estate developer Charlton Claxton likes to take an opposite approach and determine just how to convince someone to SELL something he or she may not want to sell. In fact, he’s developed three tried-and-true strategies to get people to sell their property when they may not even be looking to sell.
1) Establish a connection.
The seller sets the asking price, so if it’s below what you want to pay, you’re all set! No competition. But if you do have competition, you’ll have to woo the seller. Describe how much their home would mean to you. Talk about the children you plan to raise in this house, how you’d need to replace the roof, landscape the backyard, and host holidays in the dining room. Paint a beautiful picture in the seller’s mind of how you will take good care of the property once it’s yours. Selling a home is extremely emotional, especially if you’ve lived in it for many years, so playing to these emotions is key.
2) Play to fears.
Fact: it is much more stressful being a seller than a buyer. Buyers can shop around with no commitments. However, the seller is really putting himself out there: listing his property online, signing a contract with a real estate agent, allowing strangers to go through his home, and risking rejection. With so much worry and stress, as the buyer, you can try an “the end of the world” strategy to motivate the seller to sell to you.
“What if another housing crisis happened like in 2008/2009?” “What if there is a terrorist attack?” “You should be worried about natural disasters (earthquakes, flooding, and fire) wiping away the property for good!” The goal is to paint another picture but this time of the house being a tremendous burden and you being the hero.
3) Give a glimpse of the simple life.
Another known fact: life is much simpler renting rather than owning. And the older the property seller, the more appealing a simple life free from maintenance and repairs will be. And you can even argue about the joys of simpler living to younger property sellers too because they can definitely remember what it was like as a renter. Reminding the seller of the ease of renting versus owning is another key strategy in convincing them to sell.
So connect with the seller over your shared hobby of running, convince them that a hurricane will sweep through the coast any day now, and reminisce about how sweet life was when they were renting their first apartment. BOOM, you’ve got a new property!
What’s special about properties in the United States is how undervalued they are compared to property prices in other developed countries. As U.S. citizens, nowhere in the world can we make so much money, have so much opportunity, and live so cheaply. Claxton’s advice? ACT NOW, so you don’t wake up 30 years from now wishing you had bought property, especially property in cities that show the high employment growth. Remember: real estate is a key component of any diversified portfolio, so don’t wait to start building that portfolio before it’s too late!