In my seminars and even here through a blog format, I’ve been able to share some of my best ideas regarding seller leads, which will then result in buyer leads. However, a lead is just that until it is actually memorialized in ink. There can be a lot of objections between the discovery of a potential client and asking for their commitment. I wanted to make sure that you are clear on answers to some of the most common objections.
One of the biggest problems comes in talking with a client for the first time. Your only goal in the first phone call is to determine motivation and make an appointment. When the client says, “But I will not pay a full commission!” then your answer should be, “I don’t know of any transactions I have handled that haven’t been completed because of commission. What would be the most convenient time for us to meet so we can discuss how to increase your net proceeds and help you to achieve your goal of getting closer to the beach (or whatever their core goal of selling)?”
Put off all discussions regarding price, market, marketing, commissions, and anything else until you are able to take them through the best listing presentation, which is detailed in our product Beating the Competition Every Time. This product will not only give you a video of my listing presentation, but it will also take you through the audio of why I do what I do. Also included are the documents to use in the listing presentation in book and data CD format.
Occasionally, you might have objections prior to getting that appointment. These objections come about whether it is a good or bad market, but unfortunately, you will find more of them when the sellers are not as excited about selling. Here are some objections that my coaching clients have most recently received:
- “We are not going to sell any longer.”
“I understand, but may I please impose upon you for two more questions? (wait for response) What caused you to put the property on the market in the first place? (wait for response) What has changed about that?”
Obviously, if there is something that has changed to affect their motivation then putting the property back on the market again is a realistic objection. If nothing has changed, let them know that you can provide a customized marketing plan to achieve their goals and try some new concepts that were most likely not presented on the first marketing effort.
- “We are just going to rent the property.”
This objection usually stops most real estate agents cold in their tracks. The reason is because they often do not understand investment property. Let’s cover some basics.
Most rental properties will have an approximate 40% expense factor. This means that without considering the principle and interest payments, there will be taxes, insurance, maintenance, vacancy factor, utilities, advertising, and a myriad of other expenses. If you are able to say to them, “Many of my clients have mentioned that, but once I show them the true net that they can expect in this market, many of them allow me to achieve their goals by way of a sale. Would it be okay if I could show you the numbers you talk about when you mention renting?”
Your job is to simply show them the numbers. First, you will need to come up with an agreeable market rent amount. Next, deduct a 40% expense factor. You will be deducting the principle and interest payment. Add back the equity pay down portion of that payment. Figure the amount of equity the client would receive on a sale using your services, and agree upon a safe amount of return, should it be delivered to their pocket. This amount of lost opportunity cost on their equity is then once again deducted from the rental amount.
Explain the concepts of buying up in a down market that will motivate someone to make a purchase in an unforgiving market. Subtract all those numbers from rent, and the negative can be substantial.
If the market is at the beginning stages of a down market, you can let them know that they might have a number of years with further deflation in their price. Please don’t forget to mention that real estate markets don’t turn on a dime. If they think it is going to get better next spring, what they are actually saying is the market might actually stop going down next spring. Explain to them that it might take years for them to achieve the same price they could have had in the previous year.
Your job with any seller is to find their motivation and goals then create a customized marketing plan to achieve that goal. Show them how expectations regarding renting may get in the way of achieving those goals.
- The next objection you will hear is some sort of a put-off for a certain amount of time, maybe because of a holiday, maybe they are not ready yet, or maybe they just want a break. These objections can usually be handled by asking when they want their goal to be accomplished.
By working backwards, you can let them know that an appointment might soon be appropriate. For instance, if their property had expired in December, they might want to wait until March to put the property back on to give themselves a break and hit the hot spring market.
If you were to ask them when they would like to see their goal accomplished and property sold, they might say “End of the summer before the kids go back to school.” By working backwards, you can make a case for the fact that they should be seeing you potentially “now.” The reason for this is that many buyers buy with the purchase subject to the sale of their property. A transaction like this could easily take 90 days, which takes us from September 1st back to June 1st. The marketing time in many markets has been at least four to six months, taking you back to January 1st. The remaining thirty days will be for designing the marketing materials, getting the house ready for the market, and designing the media mix. The goal of any conversation with a motivated client is to obtain an appointment.
- “We are going to list with a family member or a friend.”
Regarding their listing with the same agent again, I believe that it is easy to overcome this objection by offering them a win-win situation.
You can offer them the following: “I can certainly understand loyalty. Let me run an idea by you. What if I was to present my marketing plan, discuss with you all of its benefits, and share why it has been so successful in the past with clients like you. At that time, you can decide whether or not you believe my plan might be able to achieve your goal of getting you closer to the beach. If you still believe that your previous agent has not done everything that they know how to do at this point, then you can stay with them and offer them any good ideas I bring to you. The benefit is that you can go back to your previous agent with some new ideas. I get to understand your motivation and see your property so that I can show it to any buyers should you choose to list with your previous agent.”
This will usually get you an appointment. If your presentation is cutting edge, you will find that because you have counseled the sellers better then you will be showing up with better solutions, which usually leads to a commitment and a listing presentation.
Sometimes they just have a family or a friend in the business, and they would like to use his or her services. In dealing with this concern, it is important to point out that in any business decision you want to maintain the reigns of control and the ability to hold an agent accountable. Explain that sometimes it is hard to put pressure on a friend or family member to achieve their very important business goals of getting their new residence.
You can explain to them how important it might be to have an agent who would not be offended if the client/seller wanted to see different marketing priorities implemented in a different way. They might still think that their friend or family member is the cat’s meow, but they might begin to see the advantage of having a real estate agent they can more aggressively control. You can mention that based upon the stats over their family member or friend, the days on market, or the list-to-sale ratio just how this is a much better business decision as demonstrated in net proceeds or in time saved.
If this second reasoning does not affect them, then they must be extremely close to this friend or family member. However, at this time, they might be thinking about the fact that you might be a better alternative, but they are trying to figure out how to save face with that friend or family member.
As a last alternative, you might consider to offer them a referral fee. As unhappy as it makes me, that might be enough for the client to save face with the family or friend. You could say something like this:
“I think that tonight we have brought to light the fact that possibly my marketing plan might achieve your goals in a shorter amount of time with higher net proceeds to you based upon the figures I have shown you. I do understand the fact that blood is thicker than water. How about I offer your friend/family member a 25% referral fee based upon my gross listing commission? Therefore, they would receive the majority of their profit without spending any money or time on the project and more than likely would be netting you more results.”
It is always amusing when they bring up the fact that they will just take the 25% off the commission they pay, which means that you probably offered the referral fee too soon!
- A lead is either worthy of the trash can, a newsletter list database, a calendared call back date, listings in the “A” class, or maybe an immediate appointment.
If you have any objections that you cannot figure out, let me know. I will be happy to give you a cutting edge answer so you can continue the conversation to achieve the client’s goals.
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