The phone rings for the first time and my heart is pounding! I set my dinner down and run back to the office. Someone actually wants to sell their home to me. I grab my computer and quickly pull up the spreadsheet with all my calculations.
I feel euphoric. I ask a couple questions to buy me some time to review my numbers, but everything is honestly a blur. Within a few minutes, I find myself making a huge mistakes by asking what the seller is considering in terms of price and we begin a light negotiation before agreeing to chat tomorrow and hanging up.
In my first five minutes of being a legit real estate investor, I made some major mistakes. They're mistakes that I haven't made again and I hope to prevent you from making in your first phone call.
The second mistake I made is doing way too much of the talking. I was nervously keeping the conversation going and in doing so I shared more information than the seller needed to know. He did not need to know my anticipated renovation budget and in those first five minutes. Now, I do far less talking and much more listening early on. You'll be surprised as how much you can learn when you just shut up.
Next up on my list of mistakes, I never asked the seller if he was the only decision maker. This came back to bite me in the butt when negotiations happened. He was able to stall late in the game by saying he needed to talk to his wife. If I knew that he remarried from the first phone call, I would've involved her in the discussions from the beginning. Instead, I spent many hours chatting with no results in the end.
Lastly, even though I brought up price too early, the light negotiations quickly revealed that numbers were probably too tight to leave both parties satisfied. Using the best case scenario numbers to make it work. But remember, these are my first five MISTAKES. Did I listen to those tight numbers? HECK NO. I was hungry and my heart was pounding! I quickly slid my renovation budget as far over to the cosmetic side as possible.
By pinching the reno budget, we may actually have a deal. Oh wait, that's right... I reached out to this home because it was distressed. So rather than logically expecting some major renovations needed, I squinted and fudged the reno budget down to $22,000 on a 2,256 sq. ft. home. To fast forward for you, I met the seller at his house a week later to walk the property. I calculated that his home needed just over $70,000 in renovation which would have left me in the hole (and in the dog house).
Those first five minutes need to represent who you are as an investor. I came across as a jumpy, money-forward rookie. That's not who I am or who I want to portray. So today, I make sure that my first five minutes are spent building relationships and listening to the unique wants and needs of the seller. I'm in the business of solving problems and that's what I lead with. If you're in the business of ultimatums and final offers, that's what you should lead with. Align your core values to your 'why' and then let that do the talking in your first phone call.