Episode Summary
Listen on iTunes
Listen on Spotify
Watch on YouTube
We know we want to generate off-market leads, so that we can negotiate directly with the Seller. This leads most investors to ask the question, “what’s the most effective way to generate those off-market leads?” This is, however, the wrong question. A better question is, “what type of Negotiation Dynamic do you want to create with your lead generation?”
In this episode, Jeff explains the important concept of Negotiation Dynamic, and the importance of focusing your marketing strategy around generating leads that fit your desired Negotiation Dynamic.
Episode Transcript
Well, you know me, I’m always making the argument that you’ll be better off if you can learn the art of off-market marketing, so that you can have real conversations directly with sellers instead of competing with other buyers on the market. So when I convince somebody that that is an approach that they should consider, the next question is, what is the most effective way to generate off-market leads? And I actually believe that is the wrong question to ask, believe it or not. So in this episode, we’re going to talk about why that’s the wrong question to ask. But more importantly, what is the right conversation to ask. And I’ll give you a clue it comes down to something I call negotiation dynamic. Let’s cue up the theme song, we’ll dive right into this.
Welcome to Racking Up Rentals, a show about how regular people those of us without huge war chest of capital or insider connections, can build lasting wealth acquiring a portfolio of buy and hold real estate. But we don’t just go mainstream looking at what’s on the market and asking banks for loans nor are we posting We Buy Houses signs are just looking for “motivated sellers” to make lowball offers to. You see, we are people-oriented dealmakers, we sit down directly with sellers to work out win-win deals without agents or any other obstacles, and buy properties nobody else even knows are for sale. I’m Jeff from the Thoughtful Real Estate Entrepreneur. If you’re the kind of real estate investor who wants long term wealth, not get rich quick gimmicks or pictures of yourself holding fat checks on social media. This show is for you. Join me and quietly become the wealthiest person on your block. Now let’s go rack up a rental portfolio.
Hey, thanks a million for joining me for another episode of Racking Up Rentals. Show notes for this particular episode can be found at www.thoughtfulre.com/e86. Please do us a big favor by hitting the subscribe button super quick in your podcast app. It really helps fellow thoughtful real estate entrepreneurs to find us onward with today’s episode.
So I want to give you a metaphor here; it’s actually quite a literal metaphor, in my opinion, and it might be helpful to close your eyes as you picture this. Your conversation and negotiation with a seller are like a performance. And who are the performers in this performance? Well, usually there’s two parties, you and the seller. The seller might be two or three people themselves. There might be other people who are performers like a CPA or friend who’s a real estate agent or something like that. But the performers are you and the seller in this performance. Where is the performance happening? Well, a performance takes place on a stage normally, right? But what is the stage? I mean, a stage is just a place it’s just a venue for a performance to happen. A stage is just sort of a generic a blank canvas. Now if you’re a director of a play, you want to have that stage, not just be a blank canvas, you want it to become a scene, right? You want it to become a scene. So what do you do with that stage, you set the stage, you set the stage to provide a context for this performance that’s about to happen. It is the scene and the setting in which the environment in which the performance that is the negotiation between you and your seller is going to take place. Okay, now hopefully you’ve got a visual of that. And I’ll put a pin in that for just a moment.
Now we’re going to talk about you. If you think about yourself, if you know yourself, you know that there are certain scenarios where you are the most comfortable, where you are the most natural, where you are at your best, where your best skills and talents. And your best attributes are on display and they’re being highlighted. So think for a moment. What is that for you? What is that situation? that scenario where you were at your best? Now this could be in life? It could be in in your work? It could be in your real estate investing specifically. But what are those scenarios like those contexts that you are at your best? In other words, in what situations and contexts? Do you deliver your best performance? Okay, I want you to think about that for a second. And we’ll put a pin in that. And now we’re going to bring and merge these two ideas into one thing. And here’s the key question that I want to ask you as we merge the idea of this setting of the stage and you at your best in the best performance. Here’s the key question that you need to ask yourself. What is the stage that you want to be set with a seller? So that when you walk onto that stage, you will be able to perform best. Let me ask it again, what is the stage that you want to set with a seller so that when you walk into that stage, you will be ready to perform at your very best? That stage where you are ready to perform your very best is what I would call the negotiation dynamic that you want to have with the seller. What is the negotiation dynamic that you want to establish with the seller so that when you show up into that scene, you are able to perform your very best?
So you might be wondering, what does this have to do with the most effective way to generate leads? Well, that is the wrong question. The better question that we’re going to discuss now is what is the way of generating leads that will create the negotiation dynamic where you will be most successful. And here is a major idea. And I don’t know why this is not discussed more often in real estate investing circles. But here is a critical point. how you generate a lead greatly impacts the negotiation dynamic. Okay, let me say that again, as well. How you generate a lead impacts the negotiation dynamic, I find for some reason that most real estate investors kind of have this mentality where they say, you know what, if I’m going to buy a property, I need to end up with a sheet of paper in front of me that’s got 10, seller names and phone numbers. And it doesn’t matter how those names and phone numbers get on my sheet of paper. If I’ve got 10, then I should be able to create a deal out of those 10. But I look at that. And I say no, the way that that name and phone number got onto your piece of paper has a tremendous impact on the type of conversation you’re going to have with that seller. Because it sets a different negotiation dynamic, let me give you a crude and non-real estate example.
Let’s say that you are looking for a date, and you want 10 candidates to go on a date with so you got a blank sheet of paper in front of you and you’re looking to put 10 names and phone numbers of people you can go on a date with on that page. So let’s say that two of your quote leads come from your best friend saying oh, you should meet this person, they would be it’d be very nice to go out to dinner with them. Three more of your leads come from a Craigslist ad that you posted said, you know single person looking for a date, to more of your leads come from a hookup app that you’ve got on your phone. And that’s one way of doing it. And then the other three you got in some other manner. Now, you can’t tell me that all 10 of those leads, quote unquote, have dates you could have are created equal, that all of those leads are going to be equally promising No, because the way that those names got on your list matters a lot about whether this is likely to go well for you or not. And the personal recommendations from your best friend who knows you very well is a very different dynamic that’s created than the person that you’ve met through an app on your phone. So let’s talk about this. Now in the context of real estate, let me just give you three different examples of three different means of generating a lead and then this the resulting negotiation dynamic for each one, because they’re very, very different from each other.
So let’s say you have a We Buy Houses website, and a seller submits their information on your We Buy Houses website, thereby saying I would like to sell my house, please give me an offer. So what is the negotiation dynamic in this case? Well, the seller has self-identified themselves as someone who is kind of quote motivated. And they have gone so far as to reach out to a cash home buyer. And so the dynamic is a certain dynamic, the dynamic is as follows. It’s like the seller is saying to you, well, we both know that I need to sell. And all that matters here is price. So give me an offer, I’m going to go get eight other ones, and then I’ll pick the best one. That stage is now set, that stage is not going to change that stage is what it is based on that approach. And that stage is set in a way that will lead to a certain type of dynamic in that particular negotiation.
Now I want to make an A-side point that I’ll remind you of later. None of these negotiation dynamics are necessarily good or bad intrinsically, but they’re all different. And that’s really the point that I want you to take away from this. Let me give you a totally different method of generating a lead and the resulting negotiation dynamic. That’s very different. So you’re out driving for dollars, so to speak, and you see a rundown house and you think I’m just gonna go knock on the door. So you go knock on the door, and the seller opens the door, what’s the negotiation dynamic that is created from that way of generating that lead? Well, the seller, because you chose to knock on their door realizes that you see some kind of level of imperfection in their property, and thus that they understand that you see that imperfection as opportunity for you in their house. And so they realize you see imperfection and opportunity that in them and their situation, and they feel kind of singled out by that they know that you just haven’t knocked on every single door in the neighborhood, you knocked on their door, because you saw opportunity. They also feel like they’re kind of forced to react in that exact moment, they weren’t expecting you to show up, but you’re standing right in front of them now. And now they have to just they have to respond somehow, because you’re standing right there. Whether they’re comfortable or not, they have to handle this situation that is now literally right in front of their faces. So that stage is a different stage entirely. It’s now set based on your lead generation approach. And it will lead to a certain negotiation dynamic. And that negotiation dynamic is totally different than our first example, where the seller submitted the information on the We Buy Houses website.
Again, I’m not saying that this negotiation dynamic is bad, or it’s good. I’m saying it’s a different scenario. It’s a different stage that’s been set, as a result of the lead generation mechanism that was chosen. Let me give you a third example. You send a letter to the owner of a rental property in your town. And in a letter, you don’t say anything about you know, I want to pay cash or close quickly or anything like that. You just say this is who I am, I’m interested in your property. If you’d ever consider selling it, well, you give me a call. So they call you back. And we have to then ask ourselves, what’s the negotiation dynamic here? Well, the negotiation dynamic here is totally different. In this case, you have no idea if this seller is actually motivated or not, all you know is that they picked up the phone and called you back, you do have a clue that they might be interested in some manner else, they probably wouldn’t have spent the energy to call you back. But you don’t really know that for sure. The seller doesn’t feel that you targeted them because you think that they’re distressed, but rather, they feel like they perceive that you reached out to them because you just like their specific property, this conversation may move towards a sale. And it may not it may fizzle out and may go nowhere. But that stage is now set. And that stage is very different than the other two stages we talked about. Because we chose this particular approach, it’s set a different stage, and will lead to a certain dynamic in that negotiation. But very different than the We Buy Houses website very different than the door knocking in the driving for dollars scenario.
So there are three totally different situations that lead to three totally different stages that are set. And three totally different negotiation dynamics. Now, as I mentioned, and I’ll say one more time, it’s not that any of these are good or bad. But as you picture those three stages that you have just set in this hypothetical situation, I’m pretty sure that your heart and mind and maybe your gut and your nerves are thinking, wow, I’d really rather be in this conversation than in that conversation. One of these probably resonates with you more, maybe two of them resonates with you more. So the real question is, what negotiation dynamic do you want to have? What negotiation dynamic do you want to step into? And thus, what do you need to do to set that stage, and now you choose your lead generation mechanism accordingly.
Now, let me just tell you in my world, based on the unique skills, traits, attributes, things that I’m comfortable with things, I think I’m good at the uniqueness that is Jeff. The stage that I want to step on to, is one in which the seller perceives me as their peer. I like to I like to talk to people who you would call, quote, unmotivated sellers, because I find that those situations are more like real conversations between two people, neither of which are desperate to make any decisions. And from my perspective, and my style and my strengths and what I’m good at, that leads to a more open conversation and a more open conversation leads to more and better deals for me. Now that is unique to me. And that is definitely indicative of what I advocate for on this podcast, but it is not necessarily exactly what you have to do. The question for you, is which negotiation dynamic do you feel like you will be most successful stepping into what stage that when you step onto that stage you show up in the best version of yourself and you can get the most things done? And when you know what stage you want to step on, you know what negotiation dynamic you want to create, when you know what negotiation dynamic you want to create, you know, or at least you now have the perspective to know how you should generate leads in a way that will lead to that exact negotiation dynamic where you will be at your best.
So to circle back to the real initial question that we posed, what is the most effective way to generate off market leads? And I said, that’s kind of the wrong question. But if we had to answer that question, I would say, the most effective way to generate off market leads is the way is the method that’s going to lead you to as many of the negotiation dynamics that are exactly the ones you want to find yourself in.
That is it for today’s episode of Racking Up Rentals. Again, show notes for this episode are at www.thoughtfulre.com/e86. Please do us a massive favor by hitting that subscribe button in the podcast app and take just a second to rate and review the show. I’m super, super grateful when you do that.
Did you know that we have a Facebook group for us trees as well thoughtful real estate entrepreneurs? It’s called Rental Portfolio Wealth Builders, we would love to have you join us over there. You can search for that title on Facebook or you could just type in group.thoughtfulre.com and the magic of the redirects on the internet will take you right to that page.
If you liked this episode, please take a screenshot of it and post that screenshot to Instagram. Tag us, we are @thoughtfulrealestate. So I will see you in the next episode. Until then this is Jeff from the Thoughtful Real Estate Entrepreneur signing off.
Thanks for listening to Racking Up Rentals where we build long term wealth by being win-win dealmakers. Remember solve the person to unlock the deal and solve the financing to unlock the profits.
Leave a Reply