Thursday morning I received a call from a 67-year-old single lady who was recently laid off from a 10 year position she had with a computer company here in the Springs. She received one of my , I want to buy your house postcard that I send out to predetermine zip codes here in El Paso County, Colorado.
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Keep in mind, that I have absolutely no problems with talking to people in their home. I began my business career selling at the kitchen and living room coffee table selling cookware, China and other hope chest items to single working women and their moms, starting at the age of 18.
To this day most people laugh when they hear I worked direct sale as did most of my friends all through college. I don't blame them, it was a pretty strange career choice and, it was much harder work that paid less then construction work or farm work, of which I had plenty of experience at too.
Yet a career path I purposely chose to get me the experience and down the road to where I am today. Not rich and famous, but self-employed and comfortable at drumming up business anywhere, anyplace, anytime.
And oh yeah, don't forget, I paid most of my college expenses selling cookware and, pre-need cemetery property all by knocking doors and some direct mail.
Literally, I have given thousands of presentations in the home.
In the field experience tells me that the first step in the negotiation/sales process is to build rapport with your prospect all the while qualifying your prospect to determine if there is a unique selling proposition (a term I believed coined by the famous and talented, Dale Carnegie) that will allow me to provide a solution to their issues and needs.
You see, I have learned to stop thinking about services I have to offer and instead, focus on the customers issues . So be a solution provider and sell the solutions your knowledge has in terms of what your prospect wants to improve their situation.
Here's what you do: focus on issues not services
Remember, your prospect rarely want to buy your products or services. What they want is the result of what your knowledge, product or service. And let me say, if you get anything out of this blog post, it should be to focus on your customers issues, not your services .
The Solutions Presentation
After about 20 minutes of conversation we felt there was an opportunity here for both of us so we set an 11 am appointment for the following Saturday to discuss her particular situation and give my Solutions Presentation of course, over-her-kitchen-table.
She is a pleasant lady with an amicable personality, intelligent, a good listener and most importantly open-minded. After introductions and pleasantries we did was walk through her house for a light and general inspection. During this intitial inspection I look for major defects and try to determine if this house would fit my qualifications as a good rental.
A good house in a good neighborhood
Her house is a good house in a good neighborhood. A two-story, three bedroom, two bath, two car with an eat-in kitchen, walk out, fenced in backyard and a finished basement. About 2000 ft. finished living space. Yes, as we say, a cookie-cutter house in a cookie-cutter neighborhood making it easy to determine value. Which I estimated to be about $170,000 plus or minus.
She was very forthright about her financial situation. As always, at the kitchen table you want to let your prospect do the talking and of course, you encourage conversation by asking open and closed probing questions .
Food for thought
For a 10 year run and she had a great job and "built up" her FICO score to 830. When she said that she "built up" her fico score that was a red flag to me so I asked her what happened in the previous 10 years. Her answer was she "had" a bankruptcy. An indication? At the least food for thought.
Her present situation
Currently, she was laid off her job a few months back which turned her life financially upside down, understandably so. She had maxed out her credit cards, could not make their payments , but was only one payment behind on her mortgage and now lives on $1,800 a month with a first mortgage payment at $1,270 a month. She said she could not afford to live in this house and decided to move back to the Midwest and live with a lifelong friend of hers who was in the same situation, and planned to combine their means and live out their golden years as roommates.
And I truly do feel for the people who get into this situation at no fault of their own. In this economy, talking to people's daily about their financial situation whether it is selling their home, renting a house, buying a home or selling a mortgage note, hers is a real estate financial situations I come across often.
Approach business as a Servant Leader
So as a servant leader, I feel it is my job to help them get down the road with solutions that allows me to draw the transaction to a positive conclusion for both of us. More on Servant Leadership another time if you wish.
Don't ask this question like this; "So, just how old are you anyway?"
Then I asked how old she was. Actually, I put it this way, "may I ask how old you are?". After 30 years of marriage I have finally figured out that women are sensitive to age questions.
Yes ladies, I am a typical guy brainless and clueless to so many things. All the more reason we need you women so badly. I'd hate to think what this world would be like without your famine guidance. One continual mud hole of a war zone I'm sure.
Anyhow, her response was 67 years old. I asked to determine if there may be a potential interest for her to share any upside (amortization, equity built up, income) from this house for the next 15 to 20 years? Admittedly, she didn't look older than in her late 50s and in good health. Either way, there is upside potential for her since she, like most women, will live to her 80s.
Again, the retail value of her house is approximately 170,000. The approximate remaining balance on her first mortgage note is 164,000. Written at a fixed 6% interest rate and a 30 year amortization giving her a monthly payment of $1270 including principal, interest, taxes, insurance. Her house in this neighborhood would rent for $1,100 a month, plus or minus.
I can get by with break even but I will not accept a native.
Continuing our discussion she mentioned that she had received documents from her lender for a loan modification. That comment got me energized because with a little effort on her part, guidance, encouragement and financial support from me, we may be able to get the current payment reduced to $700 a month allowing us, after expenses, to breakeven immediately. With some positive cash flow now and then in the future, create some real cash flow for the both of us from rental income. Which is a good thing.
Bright eyed and bushy tailed over the prospect of buying the property subject to the re-modified first mortgage note with positive monthly rental income and equity built up due to faster amortization of the principle from a modify low interest rate and, property appreciation. On a long-term basis I felt there was potential for a business opportunity here. What you think?
Here we have a 67-year-old lady living off an annual income of $21,600 a year, no financial support from any of her four children and no other means of income other than an $1800 monthly stipend she expects to receive for the years to come.
What I suggested
I suggested I give her; $3000 for moving expenses and time to re-modify her current loan to a lower interest rate, move when she wants, followed with monthly income until she passes on. This would reestablish her credit by my making her mortgage payments on her modified loan, I would take on ALL property management and all accompanying future expenses [vacancies, repairs, re-rent fix up, etc.] for life, she avoids foreclosure (in 110 days) thus meets her goal to move in seven months, and the right to say she did not walk from another loan via foreclosure like her previous bankruptcy of 10 years ago and, demonstrate to her children and grandchildren how to hold your head high and do business the right way.
A real Downer
But I felt wrong. Evidently my subjective opinion of how great this deal was did not meet your needs because she had no issues . That's right, she had no issue with walking from another mortgage, another house, and walking from the opportunity for monthly income for life, and the opportunity to hold her head high by applying herself and working her way out of defaulted situation and into financial solvency.
So when I asked her if she would like to have the $3,000 cash and a monthly income for life ( I even offered her 20% equity in the property) her answer was, no, because I don't care".
Saddle up your dead horse and get no where fast
That answer made me feel like I just saddled a dead horse. But I could not give up this early (30 minutes) into the presentation as I felt it was my fault that she didn't see the light and it was my fault that I did not uncover an issue to provide a solution for. Because without an issue why does she need a solution? After all and as she said a second time, "I don't care."
I keep my Solutions Presentation to as close to a one hour time limit as possible in an effort to remain professional and not to overstay my welcome. We continued with a very cordial discussion and I left in an hour and 10 minutes with the agreement that I would follow up in a few days for a decision.
Follow-up is key to good business
Follow-up is the final key stage to the sales process. This is the second very important concept you should get out of this blog post. Again, follow-up is key to closing business transactions .
Granted it's always good to ask for the order that day and I did ask many buying questions, but I consciously did not ask for a decision that day as it would have been too much pressure on her. After 35 years of doing this you can intuitively and logically read how to conclude the presentation with very credible accuracy so you don't don't over do it and blow an opportunity.
Here's a Kicker
As agreed, I called back in three days for a decision. She then asked me to come again and give the presentation again to her son and her friend who is an engineer and oh yah, "real smart". I suggested we ask her hairstylist to come too.
We laughed and she did not bother to asked the engineer but did set a time for my solutions presentation for her son, a computer guy, the following Saturday. As always, I told her I had nothing to hide and she could bring her attorney too. And I meant that because I have nothing to hide but she declined said her son would be good enough.
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Posted in Real Estate Post Date 01/22/2016