How to Handle Overpriced Sellers in Real Estate

Where I call for a student in a particular area and attorney tells me, no, you can't do that. I call, no, you can't do that. Then I get the third or fourth who's done 1,000 deals. He says, yeah, I get it closed for you in 2 weeks.

It's crazy.

Okay, guys, welcome to this week's Q&A Thursday. I am joined by the master, Derek Dombach. Welcome, buddy. Good to have you on here with me.

Thanks for having me on, Chris.

Derek has been hanging out with us now and part of our coaching program for a little bit where he and I coach the higher-end President's Club, we call it. It's not even a level that's advertised. It's just some really cool 5 higher-end people. And he and I hang out with them every week. And a couple of things came up on the call. Derek, the 2 things I recall that came up were a sort of the attorney script, like I got to get this review to my attorney or my attorney said no. And the second one was what we all face is a seller way overpriced. And how do you deal with that conversation in comp? So let's do the— let's do the overpriced first. And as usual, just these guys probably know us both by now, but we don't have a script. We, we get on and we banter a little bit. So a seller says they're over— we know they're overpriced, rather. What kind of conversations? Let's talk about that a little bit.

Yeah, well, I actually had a call today with one of our students in the President's Club and we were talking to a seller and we We had to have somewhat of a conversation like this with him. But what I like to do first is figure out, you know, who am I dealing with? And if they're, if they're an analytical person, this actually gets a little bit easier because we can literally put paper or email comps to them and show them what we're dealing with. If they're not analytical and they're, they're just more straight up blunt people, like I feel like you and I are, Then it's just going to be a conversation saying, hey man, you know that this house is not worth this because of A, B, and C, right? But with all of that, you still should have that information readily available or in front of you. So when I'm calling my own leads or anybody's leads, just a quick Google search of having that. I don't care if it's Zillow, Realtor.com, what it is. Have a visual of the property. Maybe look at the last known sales information, the tax information. Just, just have a snapshot. And even if you're cold calling and you're going through, you know, 50 dials a day, it doesn't take you but 30 seconds to have something up in front of you on your computer screen to kind of talk through. So one example, we feel like they're overpriced. Okay, great. Well, Hey, Chris, I brought up your property real quick on Zillow, and I know that that's not super accurate, but I can see that there's at least half a dozen other houses that have sold in your neighborhood for, for less than yours. And I'm not saying yours isn't worth that much, Chris, but here's the challenge. Everybody else in the world is going to do what I did and they're going to bring up Zillow. So let's talk about that.

Okay.

And so that brings up a conversation. Right? Like, you're always wanting to show that you're helping them because we are, but we're doing that in ways that are also encouraging them to lower their asking price.

Yeah. And I like, you made me think of a couple things. I like, we're not trying to be defensive, right? We're just, so some language just roughly for the listeners. If Derek's my seller, Similar to what he said, that in addition to that, look, I'm on your team, but here's what's going to happen. And like you said, they're going to check. Secondly, let's say, Mr. Seller, that you're lucky enough to have someone come in and they fall in love with your house, but they're not paying cash. So they are going to get financing and they're willing to overpay. Okay, here's what's going to happen. Here we are sitting on— let's just make up a date, January 1st. And they go and they go through the whole process, 45 days or whatever it takes to get through the underwriting and appraisal. Your deal comes back and it gets kicked out as it gets denied the financing. So now you're back to square one. What if the market slips? What if other circumstances happen? So listen, again, I'm just on your team. I want to— I want to make sure I set you up to win, whether we deal with each other ever again or not. This is what's going to happen. So just some scripting.

Yeah. And the other ones that I'd like to do is storytelling of other deals. If you've done other deals in that same area of that, that town or that city or that neighborhood, You bring that up in a way that's non-confrontational. So, Chris, you know, I love your house. I think you're spot on with your pricing, but I bought a house, you know, half a mile down the road. And here's the challenges we had with that one. So when you're talking about a different property or different deal or a different story, it's not saying, Chris, your house isn't worth this. It's saying, this is what I had over there. But internally, you're already starting to think as the seller, darn, maybe, maybe I'm a little high priced.

Yeah, I do love it. And then I like your story thing, Derek. So let me say this to the listeners. If you're brand new, perhaps maybe you'd want to be part of a community, whether it's us or someone else, right? But when you're in the community, in our particular community, what happens is what? Well, you call a coach before the appointment. The coach shares with you a number of different stories that you can pull from. Super powerful. And Derek teaches that, obviously. You know what, Derek, too, before we forget, in between this question and the next question that's coming, we would be remiss not to give them the link. smartrealestatecoach.com/no-means-not-yet. Okay, so smartrealestatecoach.com/no-means-not-yet. No Means Not Yet. Just as a snippet, I know I didn't tell you I was going to do this, but just tell them in a snippet what that is, because this is what they can get their hands on and get all this stuff. We're just giving them a touch of it.

Yeah. So it's a real estate— I shouldn't say real estate. It's, it's a negotiations course for everything in life, not just real estate. But it's something that, that I've had and I've produced for the last few years. And I teach people How to— there's basically 4 steps. How to figure out within a very short amount of time the personality type of who you're dealing with so you can then talk to them in a way that they'll hear you. The next thing is controlling the narrative of the entire conversation or negotiation, overcoming their objections typically through storytelling, and then moving them forward, meaning closing them. And it's a step-by-step process. So that's something that we offer here as part of our community. And yeah, it can be— you can check it out at smartrealestatecoach.com/nomeansnotyet.

I love it. I thought of it only because we were talking about President's Club indirectly earlier and they all are in the course. And it's the highest level people that are committed. All right. Let's talk about the attorney thing, because I— what sparked this, and then I want— I want you to give you a simple, cool answer you gave the other day in the President's Club. And that was, I had a deal, beautiful house, 15 acres, gentleman divorced, kids grown up and gone. So he's sitting on this big house, didn't want anymore, couldn't sell it. Then he tried realtor, then he tried FSBO. I offered him his full price. $1,500 a month principal only. His name was Bob. He loved it. He had an attorney that squished it. Then I said a few things a little bit more complex now that I hear Derek's line, which you're going to hear in a minute. But I just said things like, look, your attorney's not paying your bills. I got you. You and I agreed in theory on this. And I was encouraging him to get what the attorney didn't like because usually the attorneys, if they're squishing it, either don't do creative and don't want the liability in their head. Or they— because why would they refer to someone if they, if they thought they could help their client? And then he said, okay, Chris. And I kept in touch with him because I knew he still wanted to sell. Second time he said, let me try a different attorney. This is like 9 months later, guys. He's sitting on this house in New England, beautiful tennis court, 15 acres. Second attorney squishes him. Third time he calls me. It's going on 2, 2 and a half years. And he says, you know what, screw it, I'm just going to do it. Like they weren't helping him. Now, Derek, you summed it up way better because it summarizes what happened to me and I eventually did the deal, but it could have been had a little bit earlier. What was your line the other day in the President's Club? It's a great script for these guys.

So the line is, is your attorney giving you a solution to your problem or just telling you to say no to mine? That's the line. My backstory to that, I had a guy, he wanted to move very quickly. We were taking over the property with a lease purchase. And but he wanted to have a conversation with his attorney, the 3 of us. And we did. And the attorney did not want to acknowledge the way I wanted to do the deal and just kept saying, I cannot advise my client to, to move forward with this transaction. And I said, that's fine. This attorney's name is Scott. I said, that's fine, Scott. You know, I'm just a simple country boy with a PhD, my public high school diploma. I'll just back off and hung up the phone and it didn't take but 5 minutes. And that seller called me and he says, I don't care what Scott's saying, we're moving forward with this deal because I had asked him, is your attorney giving you a solution to your problem? Or just telling you to say no to mine.

Yeah. Yeah.

And I've used that plenty of times. Yeah.

And if and if you do have, let's talk about the second stages and we can wrap this one. If you do have a cell that says I'm going to bring it to my attorney, do you have anything you say? Because similar to your entries out there, I would say things like okay, but make sure two things: one, they know that we agreed in theory. You're just giving them the to. properly get it closed for you. And 2, I make sure they do not just real estate deals, but they've done creative real estate deals. Because I've had, Derek, numerous cases where I call for a student in a particular area and attorney tells me, no, you can't do that. I call, no, you can't do that. Then I get the 3rd or 4th who's done 1,000 deals like that. He says, yeah, I get it closed for you in 2 weeks. It's crazy. So do you tell anyone when a seller says, I got to check with my attorney, do you preempt anything there?

The only thing I really preempt with them, because if we tell them, don't check with your attorney, The deal's going to be dead. They're going to get scared off. So we can't do that. But I do have that conversation with them saying, your attorney is likely not going to have experience with this. This is not something that is done with an attorney that is not real estate specific and as you mentioned, creative-minded. So yes, I preempt them with it. And it's not really a script. It's more of just, my conversation flows based on what we were talking about at the time. I actually don't get the attorney thing as much as I get accountants. They want to talk to their accountant. And I've had— I've actually had accountants screw up more deals than attorneys in my 20s. Wow.

I don't think I've heard that that much. So do you— now that you've had the experience, you preempt anything there or no?

Well, the thing that comes up with accountants is when we're paying principal-only payments, They they start asking questions. What about imputed interest? And you know, I I'm not giving anybody tax advice. That's what I'll tell them on the phone. I'm not giving you tax advice. Talk to your own accountant about this. But I said, I know there are exceptions in the in the IRS code for installment sales. I'm not going to tell you what they are. But then they go talk to their accountant and. Yeah, sometimes it gets screwed up, sometimes it doesn't. But that's just—

Yeah, you brought up imputed. So it comes up all the time in our community. So quick story, we'll wrap. I keep saying it, but we'll think of something else. Okay. So my attorney is super, super experienced in my area. He's the senior partner of the firm. And back in 2013, when I went to him and I said, look, I'm going to start cranking out these, these creative deals, but I want to stick with you guys. He said, great, you're going to use this guy. I won't use his name. He's a junior attorney. Junior attorney said, I can't do that and I can't do that. I can't do that. He had to come in and school the younger attorney. And then one of the deals came up with principal, like Derek. And even the senior attorney said to me, no, I can't do that. You have imputed interest. So all I did is get the IRS code. You can Google it and you can get all the exceptions and it's clear. It's not like it's hieroglyphics trying to read them. It's clear. And I'm not even going to repeat them. Just Google it. So then in our community, if you type in imputed interest in Slack, you're going to get the IRS code. We put it in there because it comes up all the time. And so just so you know, like when the attorneys say it, they're not always right. When the accountant says it, they're not always necessarily right. And we're not— we're not either. But we know how to find the information. Not sure where to get started? Go to smartrealestatecoach.com/getgoing for free books, strategy calls, and a whole bunch more. We're going to help you get going the wicked smart way. We've been after this for over a decade doing exactly that. All right, guys, that wraps up our Q&A this week. You want to get access to more of this stuff? Again, I'd encourage you to look into what we're doing. You can check out the master's class. Just go to smartrealestatecoach.com/mastersclass. If any of you heard this on the Q&A and you decide to journey into the community, I tell you what, mention that you heard Derek and I and we'll get you those 2 things for free. How's that? I didn't tell anyone on the team that. So you got to send me an email or something that tells me I told— I promised that. Chris@SmartRealEstateCoach.com. Derek, thanks for joining me, buddy.