Hey, gang, this is Mike with My Real Estate DOJO and today’s lesson is about how to give a soft offer to a motivated seller, so you get the deal and more importantly that you don’t spend much time doing your due diligence driving around, looking at property all over the phone.
So let’s dive in and get started and dive in gang. Alright, so today’s lesson is about how to give a soft offer to a motivated seller and why it’s important for you to be able to give soft offers to motivated sellers. So what is a soft offer? A soft offer is like a physics equation. For example, mass X acceleration=force. So again, force equals mass X acceleration. In physics class I always remember being able to solve the formula a lot easier than putting the numbers into the equation.
Let me give you and example, if you want to solve what force is, force=mass X acceleration, it’s pretty easy to understand that. Now if you instantly substitute mass for a number, acceleration for a number, these numbers become more complex to solve. Same thing with an offer that you give to a seller. If you are talking about the numbers, the actual number, if you say: “Hey Mr. Seller, I am going to give you X dollars” and this causes too much problems or wrinkles in the equation.
What I like to do is zoom out, like we did in physics class and just talk about the formula, which in this case is my offer to the seller. So I don't put numbers when I give a soft offer to a seller. Now why am I giving a soft offer? When I talking to a motivated seller over the phone, I always offer them the superhero closing with a soft offer. The soft offer’s mission is to basically test the seller and see how he flinches.
For example, if I go like this and the guy flinches, then next time I know to come around with a hook, because that’s the way he flinches or that’s the way he is going to protect himself. The same thing happens with an offer. Before you go out there and throw the punch, before you go and get the seller the actual cash offer, you want to do a fake and see how the seller reacts to the stimulus or to the fake punch.
Are they going to go like this or are they receptive etc. Coming back to the story, a soft offer is when we tell the seller what we can do for them, if their home qualifies, without giving them the actual numbers. Let me give you some example. If I am talking to a motivated seller and I am talking to a superhero closing, now if you don’t know what the superhero closing is, refer back to my videos about what is superhero closing. I am talking to a seller and I am giving him my superhero closing. I am going to throw in some soft offers, for example, on my terms, on my cash. So if I am talking to a seller and I am going through a list of options the seller has, for example, you can list traditionally, you can rent your house out etc and then I get to the point, where I am going to give them my actual cash offer. Instead of me giving them an actual number, where I have to roll up my sleeves, get the comps, get the CMA etc I just let the seller know: “Hey, Mr. Seller, I am an investor, I am not a retail buyer. I don’t live in these properties. This is not my dream home. For my cash offer I buy properties at a deep discount. If I could buy your house at a deep discount, would that work for you”.
Basically what I am doing is throwing in the fake punch and seeing how the seller reacts. Without me telling him “Hey, your house is worth 100, but I can only give you 50” I am not going to put those numbers in there. Remember that maths equation, that formula. Force= mass X acceleration. It’s a lot easier to find what force is, what F is than adding the numbers into the equation. Same thing with the seller. Instead of telling him “Your home is worth 100, I can give you 50”, I just give him a soft offer with no numbers. Just a formula. I’d tell him “Hey, I am not going to live in this home, this is not my dream home.
I am an investor, I am only looking to make a profit. My offer for you is me buying your house at a deep discount. If I could do that, would that work for you?”. Usually the seller will ask: “What is the number for this and this”. They want more information. I let them know: “Hey, I haven’t rolled up my sleeve, I am like the pawn shop of the real estate. For my cash offer I don’t pay full retail price, I buy properties at a deep discount. If I could do that, would that work for you?”
What I am doing is I am testing him out to see if he is receptive of selling their home below retail price. I am an investor, I am not paying retail price and I am looking to buy properties at a deep discount. With the soft offer I am testing the seller, to see if they are receptive of my offer before I take so much time and energy running comps, looking at the property, before I figure out what the repair cost is etc. When I am talking to the seller and I want to buy their homes ‘subject to’ or owner financing or on a wrap, I don’t want to exactly tell them what I am going to give them. I am not going to say-okay sir, your house is worth 100 000, I am going to give you 80 000 cash and instead of cash we are going to do a note and I am going to give you this much down and this much a month. What I want to do is test the seller, see how he flinches.
I’ll let him know, when I am going to the superhero closing “Hey, you can sell your house to realtor, do property management, you can do the cash offer etc” and then when I get to the terms, I will let the seller know “Hey, Mr. Seller, if I could give you some money today and pay you every month, would that work for you?” Basically what that question is, is what I call a soft offer. I don’t tell the seller how much I am going to give them down, nor do I tell them how much I am going to pay them every month. I am just throwing it out there and allowing the seller’s reaction.
I say “ Hey, Mr. Seller, if I give you some money today and pay you every month, would that work for you?” In a nutshell I am basically negotiating an owner financing deal. I am basically negotiating a ‘subject to’ deal, because the seller is receptive. The seller is like “Yeah, that sounds good, but how much are you going to give me”. At that time roll up your sleeves, do the comps and then get back with you. What that does is allows me to know: “Hey, if the seller is receptive to my cash offer, if the seller is receptive to my term offer or owner financing offer”. In a nutshell, simply put guys, when I talk to a motivated seller I in the beginning phase, before I even know what option I am going to go with, I am only giving soft offers. I am not giving actual offers, I am not taking time to go look at their home, I am not taking time to do the repair cost. I am not doing any of that.
I am just letting them know what I can do for them in a soft offer and I am watching their reaction. If they are not okay with a deep discount, if they say “Hey, I don’t want to sell my home deep!” Well then I am probably not going to go with that option. If they say, “Hey, I don’t want to go with your terms. I don’t want any money down or a monthly payment”. More than likely they are not going to be down with the terms. But if they say questions like “How much you are going to give me down?” “Okay, I am willing to sell it for a deep discount, but what is the actual price”. If they give me signals and signs that they are receptive, then I am going to roll up my sleeves, run the comps, get the repair cost and then I may go to the sellers home to look at that property. I usually like to get the deals all over the phone. I don’t like to go drive out there until I send them the contract, get the contract filled out.
But I am a professional, guys. If you are new, then I highly recommend you go out there and look at every property. So let’s summarize this up, because this is a very important point. Just like mathematics, to figure out the answer with force=mass X acceleration it’s a lot easier to use variables like E, M, A to represent a huge number. Then you move those variables around. If you want to find out what acceleration is, you just move the M over to the left and then you find out what acceleration is. If you want to find out the masses, then you move the F over here, so you figure out the forces or the masses. Same thing with giving an offer to a seller. I am not going to put all the numbers into the formula. I am just going to use the formula, just F=Mass X Acceleration to figure out force. I am just going to give them a soft offer. Instead of giving them a number, I am just going to give them a variable, like X. If they are okay with X, even if they don’t know what X is, then I go ahead and define what X is further down the line, when I define my due diligence.
This saves me a lot of time. It allows me to help the seller out and create a win-win situation, because the truth of the fact is, if the seller doesn’t want to sell it at a deep discount, you’re not going to be able to convince them, guys. It’s not like this business is a spontaneous transaction, where you convince the seller and they give it to you. No, there is a lot of grave period, it might take 30 days before the deal goes to closing. If you convince a seller, which probable doesn’t happen, but if you can, if you have the ability of a great sales person, then in that grave period the seller is going to have that buyers remorse, the sellers remorse. He/she is going to try and back out of the contract.
That’s not the way I like to do business. I like to help the seller out. If I can’t help them and they don’t feel like I am helping them, fuck it, I am going to the next deal. I really want to create a win-win situation. I only want to put my time and energy into people that I am actually helping out. If they don’t feel like it’s a win for them, fuck it. I don’t want to do the deal, I am not that hungry for the fucking money. I am going to go to the next seller that appreciates what I am going to do for them and actually thinks it’s a win-win situation and I am going to solve their problem and create a win-win. It’s a win for them, it’s a win for me. If they are not feeling sellers remorse or buyers remorse I am not feeling that either and they are really happy to do a deal with me, with Mike Mr. Investor. Gang, now I’ve told you how to do a soft offer- it’s such a powerful tool. Combine that with my superhero closing and then you are going to be a superhero closer, guys, because you are creating a win-win situation for the seller, you are not focusing on the cheese or the money, you are really trying to help people out and you really want it to be a good situation.
When they sell their home, they are happy, they don’t feel sellers remorse or buyer’s remorse. They are actually going to go and be a raving fan. They are going to tell their friends, tell their family. Maybe two years from now, maybe three years from now. Basically what you are doing is you are planting seeds. You are not the type of guy, who is just down trees, you are planting seeds. Sometimes you are not going to get as many deals as possible, if you don’t do business shady or you do business unethically. You know what, fuck it! In my mindset, I don’t give a fuck about money, I care about how I feel, because if I feel good, I can go conquer the world. If I feel bad, I can’t even conquer myself. I don’t want to put myself in a situation when I feel bad, because I am doing unethical business and I highly recommend that to my students.
When you bring somebody up, you’re going to be the one who is brought up. End of the day, you are going to profit big because a). you feel good, b). the vibrations are coming back to you of that positivity, guys. This is Mike with Mr. Investor, with My Real Estate DOJO, go out there and hustle and bustle, don’t take ‘no’ for answer and fuck anybody, who doesn’t believe in you, fuck anybody who says you can’t do it and fuck anybody who encourages you not to chase your dream. Fuck the TV, read a fucking book.
Talk to you later gang, have a great day!