Watch for Sellers Ready to Sell for Lower Prices

In this episode EarlToms talks about things to watch for and how to identify sellers ready to sell for lower prices. It won't last long so it's important to get these deals now.

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https://earltoms.com/earltoms_blog/episode-42-watch-for-sellers-ready-to-sell-for-lower-prices/

Transcript

0:00  
Welcome to another episode of EarlToms podcast. Today we're going to talk about what I'm seeing in the market right now what's happening when I go on appointments, and in turn when I sell these properties, what I've noticed lately, and usually, it all kind of it hits at the same time, unexpectedly. 

0:33  
I've noticed recently is more of the sellers are what I call laying down, they're laying down sales. What that really means is, is that you have these these homeowners that whatever their circumstance is, are basically just wanting out. So they just lay down, give it to you for whatever price that you offer. And in some cases recently, have given it to me at prices, a lot lower than what I have, thought they would sell it for. One recent example, there was a lady, you know, whether it be what's been going on for the last year and a half, she's elderly. But when I got over there, she just basically said, Look, I want out, I want companionship again. So I want to go to an assisted living, so that I can be around people again. So just give me this price. And I'll sell it to you. And to be honest with you, it was about $20,000 to $30,000, under what she should have sold it for. But in that situation you come into what I would always refer to as an as an ethical dilemma. Is it your responsibility to pay them more, if that's not what they want? Or do you give them what they say, even though you know, it's a lot lower than what it should be. One of the things that some might struggle with is that ethical dilemma, but I was always taught that you give someone what they want, if it's not gonna hurt that person. So while you are being told, Hey, I'll take this for that house, you're not necessarily doing a disservice, or getting over on that person, if you give them what they asked for. And we, we've all been through these scenarios. But now it's kind of in the in the reverse sense that, you know, usually when you go out, and somebody is right there on the line, let's say that the, you know, you can give them 95, but they want 100 for their house. Now, instead of you trying to get it lower, you're trying in some ways to say it should be higher. And that's, that's a, that's an odd feeling when you come in contact with that, but at the same time, that's your decision of whether you give that extra money to that person, or you wind up just giving them what they want. So the happy medium that I've always found, that would make everyone you know feel more pleasant about the experience is you know, that it should be a certain price, they want this price. So the price that they won't, you don't necessarily have to give them what it should be. So it can still be sold.

4:22  
But you give them more of what they're asking for whether that's $2,000, $5,000, $10,000 whatever that amount is, just give them a little grace on top of what it should be because you know, even if the price that you're giving it to them, that you're gonna you know, wind up making more money. So in this in this circumstance, I wound up giving this lady more money than what she was asking for. And she was appreciative of that. Because she has kids and you know, one day it may be there. inheritance or whatnot, because it's still a livelihood. But that's the ethical dilemma that that you're facing. And the reason that you're going to face that now, you have a very short window, a very small window of opportunity right now, to be able to execute this. And the reason that I say it's a small window is because your buyers are going to pick up the current conditions, it'll take them a couple of months, but they're going to pick it up. So when you're going in a situation like this, where you have the, the prices online being reduced, houses are not selling as fast, you're you're falling, it may not be rapid, but you're falling. And then you're gonna but what, what you have in this fall, are these people that say, hey, I want out now, because I don't want to have the competition of everyone else falling because I know money is getting tight for everyone around, I want to take advantage and be able to just cut my losses, get out right now and move on with my life. 

6:11  
So when you're going to these appointments, I'm not saying go in and completely lowball somebody to see if they're lay down. But to be able to go in and read that seller, and understand whether or not there is a potential lay down is something that you need to consider. Because now you're you're about to come into the situation where a lot of people are gonna be in that situation, or they have to get out there, there are some that are still going to try to hold on, get them get as much as they possibly can. But unless you can read that situation and know that that person is very willing to just lay down, get that house sold, move on with their life, you're going to miss an opportunity to be able to kind of double up your your money selling these houses to your buyers while they catch up. And you're not doing anything necessarily wrong. Because at the end of the day, it's all balancing, because when the market is good, your buyers are trying to get it for a lower price from you. So now, you didn't make that much money. As much as you should have. Now the roles are kind of reversed to where if you're going in now and you're and you're reading your your sellers the correct way. And you get these lay downs, the now your buyers haven't caught up so now your spreads get wider, you make more money, but at the same time, the the person that will sell in the house is happy, you're happy. Now whether you give them extra money or not, it's completely up to you. I personally do it. But I don't go overboard with it. Because I've been in this business long enough, I could put something under contract today and the market just completely change tomorrow. I always go back to the first house ever flipped, I put it on the market the day the market crashed in 2009 with the foreclosure crisis, held the house for a year paid $1,000 mortgage on it and took $2,000 to the closing table a year later just to get it so. So it can it can sneak up on you. It doesn't matter how good you actually think you are. And I'm I'm saying that because at the time, I was actually going out telling how people how much their house was worth. Because I was an active appraiser at the time, trying to flip and do these things. And even though I should have known it was coming, I got caught right in the middle of it with the first house I ever flipped. So it happens. And it's out of your control. 

9:06  
So the reason that I give them a little extra, but don't go overboard is because of that I could I could put that house under contract today wake up tomorrow, and who knows what's happened in the world and now the entire economy is on a race to the bottom. So I do a little bit more just as a help that person but also protect my ability to keep my word and get that house sold. So like I said, it's all gonna depend on you what you want to do. But right now, the market is changing and it's going to change fairly rapidly. When you have the situations that we have the supply chain, the ships, that they last count, there was some 300 container ships off of the coast, waiting two and three months just to be offloaded. All of those products are part of the economy when you go to Target and try to buy something and it's not on the shelf, that's revenue for that local economy, that's revenue that's being turned over. That's this being missed. So it winds up kind of hurting, I saw a figure last week, I think it was that said one in five people are ready shopping for Christmas. Because you've had the government officials come out and basically say, if you don't shop now, you're probably not going to get, you know, Christmas presents for your kids and loved ones and those kinds of things. Because it's just not gonna be on the shelves is not gonna be able to to arrive on time. So that has pushed a lot of people to go ahead and start shopping for Christmas now. Because one of the biggest economic drivers is the Christmas season, the real estate season, I'll always argue is the most important one, just because it it has every disposable good produced inside of a house, whether it's Clorox a couch or a car, it's in house. So that real estate season and that constant turnover, whether you're going out buying paint, or a new couch, or cleaning supplies, you can't you need that season to be able to turn things over and we had a decent real estate season this year. But now that the Christmas season is coming up, so if that honor that, that economic turnover doesn't happen. You know, what is what is it going to look like, and it's and it's scaring a lot of people. So when you get fear with people's livelihood is a lot of times when they're going to lay down. 

12:04  
So, for example, let's go out to a, to a house and you're talking to a seller, the one thing that I always tell people is to just carry a conversation with what the seller is, you're not trying to get, you know, very in depth in their personal life or anything like that. But you're you're trying to gauge where they are in their life, what's going on in their life. So that you know, for lack of a better term, your angle of attack. So when you're going in, you've got to be able to punch holes, you know, in that in that wall of trust that they've got built, because they don't know you. So you've got to be able to relate to them to be able to get that price where you need it. Because you're never gonna, you're never gonna buy a house, just don't, you know, from a seller just on price alone, they're looking for someone that they can trust, to be able to sell it to because you could walk in and tell him you're gonna give them a half a million dollars for $100,000 house, and they're gonna look at you like, I don't believe this person, this, they've lost their mind, there's no way they're gonna do that. So whenever you're out there at these properties, right now, it's more important to relate to that person to get them to get to know him in some way so that you can build that rapport and that trust with them. And then that way, you'll be able to see whether or not this is a lay down. Or if they're not laying down but they've got this false wall in front of them. it'll it'll help you see that, that that false wall is sitting there, so that when it comes down to the brass tacks, and you're getting into the negotiation, instead of them, you know actually needing $100,000 to sell the house. Now they accept $75,000 but they really only needed $60,000. So that's still a let's say a $25,000 profit for you. But you would have never known that had you not going in and tried to relate to that person and build trust with them. But it's it's going to be a short window, because what's going to wind up happening and it happens every time is whenever you get to where there is a lot of supply. It's basically pick the best deal. So when you go let's say foreclosure start to get released, short sales, you know, become popular again. Things of that nature. Now you have an abundance of supply. So what that winds up doing is driving The price down. Now this time may be a little bit different because we have a lack of supply. Because you've got a lot of institutional investors buying now compared to the foreclosure crisis. So it may help hold that value up a little bit. But you're whenever you get a massive influx of supply put on the market somewhat at one one time, whether it be you know, one month, two months, three months, six months, whenever there is a, an excess flow coming in, the market has to adjust itself. 

15:39  
So a lot of these people know that they're going out there right now, before this happens, and they're trying to get their houses sold. But they're not realizing that right around the corner. Well, they may realize it, but they don't want to admit it just yet. So your job is to point that out. Mr. or Mrs. seller, you know, I want to help you today. But, you know, if I get this for you today, my worry is is in three months. Once christmas hits, we don't get presents for our kids. What's the economy going to look like? Are we gonna, we're gonna be okay, are we gonna go down. And every single person this is this is the one thing that a lot of people don't realize, every single person that owns a house has seen a bad economy has had to struggle has had to figure it out one way or the other. Whether it go be get a couple of part time jobs plus the full time job. Every single person is of age to where they have been through an economic struggle in their life. They know what it looks like, they know what it feels like. They're protecting themselves. So what we didn't see during the, you know, height of of everything that was going on in the last year and a half was that panic, but people were actually hunkering down, protecting, spending less trying to weather the storm so to speak. But now it's starting to play itself out like you can go back, probably for a year worth of episodes, it's really starting to play itself out. Because it you can only put a bandaid on something for so long, hoping it's gonna heal without actually taking care of it. So that's what's happened this last year, you look at everything pumping more money into the market, not handling problems. The way Matter of fact, I'm not even gonna say handling problems the way they should have been just handling problems in general. There's there's been a lot of missteps in 2021. That were very avoidable. But you look at things of, of what's happened, you know, you take Budaj edge, for example, I don't have any problem with him taking leave after adopting those kids. There's plenty of people in my office that take, you know, two weeks to a month whenever they have kids don't have any problem with it whatsoever.

18:40  
The issue that that we face with him, however, is that you're sitting there with 300, some odd containerships. That can't even offload this taken two and three months. Now was not the time for you to take two months off. Now was the time for you to go and take two weeks off. No one forced you to take that job. No one forced you to adopt those children. You have responsibilities based on that job. So if you were unable to fulfill your responsibilities for that job, you needed to move aside and let someone else handle it. Instead of basically going on vacation for two months. And not telling anybody or anything like that. And all this is recent just coming out. But it makes complete sense is why a lot of things are not being taken care of within his division. But like I said, I don't have any problem with you taking off when you have kids or kids or whatever it may be. But there There comes a time where you have two adult there, the the adult and everyone is is a, I have to do this, whether I like it or not. Because when we're kids, we don't do anything that we don't like to do. It's just the maturity as you get older. And when you get in a high level position, like what's he what he's in, you expect the maturity of that adult to be a lot higher than you would a 15 year old kid out just being a teenager. As far as their priorities go, and as far as their responsibilities go, and their need to do their job the right way. Regardless of what's going on, and their personal life, you've always heard, leave your personal life outside of work. When you come into business, you've always heard, it's his business, it's not personal, there's a difference that has to be separated. So like I said, there's been a lot of things over the past year that have kind of led us to this point. And even a lot of things in 2020. That led us to this point, you could argue all the stimulus tax unemployment in insurance, that started in 2020, you can argue every bit of that has led to this. And you will be right. Because excuse me, you have one step two step, you get to 10 steps, each step got you to where you are. So it's not just the blame on one person, one administration, anything like that, it's a compounding issue that has not been solved. 

21:48  
So you're looking at it now in a way of your ability to make money. So I want everyone to really, when you go out right now, when you're looking at these properties, try to figure out whether or not this is a lay down, or whether there's the holes, the punching in the price, given the situation that they're in. Because right now what you get is the the panic sellers that are trying to avoid being the foreclosure or short sale, or delay off. Because they've weathered this storm the same way everyone else has for a year and a half. And maybe they just run out of energy, or financial ability to continue to weather it. So now you know, and it's the same as with investors. Now they're just sitting there thinking to themselves, I'm tired attendance not paying. Now, you know, I've got a vacant house, I know I'm not gonna get what I need to, but I'm just emotionally destroyed right now. So whatever you give me is what I'll take. You're not taking advantage of that situation, as long as you at least meet what they're asking for. I'm not again telling you to give them more. But if you know if you've got $100,000 house, and an investor or homeowner says give me $60,000 for it, out of the goodness of your heart, maybe give them $65,000 or $70,000. It's up to you. Because you know, you can still turn around and get it sold. But at the same time, you don't have to because if they only want $60,000 you're still not at fault, because you're still giving them what they want. They're grown, they made that decision. That's what they asked for. So the only reason that you give them more for that is if you're just trying to extend a little bit of grace, and an otherwise unfortunate situation in the world and in their life. 

24:04  
So right now just make sure that you're going out, you're looking for these opportunities because they're going to be short lived once the supply gets thrown on the market. It's going to be a feeding frenzy. And you're going to be able to race to the bottom and your investors your buyers are going to know they can get these houses now for lower. So in the meantime, check these lay downs to see if there's something that you can benefit from to make more money. Because like I said, there's nothing wrong with it. They're grown they made their their decision. It just depends on whether or not you want to extend the grace to them and give them a little extra. But there's there's not a single thing wrong with you. Protect thing your livelihood, your families. So like I said, if somebody won't $60,000, and you think your market is could go sideways within a week, hey, give them $60,000, you may really only turn around and be able to sell that house for $75,000 instead of $100,000. It could happen is happened before. 

25:23  
While you're able to pad, your ability to keep your doors open, take full advantage of it. Because for a lot of people over the past year and a half, they've struggled to get by maybe even ate ramen noodle here, they're just to be able to put food in their mouth, because they just didn't have extra money. But they were able to still keep their doors open. We've all struggled through this. But right now it's a time to where businesses need to be able to have that ability to cushion the fall. So that way, they can still create jobs. And it may not be the seller that you're buying from. But it might be a friend of theirs that you wind up giving a job to, in the six months that the full circle of life came to be. So don't in any ways think that you're that you're doing a disservice to someone if, if they're asking for a lot lower than what they should be. It's the circle of life so to speak. So just take part in it, pad your your business Mike account and move on to the to the next one. Because when the supply does hit, you're going to be sitting there thinking to yourself, what do I offer, because man, today the house is $100,000 I know for a fact, in a month, I'm gonna be able to go out and get this house for $75,000. So for me to go out and put this house under contract is useless because I'm not gonna be able to get it sold. So you need that that little cushion to be able to prepare yourself to stay in the business. When it all hits. 

27:15  
With that, we're going to draw it to a close if you want to any more information on how you can grow your business or suggestions. No tips or tricks, things of that nature, just head on over to EarlToms.com and check it out. Everything on there is free to read or listen to. The only thing that we have on there that they cost money is a deal analysis. If the $7 is so mean, it's not going to break your bank at all. But you know, if you get that it could very well change your life because it basically does. Everything you're not necessarily strong at it does it for you without you having to figure it out. So I'd encourage you to at least look at it to see if it's something that you can put in your business. 

28:09  
But again, we're gonna draw to a close hope you've enjoyed this episode. We'll see you in a couple of weeks. 

28:16  
Thanks for listening