Have you ever learned that a word you used in conversation was the same as a word you had read but you didn’t realize it? I have. Take “facade” for instance. I was probably in college when I realized it was the same as the word that I pronounced “fəˈsäd” in conversation. When I read it, however, it sounded completely different in my head.
How many times have you heard to “build rapport” with your seller? This is admittedly one of those words that I read as one word and heard as another for years. So that you may avoid the same embarrassing faux pas (pronounced fō ˈpä and also a word I read differently in my head for years), it is pronounced raˈpôr.
Now that I have cleared the grammatical air and admitted my misunderstanding of my primary language, I will move on.
So what is this “rapport” we’re supposed to build? I’m glad you asked. It is “noun. Relation; connection, especially harmonies or sympathetic relation.” Why should we build it in real estate? Shouldn’t we just take the strong position and negotiate hard with an offer that expires in a set time like a bomb timer ticking down? After all, we’ve got access to cash and far more knowledge of real estate than our seller which gives us power. We should use that to squash the competition…or our seller, right? You CAN do all of these things and then you can try to sleep at night knowing that you got a “good” deal while taking advantage of someone. I think there is a place for people like this. None of US will go there but if we did, we would meet that used car salesman I met once that tried to spray paint over a rusted out exhaust pipe to sell me a car….but I digress.
Have you ever been to a store that recommends a different store that may better fulfill your need? I had this happen recently and it made me like the first store even more because I felt they really wanted to solve my problem even if they didn’t profit directly from this sale. And the result? I got my item at the recommended store but the salesman built rapport with me because he wanted my problem to be solved even if it didn’t benefit him! And the next time I need an inflatable flamingo I know exactly where I am going to go! Just kidding, it was an auto parts store. Seriously!
This is one way to build this thing called “rapport”. It is trust. It is showing people that you care about the best outcome for them more than the outcome of this one deal. If I don’t make offers and meet people, I don’t get this opportunity to build rapport. Just like the guy that didn’t have the part for my lawn mower but who sent me to a place that probably would, I am likely going to come back to his shop when I need any one of the thousands of things he offers (an inflatable flamingo isn’t one of them).
But most sellers only have one house to sell, so why build rapport? Do you just hope they sell you the next one? Well, in our experience, they still want to sell to someone they trust. Here is a situation that has happened to us multiple times now. We look at a house and we talk about whatever comes up that we can find in common. Then we just have a relaxed conversation. I try not to talk so much and try to listen to their real reason for selling. I try to hear what problem they need to solve. If it is selling at the highest price and they have time and money to renovate then I advise them of that. Our sellers often need something else. Maybe they need a quick sale to move. Maybe they don’t want to make any repairs. Maybe they don’t trust realtors or want to pay their commissions (which studies show is actually worth every penny to get the best price). Whatever the situation, we give advice and show them options. NOT selling to us is always one of their options. So we tell them that. We explain what it might require to bring the house up to its highest value. We also usually try to find one or two options by which we might be able to buy their house and explain what that would look like. Maybe a low offer that is cash and closes next Friday with no inspections etc. and a higher offer if they can carry the financing.
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Several times the seller has told us “no thank you” to our offers and decided to go another route. We part as friends and sometimes continue to give them advice, as needed, through their process of finding a more suitable buyer. We do this because it is the right thing to do and only requires a few minutes on the phone. But several times they have come back to us because the other investors they spoke to did not give them a good feeling. In other words, they didn’t build rapport with the seller or show an interest in the seller’s situation or problem. We never increase our offer at this point because we already made our best offer and to offer more would seem as though we didn’t make our best offer previously which would undermine our credibility. These sales have happened weeks or months after our initial “no” from the seller. They happened because we built rapport!
This method of sales is probably against every sales trainer’s advice but it’s what works for us. It’s just more genuine. Remember, this is often the largest investment in someone’s life. How we treat them matters. It matters to them and it should matter to us.
We have bought houses from sellers who said no to the wholesalers who offered a price that was only good for four hours. We’ve bought from those who said no to investors who had assignment clauses that they couldn’t explain to the seller. We’ve also bought from sellers who just felt the other investor was “slimy” and not trustworthy. I’m sure some of the “no’s” we’ve received also went on to sell to other investors who used the “power negotiation” techniques taught in sales books. I’m okay with that. I can rest easy knowing that we gave sellers many options with their most important investment and that if they wanted to sell to us at a discounted price it was because it was a win for them; not because we coerced them.
So I can now go back to reading the dictionary instead of sales books and learn what other words I’m mispronouncing. Just remember to build rapport when you talk to sellers and treat them with respect. If you take advantage of sellers then tell that used car salesman that I said hello and that I saw the spray paint on the rusted out muffler. Not that I’m still mad…
The point of this post is that we are likely on the precipice (yes, I actually know the meaning and pronunciation of that one) of a recession. The Federal Reserve has as much as told us that it’s not stopping with interest rate hikes and it understands that unemployment will rise. This means there WILL BE distress. There will be motivation to sell. There will be hardship. As investors, we have to hold ourselves accountable to not just do what is legal but, more importantly, what is moral and ethical. That is a higher bar.
I urge you to listen to the needs of the sellers you meet. Maybe they need a more affordable living situation and you have a less expensive rental available. Maybe you can help them find a rental. Maybe you can help them with moving expenses. As an investor, you are going to need to buy deals at a discount but you don’t need to take advantage of people. If you truly go into a negotiation with a problem solving attitude and you do care about the human you are negotiating with, you will have more success and you will sleep better at night.
I haven’t invested through a recession before but I see one coming. It will be more important than ever to hold ourselves accountable to our ethics as the power shifts from sellers to buyers, as has already begun.
I wish you all the best and hope that through the coming adventures you will always Keep the Main Thing the Main Thing!