My best advice for negotiating on the telephone is simple: be quiet and listen. Really listen.
Find out why they called before you quote
In the first conversation, what should your objective be? I suggest it’s to find out why the person called. If it’s about selling a note, you want to learn what they have, what they want for it, and who they are and what problems they have. Do all of that before you give them any information about buying their note.
You can put off questions you don’t want to answer yet by saying, “I’ll give you that in a minute, but first I need to know…” and then asking your questions. That way you control the conversation without being obvious or obnoxious.
A sample call that puts listening first
When you ask your questions, keep quiet and really listen to the answers. Don’t be in a hurry to respond. The caller may only have paused to collect their thoughts. Here’s an example:
Jim: Hi, my name is Jim. I understand you buy notes.
Del: Yes, Jim, I sure do. Do you have a note to sell?
Jim: Yes, I do. It’s a 15-year note at 10 percent, and I want to know what you’ll give me for it.
Del: Do you have the note in front of you, Jim? I have a number of questions I need to ask you first.
Jim: No, it’s in my safe deposit box.
Del: All right, I’ll need to see a copy of it, but first, let’s talk some more about your situation. How did the note come about?
Listen, and follow up with related questions. Then keep going:
- “What can you tell me about the payor and their credit?” Listen, then ask more: “Did you check their credit?” “How much money do they make?” “What do they do for a living?”
- “What makes you want to sell the note right now?” Listen: is it a real reason or a smokescreen? Follow up: “What happens if you can’t sell the note?” “Who else have you talked to about selling it?” “Did they make you an offer?” “How much was it?” “Why didn’t you accept it?” “How much money do you need to get done what you need to do?”
By now you should know more about Jim’s circumstances, needs, preconceived notions and attitudes than about the note. That’s the objective.
Use a form to get the paperwork
Here’s a way to move to the next step. After listening completely, Del says:
Jim, I have a form here that I need to fill out with a lot of information about the note so our underwriters can look at it. Everything I need is in the paperwork you already have, so the easiest way is for you to get the note and other papers out of the safe deposit box and send me copies. At a minimum, I need the note, the mortgage or trust deed, and the settlement statement. Within a few days after we have those, I can talk with you about an offer and how we’d propose to solve your problem. When can you get those to me?
Try using a form. People will give you information for the form, and for the underwriter or investor behind it, that they might hesitate to give if they think it’s just you asking.
Spotting a buy sign
Note sellers often tell you they’re ready to do business by giving a buy sign. And we often miss it because we weren’t listening or didn’t know about buy signs. Here’s an example.
A reader working on a transaction with me asked, “What do I tell him if he asks whether the quotes I gave him a while ago are still good?” That question is a buy sign!
Don’t answer it. Ask a question instead: “Which of the quotes are you interested in?” After he answers, tell him the market changes quickly, so you’ll have to confirm the quote with the investor or underwriters. Then ask: “If I can still get you that price, do you want to do the deal?”
If he says yes, have him sign the agreement before you go back to the investor, “so the investor knows the seller is serious.” If he isn’t sure, tell him you don’t want to risk turning the investor off by waltzing around and using up the investor’s time (and your credibility). He should think it over and call you when he’s decided. Only then do you risk your relationship with the investor by going back for confirmation.
Turning a buy sign into a commitment
A buy sign is usually a question where the seller implies the answer will decide whether he sells. Most of the time it isn’t really pivotal. It’s a sign he needs you to help him say yes, because he has basically already decided.
Typical buy signs sound like this: “If I go ahead with this, can I have the money by [date]?” “Can I keep the next payment?” “Will you cover the cost of the appraisal?”
In short, he’s asking you for something or asking you to confirm something. When he does, ask for a commitment: “If I can get this for you, do we have a deal?” Get an absolute commitment before you do what you promised in exchange. He won’t be offended. He’s looking for you to help him decide and commit, and once he has, he can breathe a sigh of relief that his problem is being taken care of.
