by Delbert Ashby
THE NEXT STEP
Now that we have seen the cash flow note, security instrument, settlement statement and have filled out our MORTGAGE EVALUATION WORKSHEET, we can realistically decide whether we want to buy the note or not. I will address evaluation strategies at another time, but for now let’s assume we like the quality so far. I am now willing to begin to talk “numbers.”
Before I continue with the DOCUMENTATION discussion and before we talk numbers, I need to touch briefly on the very important subject of negotiations. I am ready to address the “numbers” issue provided that I have learned enough about the cash flow seller and his/her MOTIVATIONS! When I talk numbers, it is critical to remember that it’s more than numbers that will make the deal. We know that terms, conditions, when and how we pay for our purchase, what we plan to do with the note and many other issues are variables appropriate for negotiating.
Most cash flow sellers are unaware of these issues. DON’T EDUCATE THEM. Just ask them …. Would it be all right if …. (decide what you want and ask for it). If you don’t ask, you sure as the world won’t get it. Don’t be afraid to ask. It works.
The negotiation process actually begins before you get the note, mortgage, etc. It begins with the very first time you talk with the seller. That’s because the first action in negotiations is COLLECTING INFORMATION. LISTEN a lot and don’t talk any more than necessary to keep them talking. An encouraging grunt to acknowledge that you understand is all you need to say. My personal style is to get on their level on a friendly basis to get them to open up with me. Especially on the telephone, I try to PACE people.
If you are speaking to a “slow talkin’ southerner,” you better slow down or chances are that they will get a “fast talkin’ city slicker” impression of you and an immediate distrust will set in. You won’t collect much information then: At least, not valid information. By the way, don’t EVER mistake slow talkin’ for dumb. If you do, I’ll guarantee that you just lost the negotiation!! In a similar fashion, if the person is a fast talker, soft spoken, or whatever, try to get on their wavelength so that they will really share information with you.
Frankly, the information we want is more about them and their needs/motives than the cash flow note itself but you will often pick up a lot of info while they are talking about the note. Again, LISTEN, LISTEN, LISTEN and take good notes. After they have stopped talking. I always try to be TOTALLY SILENT for a full 8-10 seconds before I say anything in case they start talking again. If they don’t, I’ll ask another “open ended question” to get them going again ‘til I’ve got all I need or all I can get. More on negotiations later.
Delbert Ashby is a veteran note investor and broker and the author of the book Make Money Trading Mortgages. For information: http://store.papersourceonline.com/best-beginner-book/
