For a Limited Time Only: Using Scarcity to Sway a Deal

limitedHey guys! Patrick here, answering a fantastic question from one of our Insider students. She writes:

“Hey Patrick – I’m newer to REI and I’ve been working on getting deals. Sometimes, when I think for sure I’ve got a deal nailed down, it falls apart. Is there some secret to locking in that ‘Yes!’ from a seller or private money lender?”

This is a great question! And I think you’ll find my answer is pretty interesting…

p riddlePatrick’s Take

So, like anything else, there’s no guaranteed, one-size-fits-all approach to get people on board with your business. But there are absolutely some powerful tools you can add to your belt when talking to potential buyers, sellers, or private money lenders—and it’s as simple as the words you use.

I’m talking about the principal of scarcity. It’s the same psychological magic that has people scrambling to McDonald’s every time the McRib sandwich comes back, or piling Disney DVDs in the shopping cart when their childhood favorites leave the proverbial “vault.”

Robert Cialdini puts it this way in his book, Influence: The Psychology of Persuasion:

“Human beings have been hardwired to want what is going away. Far more people are motivated by the thought of potential loss than by potential gain.”

Basically, this is the law of supply and demand. Make people think they’re about to miss out on something, and their motivation level explodes. You can create this effect easily by limiting either time or amounts.

Let me give you a quick rundown of what creating scarcity looks like with sellers, buyers, and potential private money lenders…

Sellers:

Every contract you write should have an expiration date.

Whenever you sit down with the potential seller, emphasize that once that time frame expires, the offer is no longer on the table. BOOM! Scarcity.

Or say:

“Mr. Seller, I just want you know, it looks like the company that I work with is only going to be buying one or two more properties this month. So if you call us next week, we may have already found other properties and won’t be able to purchase yours. So the sooner you let us know, the better.”

Buyers:

timeI’ve got two words for you: Group Showings

This may not blow your mind at first, but think about how many other investors you know who are doing it. Probably not many. And the fact is, your house becomes a scarce resource when there are multiple people who may be interested in buying.

Start marketing your property, then as the leads come in, set up only one time to get everyone there. Nothing motivates like a little competition, right?

Private Money Lenders:

Limit their time. When you call a potential lender to follow up, say something like:

“Well, I want you to know that we’re going to have someone lined up for this awesome investment opportunity by next Wednesday. So if you’re interested, you will need to let us know soon.”

Limit the amount. Again, call the prospective lender to follow up and let them know your company is just looking for a few — probably less than five — highly qualified private lenders to join your team. And once those slots are filled, you probably won’t be offering these kinds of deals to people on the outside.

There You Have It

See? Super easy ways to instantly up the ante in the minds of your potential clients and business partners. Everybody hates missing out on a good deal.

This stuff may be simple, but it’s powerful. Give these strategies a-go in your business today.

Has This Worked for You?

I’d love to hear how these strategies are working for you. Tell me about it in the comments below.

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