Motivating a Seller to ...Sell!

An investor’s guide to getting cooperation when it counts
By RK Kliebenstein and John Michaels

The world of investing has its own etiquette to follow. As an investor, if you can present yourself as a professional, you’ll be taken more seriously by novice sellers and more respected by experienced ones. What you do you bring to the table that will motivate a seller to cooperate with your requests and accept your offer? To answer this, you’ll need to find out why the holder is selling, how much he owes on the property, and what he needs to seal the deal.

Even in today’s exceptional storage market, there are reasons beyond greed compelling sellers to liquidate their holdings. If a property’s listing includes words and phrases such as “must sell,” “illness forces sale,” “foreclosure,” “reduced,” “will sacrifice,” “transferred,” or “make offer,” then you already know where the owner stands. But not every seller will be so forthcoming. When trying to asses an owner’s position, consider the following:

  • What is the state of local market conditions? For example, what is the unemployment rate? Are population counts declining? Is there an ethnic shift occurring? Are businesses relocating outside the area? Have environmentalists or historical societies stifled potential growth?
  • Does the seller have other storage assets? If so, where are they and how are they performing?
  • Is there a 1031 Exchange looming and, if so, has the replacement property been identified?

An examination of these factors can provide an indication of how receptive a seller may be to an offer and under what terms. But before you enter the negotiation process, you must know: Do you have the funds in place to do the deal, either equity or debt? What will be your exit strategy? How is the property currently managed, and how will you manage it after taking ownership?

» The Official Presentation

In an ideal situation, you’ll work with a flexible seller whose property has favorable financing in place. But since that won’t always be the case, here are some tips to follow when submitting an offer and negotiating the sale:

  • Establish credibility and a friendly rapport with the seller. Offer to release your financial statements or a letter from the bank indicating you have funds to close.
  • Put everything in writing and present all offers in person, making sure necessary parties are in attendance.
  • Avoid using round figures in your offer. For instance, use $60,480 instead of $61,000. The seller will think you have a specific reason for doing so, which makes you appear more savvy.
  • Consider using a net/net offer or multiple offers.
  • Use nonessential contingencies.
  • Present your offer in reverse order, discussing contingencies before giving your offering price.
  • Let the seller do some of the talking, and be a good listener. Once you make a negotiating point, be quiet. The one who speaks first usually “loses.”
  • Don’t get emotionally involved. If you do, you lose objectivity and your negotiating skills.
  • Respect the brokers, but assure them of your position in the deal. If you’re able to establish a rapport, negotiate as principal to principal. If not, let the brokers to present to each other (though this will take longer).
  • If there are contingencies with significant negative impact or any negative negotiating points, let your broker break the news. Then deliver the compromise.
  • If your broker has any sort of conflict with the seller or his agent, remove him from the negotiating process immediately.
  • Never argue with your broker in front of the seller. It will hurt negotiations.
  • Be diplomatic. Don’t overly criticize the property, and do not disparage the seller.
  • When being inflexible on a point, feel free to let your “partner” or some other absent party pose as the “bad guy.”
  • When necessary, use third-party examples and references to overcome seller ignorance.
  • If negotiations seem to be at a standstill, leave the paperwork and make arrangements to speak the next day.
  • If price is an issue, be willing to share your underwriting.
  • Consider offering to let the seller carry paper, but state your interest rate in dollars rather than as a percentage.
  • Try not to “re-trade” a deal. Put forth an offer you can close on.
  • Never negotiate a price reduction for any reason other than to get a better deal.
  • Don’t enter a transaction thinking you’ll secure a better price by getting the brokers to reduce their commission.
  • Assure the seller you are ready to commence due diligence, and have your service providers in place before the offer is signed. Let him know which vendors will be accessing the property.
  • Explain the due-diligence process and what will occur during the inspection period. Notify the seller of all actions beforehand and perform them in a timely manner, i.e., the physical inspection or Phase I environmental survey.
  • Try to negotiate extensions in advance.
  • Never give the seller more than 24 hours to accept or counter an offer.
  • Let the seller know you’re looking at other properties.
  • Reinforce the peace of mind that will come once the property is sold.

In short, you need to draw out the owner’s motivation for selling. Listen to what he has to say, what he plans to do when he sells or, better yet, what he plans to do if he doesn’t sell. If you’re successful in getting the seller to volunteer information, you’ve established trust, and the deal is as good as done. Good luck, and happy investing.

RK Kliebenstein is president of Coast-To-Coast Storage, a self-storage consultancy firm, and co-author of How to Invest in Self-Storage, now available through national booksellers such as For more information, call 561.963.4004, ext. 81; e-mail John Michael, also known as the “King of Bling,” is an investor, mentor and author. For more information, e-mail

Article can be found at: 
, 2/01/06

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