The ‘Four Yeses to Success’:
What Are They and How Do You Get Them?
By Don DeRosa

A winning effort begins with preparation. Joe Gibbs


How many times have you been told by a seller not to bother to come over if you’re one of those investors who’s just going to make a low ball offer? Does that stop you or do you go anyway?

Me? I always go.

If it’s a house I’m interested in, the seller is motivated and the numbers work, I go. Because I do my due diligence and come prepared with the information to show the seller why my offer is a reasonable one. Even if it’s tens of thousands less than they want out of their house. I usually get them to say ‘Yes.’

That’s because having an objective basis for your offer makes the negotiating process much easier. And when you take the time to explain the numbers and the logic behind your offer, the seller appreciates it. Most other investors don’t take the time to do it. You build credibility and earn trust. (And you gain confidence in yourself, too!)

But perhaps the biggest benefit of walking through the objective basis for your offer is that you get a series a ‘yeses,’ or agreements, which lead to an ultimate ‘yes’ to your offer.

Let’s back up and make sure you’re clear on some basic concepts that will get you to that ultimate ‘yes.’

In this business, knowledge truly is power. And you know the old real estate adage: You make your money when you buy, but you realize it when you sell. That means that before you ever go to meet the seller – before you ever make an offer – you’d better know what that house is going to cost you and what you can sell it for. In other words, it means doing lots of due diligence up front.

Now, this is pretty basic stuff. But a lot of investors use old rules, ratios and formulas (e.g. the MAO – Maximum Allowable Offer – formula) to evaluate properties. Those old rules don’t necessarily work in this market. And even if they do, using those old rules to put together your offer doesn’t help you explain the objective basis for your offer to your seller. Which doesn’t help you get that series of ‘yeses’ that will lead to acceptance of your offer.

So if you follow my system to get those ‘yeses’ when you visit a seller, you’ve already looked up the ‘solds’ in the neighborhood. Most sellers base their estimate of their home’s value on flyers in the neighborhood. But those only show asking price, not sales price. When a seller tells you that their house is worth X because the house down the street is selling for X, you will politely tell them that the house was listed at X, but sold for Y, a lower price.

Immediately you build credibility, because you will say it nicely, but authoritatively. You will show that you’ re a pro, and that you will use objective information, and not just opinion or guesses, to evaluate their house.

After you build rapport, you’ll walk around the house with the seller and take notes on all of the repairs that need to be done. You’ll ask a lot of questions, eliciting ‘yes’ responses. (“Are these the original countertops?”) Meanwhile, you will explain to the seller that you renovate your houses with extra special touches to make them stand out and sell quickly. Then you will sit down and walk through my evaluation tool with the seller.

And this is where you start getting your four‘ Yeses to Success’

First, you explain that this is a tool that you use to evaluate houses, so that you account for all of the costs associated with the property in order to ensure that there will be a profit on the back end. Because of course, you won’t be living in this house; you’re buying this with the intent to make money on it.

You ask, “You’re ok with that, right?”

You need to make sure that the seller is ok with the fact that you’re in this for a profit before you go any farther. (Note: That may seem intuitive, since you’re an investor, but you still need to make sure they understand it, and get them to say ‘Yes’ they understand it.) And you explain that your company has certain criteria you have to meet and thresholds that you have to pass in order to make it a deal you’ll pursue.

Taking the time to do this is important. It shows that you’re a solid professional, that you have an objective basis to what you’re doing. You’re not just holding your finger up in the air to see which way the wind is blowing. It also sets up your competition, so that if they don’t go through a similar process, your seller won’t necessarily view them in a similar professional light. And it gets the seller to continue to say ‘yes.’

Then you walk through the numbers that go into your evaluation. And as you go over the numbers, you get agreement, or a ‘Yes,’ as you describe what goes into each one. You’ll review the four expense areas: acquisition costs, holding costs, repair costs (based on your walk-through of the house – so there should be no surprises!) and selling costs. Each time, you get them to agree (your four ‘yeses’) that those are the costs that go into buying, rehabbing, holding and selling the house.

And when you’ve gotten those four ‘yeses,’ your offer is just one more ‘Yes’ in the process. Because it’s all based on the numbers. It becomes you and the seller against the numbers.

You can only offer as much as the numbers allow.

Unless the seller goes against every ‘yes’ that they’ve uttered during the negotiation, the only logical conclusion is that your offer is a valid one. And usually, they’ll take it.

It’s all in the numbers. It’s four yeses to success.

And you’ve got a profitable deal.

Don DeRosa was recognized as one of the nation’s top 21 real estate investors in the New York Times bestseller The Millionaire Real Estate Investor. Don, who is a full-time investor, trainer, and mentor, offers a complete system to build and run a thriving real estate business. He is the first to make all of his training material available on mobile devices like the iPad, so investors can truly leverage tools and technology to make more and work less.