We have been taught in school to write in proper grammatically correct sentences. When you start writing dialogue this is the first thing you must unlearn. If you listen carefully most people don’t speak in complete and perfect sentences. We cut ourselves off, loose track of what we were saying, repeat words, use stop words and curse.
For this exercise we are going out of the house! Go to a place where there are other people and just listen to their conversation. This can be in a bar, restaurant, coffee shop, in public transport or on the street. Focus less on the content and more on how they speak. Do they use a certain type of words? Is there a rhythm or certain tone in their voice?
When you are back home or in the place where you do your writing. Try to remember the conversation you overheard and write them down as literally as you can remember.
If you can’t leave the house, you can listen eavesdrop on the people you live with or listen to a radio program or a podcast. Just bear in mind that a lot of the people you hear are professional speakers and will use a lot less fluff and clutter when expressing themselves. A program that interviews ‘normal’ people would be your best choice.
If you can record people without them realising it, it is even better! You can type out the entire conversation. Not a very creative endeavour you might say, but it will help you realize how strange and how different people speak and will help you to feel free to use language in a more creative and free way, compared to the proper grammar you are used to. This exercise will help you tremendously with writing natural dialogue and using dialogue to build your characters.