Tuesday, June 3, 2008
Friday, May 30, 2008
Sunday, March 16, 2008
A Day in the Life/Office
Ok, so how about a day in the life? Well here goes for everyone.
Up at 6:45 check email via blackberry by 7:30 in the office by 8 at morning prayer by 8:30, back at the office by 9. Short sales meeting with sales staff. Meet with my buyers about appointments for the day. By 11 looking at a house we got under contract yesterday. Signed a sales contract on a retail sale for 75k (got about 28k in it). Went to lunch with an investor and talked about the biz. Played around on flipitbig.com for a while after lunch. Worked on a contract addendum for a particular deal that we are working. Followed up with one of my buyers after one of his appointments regarding a house that he looked at. Talked to my sales girl about some of her leads with retail buyers that are pre-qualed. Talked to a couple of investors about lines of credit and how to establish them. Met with a private lender regarding transactions coming up. Got earl (the rottie) and packed up the laptop and called it a day (5:15).
Kinda’ normal day. I spend a lot of time on the phone, mostly networking and talking to lenders and investors (8000 minutes/month usually). But I only look at houses that are deals and are under contract after my buyers have completed their part of the deal. I basically manage my system and manage my people at this point. However, I do have bad days and days that I run crazy all day etc. I am sure we all do. But let me give you a day in my franchise/business and what goes on around here all day overall.
We usually start showing up at the office around 9 am as a group. I usually spend a little time with each of my buyers and sellers to see what they have working at the time. My buyers will go over the paperwork and comps for their upcoming appointments for the day. We generally schedule appointments at either 10 or 2. This gives the buyers time to prepare emotionally and with their paperwork etc for the meeting with the sellers. We have 3 buyers and each of them will have 2 appointments on the average each day. My coordinator will pull a comp report on each house that we will look at. On each house she will pull at least 10 comps and then narrow them down to the three closest and in size to the subject property. She then puts each one of them into our proprietary program which includes an estimator program for repairs. Once it is all entered, a packet is produced and given to the buyer on that house. Along with a credibility packet the buyer will take all of this including a laptop to the appointment.
We normally have at least 15 or so line ads in the local paper, or thrifty nickel type of paper. Because of this, the phone rings about 10 or 15 times an hour on average! So needless to say my coordinator is busy every day just with that part and the paperwork for the buyers, but she does a variety of other things as well. She is responsible for our reporting to HVA, as well as the daily managing of the comings and goings of the office. She coordinates between all of the members of our team. This also includes requesting title work and maintaining a file on each property that we have under contract. She will push our deals from a communication standpoint and make sure we are all on the same page. She will make sure that everything is on schedule with rehab jobs as well. Basic tracking of invoices as well as ordering of office supplies and deploying garbage cans etc are covered by her as well.
My buyers of course are the ones who go out to the appointments and meet with the sellers. Their job is to negotiate for the purchase of the houses with them and convey our position as the industry leader to them as well. This gives them confidence in our abilities as professionals and lets them know that we are their best choice in the market for them. They will drive the area that they have the appointment in and look for vacant houses before leaving the area. Once back at the office they will pull the subject information of the vacants and mail them a letter. They will also place door hangers on all of the houses within a couple of streets of there as well. Then do that all over again for the second appointment. Two of my buyers will also sell houses wholesale for me to our investor database, they have a group and list of buyers that are their clients.
Our retail sales person schedules and has appointments with potential buyers where she will pre-qualify them with our FHA lender. Once pre-qualified, she will give them a list of property that they can go and look at, this happens about 3 times a day on average. There is of course a big pile of paperwork that will need to be gathered on the buyer including two years worth of W-2’s, two years of tax returns, verifications of rent, deposit for down payments, and verification for the 3 necessary trade lines as well. Her job is to manage all of the gathering of the info to send to the lender along with the selling of the houses retail. She normally talks to 4-6 potential buyers a day and meets with at least 3.
I have 2 property locators that drive neighborhoods daily looking for houses that are vacant and need work, which we will pull records on and mail to them to attempt to get a lead and set an appointment.
Our construction superintendent oversees the rehab process on our rehab projects. He of course has to procure supplies for the jobs and manage the subs that are on the jobs, which is one of the hardest jobs in the business. We normally work 2-5 rehabs at a time, so all of it is in multiples. He normally is at Home Depot at least 2 times a day, and is at each rehab at least once a day.
Our bookkeeper is responsible for the day to day management of the financial part of our operation including maintaining the daily balances, booking invoices, and HUDs from closings. We also have a CPA that oversees her process and we meet with him monthly to go over our P&L and he lets us know exactly where we are at financially.
We have one full time short sale person along with my wife who oversees the department. She talks to banks every day and usually have at least 4 or 5 hours on the phone daily either talking to banks or holding for banks. She deals with people about to lose their houses and has to maintain a communication level with the sellers to ensure the deal will go well.
My wife’s main job function is to oversee the sales department of the office and make sure that part is moving in the right direction. She oversees the short sale department as well. My goal for her is the same as myself, doe us to work on our business not in it. this gives us the ability to develop our business and take it to the next level.
All of these parts are moving daily in conjunction with each other, sometimes they move well, sometimes not as much, but that is what we do around here.
Up at 6:45 check email via blackberry by 7:30 in the office by 8 at morning prayer by 8:30, back at the office by 9. Short sales meeting with sales staff. Meet with my buyers about appointments for the day. By 11 looking at a house we got under contract yesterday. Signed a sales contract on a retail sale for 75k (got about 28k in it). Went to lunch with an investor and talked about the biz. Played around on flipitbig.com for a while after lunch. Worked on a contract addendum for a particular deal that we are working. Followed up with one of my buyers after one of his appointments regarding a house that he looked at. Talked to my sales girl about some of her leads with retail buyers that are pre-qualed. Talked to a couple of investors about lines of credit and how to establish them. Met with a private lender regarding transactions coming up. Got earl (the rottie) and packed up the laptop and called it a day (5:15).
Kinda’ normal day. I spend a lot of time on the phone, mostly networking and talking to lenders and investors (8000 minutes/month usually). But I only look at houses that are deals and are under contract after my buyers have completed their part of the deal. I basically manage my system and manage my people at this point. However, I do have bad days and days that I run crazy all day etc. I am sure we all do. But let me give you a day in my franchise/business and what goes on around here all day overall.
We usually start showing up at the office around 9 am as a group. I usually spend a little time with each of my buyers and sellers to see what they have working at the time. My buyers will go over the paperwork and comps for their upcoming appointments for the day. We generally schedule appointments at either 10 or 2. This gives the buyers time to prepare emotionally and with their paperwork etc for the meeting with the sellers. We have 3 buyers and each of them will have 2 appointments on the average each day. My coordinator will pull a comp report on each house that we will look at. On each house she will pull at least 10 comps and then narrow them down to the three closest and in size to the subject property. She then puts each one of them into our proprietary program which includes an estimator program for repairs. Once it is all entered, a packet is produced and given to the buyer on that house. Along with a credibility packet the buyer will take all of this including a laptop to the appointment.
We normally have at least 15 or so line ads in the local paper, or thrifty nickel type of paper. Because of this, the phone rings about 10 or 15 times an hour on average! So needless to say my coordinator is busy every day just with that part and the paperwork for the buyers, but she does a variety of other things as well. She is responsible for our reporting to HVA, as well as the daily managing of the comings and goings of the office. She coordinates between all of the members of our team. This also includes requesting title work and maintaining a file on each property that we have under contract. She will push our deals from a communication standpoint and make sure we are all on the same page. She will make sure that everything is on schedule with rehab jobs as well. Basic tracking of invoices as well as ordering of office supplies and deploying garbage cans etc are covered by her as well.
My buyers of course are the ones who go out to the appointments and meet with the sellers. Their job is to negotiate for the purchase of the houses with them and convey our position as the industry leader to them as well. This gives them confidence in our abilities as professionals and lets them know that we are their best choice in the market for them. They will drive the area that they have the appointment in and look for vacant houses before leaving the area. Once back at the office they will pull the subject information of the vacants and mail them a letter. They will also place door hangers on all of the houses within a couple of streets of there as well. Then do that all over again for the second appointment. Two of my buyers will also sell houses wholesale for me to our investor database, they have a group and list of buyers that are their clients.
Our retail sales person schedules and has appointments with potential buyers where she will pre-qualify them with our FHA lender. Once pre-qualified, she will give them a list of property that they can go and look at, this happens about 3 times a day on average. There is of course a big pile of paperwork that will need to be gathered on the buyer including two years worth of W-2’s, two years of tax returns, verifications of rent, deposit for down payments, and verification for the 3 necessary trade lines as well. Her job is to manage all of the gathering of the info to send to the lender along with the selling of the houses retail. She normally talks to 4-6 potential buyers a day and meets with at least 3.
I have 2 property locators that drive neighborhoods daily looking for houses that are vacant and need work, which we will pull records on and mail to them to attempt to get a lead and set an appointment.
Our construction superintendent oversees the rehab process on our rehab projects. He of course has to procure supplies for the jobs and manage the subs that are on the jobs, which is one of the hardest jobs in the business. We normally work 2-5 rehabs at a time, so all of it is in multiples. He normally is at Home Depot at least 2 times a day, and is at each rehab at least once a day.
Our bookkeeper is responsible for the day to day management of the financial part of our operation including maintaining the daily balances, booking invoices, and HUDs from closings. We also have a CPA that oversees her process and we meet with him monthly to go over our P&L and he lets us know exactly where we are at financially.
We have one full time short sale person along with my wife who oversees the department. She talks to banks every day and usually have at least 4 or 5 hours on the phone daily either talking to banks or holding for banks. She deals with people about to lose their houses and has to maintain a communication level with the sellers to ensure the deal will go well.
My wife’s main job function is to oversee the sales department of the office and make sure that part is moving in the right direction. She oversees the short sale department as well. My goal for her is the same as myself, doe us to work on our business not in it. this gives us the ability to develop our business and take it to the next level.
All of these parts are moving daily in conjunction with each other, sometimes they move well, sometimes not as much, but that is what we do around here.
Wednesday, March 12, 2008
Negotiating Tips
Now I am going to attempt to “wrap up” this topic. Not sure how successful that will be. We could literally talk for days about negotiating, but I will get it to where everyone has a little bit of understanding of the topic and let it go from there.
Ok, I walked everyone through they way that I teach my buyers to buy houses. We walked all the way through the process, but now I want to back track a little and talk about some tips/tricks that may have been mentioned but should be expanded upon.
Planting seeds is the first thing that you need to learn about. In the negotiating process you must plant seeds of doubt regarding the seller not taking your offer. So think of all of the negative reasons that a seller would have where keeping the property is concerned and these should be brought up.
Costs: most of the houses that you get a call on are going to need plenty of work, and that means money. One of the main reasons that the sellers will call you will be because they do not have the money to fix the property on their own. I usually even bring that part up from the get go. Just to let them know and be upfront I put it out there that they will make more money if they keep it, fix it, and sell it themselves. Once that is done, we have planted the seed that they will need the cash to fix the house. So this will be in the back of their mind when they get your offer.
Slow Market: we can capitalize on the market conditions and present the fact that it may take a while for them to sell their house. You can quote falling prices in the area, or days on market that you know about. The number one thing to do here is be armed with the facts of what is going on. When that is put out there they will then think hard about how hard it is going to be to sell their house.
Fees: closing costs and commissions fit in here, as does insurance costs. So these are figures that you need to bring up to the sellers so that they are aware of them and will think about them. I like to do this just like a net sheet that a realtor prepares. You can itemize all of the fees that they will see in the process so that they will also be thinking about those fees when they see your offer.
Dealing with contractors: all of us have problems dealing with them, and civilians are no different. They have the problem of finding the contractors that will do the job. Then fight putting up money up front and whether or not they will even show back up (sound familiar). Then what about the time to manage them, bad workmanship, not completing the work, etc. these are all seeds to be planted as well.
Financing: most sellers don’t even realize what is going on around them so you may need to educate them on the financing battles that are going on in the market right now. Let them know that it is now that people don’t want to buy a house, it is that with the recent collapse of the lending companies it is harder and harder to get people financing. Let them know that often times when a house sells and gets to the table to close the financing falls apart. This is a seed that will plant a lot of doubt in the mind of a skeptical seller. Now everyone that wants their house could be the loser that they are scared they are.
All of these things are small by themselves, however, when you put them together, they become a lot of negatives. You must practice your presentation skills so that you work certain things in at certain times in your visit. It must not sound rehearsed but it is almost a script that you have to follow. Once you have done it a few times it starts to become natural to you. You are adding blurbs to your presentation in the middle of building rapport.
Another thing that we must talk about is finding the pain. Part of the rapport building process is to find the pain. Why are they selling you their house? What problem is there in their life that makes them need to sell to you? Also what do they need? Is there something in particular they need to allow them to get out of their house? Usually this is a topic that will help you decide what seed to plant. If they need to go fast then you can mention the time on market in the area and the uncertainty of the financing even if it is sold. This is just like a debate session or playing devil’s advocate. If they are broke then you emphasize the costs of getting the house ready to take to the market.
When talking about of costs and pricing, it is important to note that you may need to allow them the ability to lead the conversation to some extent. A lot of times their pricing that they have in their mind is completely different. The main reason is that you as an investor will get an entirely different pricing from your contractors than what a civilian will get. So allow them to lead you a little bit on pricing and values. You can also allow them to tell you what they think needs to be fixed on their house and they may tell you something that you didn’t know or won’t see on your own. You can also ask them what they think their house will sell for, this may be a lot less than what you think as well.
You should be able to sell yourself/company as well and why it is that they should deal with you as opposed to all those other guys out there. What is unique about you and your company that makes you stand out and makes them want to sell to you instead of someone else. This is where you push your abilities, the financing that you have available, and the network that you have at your fingertips. You can also use this time to explain to them about you and your company and some of the things that you have done. Remember they have to be convinced that you can solve their problem.
I like to be able to talk intelligently about my contract as well. I like for it to be in layman’s terms and be able to paraphrase it for the clients that I meet with. It is important to be able to convey all of the information to the seller, otherwise they will slow the deal down to run it past someone else. I like to put a timing deadline on all of my contracts so that they can’t just hold on to it and shop it to everyone in town and then call me at the end.
So these are some tips for your negotiations for now, I will add more stuff on this later.
Ok, I walked everyone through they way that I teach my buyers to buy houses. We walked all the way through the process, but now I want to back track a little and talk about some tips/tricks that may have been mentioned but should be expanded upon.
Planting seeds is the first thing that you need to learn about. In the negotiating process you must plant seeds of doubt regarding the seller not taking your offer. So think of all of the negative reasons that a seller would have where keeping the property is concerned and these should be brought up.
Costs: most of the houses that you get a call on are going to need plenty of work, and that means money. One of the main reasons that the sellers will call you will be because they do not have the money to fix the property on their own. I usually even bring that part up from the get go. Just to let them know and be upfront I put it out there that they will make more money if they keep it, fix it, and sell it themselves. Once that is done, we have planted the seed that they will need the cash to fix the house. So this will be in the back of their mind when they get your offer.
Slow Market: we can capitalize on the market conditions and present the fact that it may take a while for them to sell their house. You can quote falling prices in the area, or days on market that you know about. The number one thing to do here is be armed with the facts of what is going on. When that is put out there they will then think hard about how hard it is going to be to sell their house.
Fees: closing costs and commissions fit in here, as does insurance costs. So these are figures that you need to bring up to the sellers so that they are aware of them and will think about them. I like to do this just like a net sheet that a realtor prepares. You can itemize all of the fees that they will see in the process so that they will also be thinking about those fees when they see your offer.
Dealing with contractors: all of us have problems dealing with them, and civilians are no different. They have the problem of finding the contractors that will do the job. Then fight putting up money up front and whether or not they will even show back up (sound familiar). Then what about the time to manage them, bad workmanship, not completing the work, etc. these are all seeds to be planted as well.
Financing: most sellers don’t even realize what is going on around them so you may need to educate them on the financing battles that are going on in the market right now. Let them know that it is now that people don’t want to buy a house, it is that with the recent collapse of the lending companies it is harder and harder to get people financing. Let them know that often times when a house sells and gets to the table to close the financing falls apart. This is a seed that will plant a lot of doubt in the mind of a skeptical seller. Now everyone that wants their house could be the loser that they are scared they are.
All of these things are small by themselves, however, when you put them together, they become a lot of negatives. You must practice your presentation skills so that you work certain things in at certain times in your visit. It must not sound rehearsed but it is almost a script that you have to follow. Once you have done it a few times it starts to become natural to you. You are adding blurbs to your presentation in the middle of building rapport.
Another thing that we must talk about is finding the pain. Part of the rapport building process is to find the pain. Why are they selling you their house? What problem is there in their life that makes them need to sell to you? Also what do they need? Is there something in particular they need to allow them to get out of their house? Usually this is a topic that will help you decide what seed to plant. If they need to go fast then you can mention the time on market in the area and the uncertainty of the financing even if it is sold. This is just like a debate session or playing devil’s advocate. If they are broke then you emphasize the costs of getting the house ready to take to the market.
When talking about of costs and pricing, it is important to note that you may need to allow them the ability to lead the conversation to some extent. A lot of times their pricing that they have in their mind is completely different. The main reason is that you as an investor will get an entirely different pricing from your contractors than what a civilian will get. So allow them to lead you a little bit on pricing and values. You can also allow them to tell you what they think needs to be fixed on their house and they may tell you something that you didn’t know or won’t see on your own. You can also ask them what they think their house will sell for, this may be a lot less than what you think as well.
You should be able to sell yourself/company as well and why it is that they should deal with you as opposed to all those other guys out there. What is unique about you and your company that makes you stand out and makes them want to sell to you instead of someone else. This is where you push your abilities, the financing that you have available, and the network that you have at your fingertips. You can also use this time to explain to them about you and your company and some of the things that you have done. Remember they have to be convinced that you can solve their problem.
I like to be able to talk intelligently about my contract as well. I like for it to be in layman’s terms and be able to paraphrase it for the clients that I meet with. It is important to be able to convey all of the information to the seller, otherwise they will slow the deal down to run it past someone else. I like to put a timing deadline on all of my contracts so that they can’t just hold on to it and shop it to everyone in town and then call me at the end.
So these are some tips for your negotiations for now, I will add more stuff on this later.
Monday, March 10, 2008
Negotiating The Deal Part 1
I guess I will start a little line about negotiating your deals. I know a lot of people out there are starting out and there are some things that you should know and learn.
First is empathy, and rapport. These are essential to establishing the reason that someone will buy from you. No matter what you offer, or even if two people offer the same amount the seller is going to sell to the buyer they have a level of rapport with. The person they “like” will win every time.
So let’s talk about rapport. In a drawn out way let me give you a story on rapport. When I was a restaurant manager, I had a waiter that consistently sold more than everyone else working, every night. He was a big guy and used to play college football, so I naturally thought he scared them to death until they bought whatever he told them to. He never seemed to get in the weeds like everyone else in the store and could handle as many table as I dared to give him. One night I had a conversation with him about this, and he allowed me to follow him all night and explained a few things. First he said that the key was to identify with them, next was to put yourself on their level, and never stand over them looking down. After that he said you must lead them to what you want for them. Now let’s apply that to houses.
The rapport starts with the phone call, when you receive it you must start building this rapport. You must identify with them by sharing something that is similar to what they are going through. Don’t rush them off the phone take your time. Usually, when people call us (investors) they are in trouble, so in a lot of situations part of your job is to listen. They just want to vent some of it to someone that will not judge and we are perfect, they probably will not ever see us again. Ask open ended questions like “tell me about your house” and “it sounds nice why would you want to sell it”. This is to get them talking about their situation so that you can establish the level of motivation, and connect on a emotional side as well. Once you get that rapport built, the next thing to do is set the appointment to go out and look. It is important to note here that if it is in the area that you like to buy in, I did not say “how much equity do you have”. Doesn’t matter, if they are motivated enough they will make it happen and so will you, but beyond that you have to realize that this is part of the reputation that you are building.
So let’s go there now; most investors get a call screen because of equity, and then determine that they cannot make a deal and don’t call back or follow up with the potential client. If they do go out, even on a call that has some equity, they have their numbers down and usually within the first 30 seconds with the seller they are trying to make a low ball offer. Then afterward, everyone wonders why didn’t they get the house, and why do people think investors are bad. Go figure!
So for you as an investor, you should think enough of your marketing, and enough of your clients to go out and meet with them. There is no sense in doing heavy screening if it is in an area that you will buy in ( or you have a buyer that will buy in) just go and meet the seller. You go and meet them and pick up where you left off on the rapport building. Sit down and ask them about their house, and how they got in the situation they are in. How did they hear about you? Wow, I notice you are in to hunting, me to, what do you hunt? That type of thing. Establish a medium between you and the seller so that they understand you can identify with them. Also this is the part of the meeting where you plant seeds. Talk about the market and how hard it is to sell, or how much of a problem that buyers are having getting financing. Also you need to mention basic fees involved in selling a house such as sales commissions, closing costs, holding costs, insurance, and the fix up of the house. I usually let them give me some numbers here, like “how much you think that roof will cost to replace”. You know your numbers, so if theirs are higher use theirs.
Once this is established you can then go and check out the house. Take a notebook or clip board to write notes on. It is important to note here that it does not help or even do you any good to bash someone’s house. You should not say “crap this room is ugly” or “wow your house is a piece of crap”. In most cases this is where they have raised their kids, spent Christmas, thanksgiving, and other family times. It will not help you to bash that. In fact you may want to stress that you understand that specifically by saying something like “I understand that you have raised your family here, but please understand that for me as an investor I could never make an offer that would do justice to the memories you have made here”. That being said you can also let them know that you have to make an offer that make business sense to you. These types of hints start to plant the seed about what you are going to offer. What is acceptable to do for conveying the stuff that you will work on is to make a “hmmmmm” noise, or just touch the spot without saying anything. Make a noticeable attempt to write down the defect. This puts a spot in their head regarding the defect, without you saying “damn lady you sleep here”. Believe me they know what is wrong with their house, you do not have to tell them.
So once you have made your pass around the house and looked at everything it is time to prep them a little more. Let them know that you are going to work the numbers out and see what the offer will be, but want to cover a couple of things. Cover everything that you have done and talked about, mention everything before, and then go to the car to figure your numbers. This gives separation between you and the seller, long enough for you to think and work out your numbers, but also to allow them time to mull over the offer that you are about to make them. You can even get the in the “ballpark” before you go out to the car with something like “so let be clear here, we think this house will be worth xxx when it is fixed, and we got at least xxx in repairs, but I will figure those numbers out, so if I can be around xxxx are we going to be able to do business?” Then go figure out what exactly your offer will be, but take at least 8-10 minutes on it. When you go back in you can go through your blank contract to let them know about it. I like to be able to paraphrase it for them, and then when you are done you write the amount in the price line and push it in front of them and say “I can offer you xxxxx” and be quiet. Don’t say a word until they do. The first one that talks looses.
We’ll start wrapping this section up tomorrow…………………..
First is empathy, and rapport. These are essential to establishing the reason that someone will buy from you. No matter what you offer, or even if two people offer the same amount the seller is going to sell to the buyer they have a level of rapport with. The person they “like” will win every time.
So let’s talk about rapport. In a drawn out way let me give you a story on rapport. When I was a restaurant manager, I had a waiter that consistently sold more than everyone else working, every night. He was a big guy and used to play college football, so I naturally thought he scared them to death until they bought whatever he told them to. He never seemed to get in the weeds like everyone else in the store and could handle as many table as I dared to give him. One night I had a conversation with him about this, and he allowed me to follow him all night and explained a few things. First he said that the key was to identify with them, next was to put yourself on their level, and never stand over them looking down. After that he said you must lead them to what you want for them. Now let’s apply that to houses.
The rapport starts with the phone call, when you receive it you must start building this rapport. You must identify with them by sharing something that is similar to what they are going through. Don’t rush them off the phone take your time. Usually, when people call us (investors) they are in trouble, so in a lot of situations part of your job is to listen. They just want to vent some of it to someone that will not judge and we are perfect, they probably will not ever see us again. Ask open ended questions like “tell me about your house” and “it sounds nice why would you want to sell it”. This is to get them talking about their situation so that you can establish the level of motivation, and connect on a emotional side as well. Once you get that rapport built, the next thing to do is set the appointment to go out and look. It is important to note here that if it is in the area that you like to buy in, I did not say “how much equity do you have”. Doesn’t matter, if they are motivated enough they will make it happen and so will you, but beyond that you have to realize that this is part of the reputation that you are building.
So let’s go there now; most investors get a call screen because of equity, and then determine that they cannot make a deal and don’t call back or follow up with the potential client. If they do go out, even on a call that has some equity, they have their numbers down and usually within the first 30 seconds with the seller they are trying to make a low ball offer. Then afterward, everyone wonders why didn’t they get the house, and why do people think investors are bad. Go figure!
So for you as an investor, you should think enough of your marketing, and enough of your clients to go out and meet with them. There is no sense in doing heavy screening if it is in an area that you will buy in ( or you have a buyer that will buy in) just go and meet the seller. You go and meet them and pick up where you left off on the rapport building. Sit down and ask them about their house, and how they got in the situation they are in. How did they hear about you? Wow, I notice you are in to hunting, me to, what do you hunt? That type of thing. Establish a medium between you and the seller so that they understand you can identify with them. Also this is the part of the meeting where you plant seeds. Talk about the market and how hard it is to sell, or how much of a problem that buyers are having getting financing. Also you need to mention basic fees involved in selling a house such as sales commissions, closing costs, holding costs, insurance, and the fix up of the house. I usually let them give me some numbers here, like “how much you think that roof will cost to replace”. You know your numbers, so if theirs are higher use theirs.
Once this is established you can then go and check out the house. Take a notebook or clip board to write notes on. It is important to note here that it does not help or even do you any good to bash someone’s house. You should not say “crap this room is ugly” or “wow your house is a piece of crap”. In most cases this is where they have raised their kids, spent Christmas, thanksgiving, and other family times. It will not help you to bash that. In fact you may want to stress that you understand that specifically by saying something like “I understand that you have raised your family here, but please understand that for me as an investor I could never make an offer that would do justice to the memories you have made here”. That being said you can also let them know that you have to make an offer that make business sense to you. These types of hints start to plant the seed about what you are going to offer. What is acceptable to do for conveying the stuff that you will work on is to make a “hmmmmm” noise, or just touch the spot without saying anything. Make a noticeable attempt to write down the defect. This puts a spot in their head regarding the defect, without you saying “damn lady you sleep here”. Believe me they know what is wrong with their house, you do not have to tell them.
So once you have made your pass around the house and looked at everything it is time to prep them a little more. Let them know that you are going to work the numbers out and see what the offer will be, but want to cover a couple of things. Cover everything that you have done and talked about, mention everything before, and then go to the car to figure your numbers. This gives separation between you and the seller, long enough for you to think and work out your numbers, but also to allow them time to mull over the offer that you are about to make them. You can even get the in the “ballpark” before you go out to the car with something like “so let be clear here, we think this house will be worth xxx when it is fixed, and we got at least xxx in repairs, but I will figure those numbers out, so if I can be around xxxx are we going to be able to do business?” Then go figure out what exactly your offer will be, but take at least 8-10 minutes on it. When you go back in you can go through your blank contract to let them know about it. I like to be able to paraphrase it for them, and then when you are done you write the amount in the price line and push it in front of them and say “I can offer you xxxxx” and be quiet. Don’t say a word until they do. The first one that talks looses.
We’ll start wrapping this section up tomorrow…………………..
Thursday, March 6, 2008
Thursday
Today has been much like the whole week, I have not had a second during the day. Two appraisals, meeting with my real estate attorney, countless calls to investors regarding new projects. Looked at 3 houses, signed 1 contract to buy, and showed 1 retail property to a buyer. Got 1 new client pre-qualified for a loan. Talked to Gerald my one of my partners on flipitbig about some/alot of the possiblities for the site. Talked to my corporate credit guy-a couple of times. Worked out a title issue on a house we are buying. Talked to a seller we are about to close with, and was at home by 7 for a webinar. Wow!
Just another day at the office I guess.
I will catch up with a more detail post tomorrow.
Just another day at the office I guess.
I will catch up with a more detail post tomorrow.
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