Become a Million Dollar Question Asker

23

She sat across the desk from a master. This real estate broker was about to be grilled by one of the best question askers I have ever met. Mark sized her up quickly. With a twinkle in his eye he fired the first shot. “How’s business?” he asked.

She told us that business was great. How couldn’t it be? “I’m finding houses on the multiple listing service for .50 cents on the dollar” she claimed. “Really,” Mark said. This unsuspecting Realtor just stepped into his trap. She shook her head confidently, “Yes, I am.”

Mark told her he would buy every house she could find for .50 cents on the dollar. This, of course, made the agent very happy. She was grinning from ear to ear. “Okay, I found a condo in Phoenix you can buy for $140,000. It’s worth about $210,000.” A puzzled look came across Mark’s face. “I’m no math expert, but that doesn’t sound like .50 cents on the dollar to me” he answered. The Realtor said, “You’re right, but it’s in turnkey condition, no repairs needed.”

“But you just told me you were finding properties for .50 cents on the dollar” Mark insisted. He told her if she found any to call him. Then we wrapped up.

This meeting took place in September. 2008. Here we are, more than five years later and poor Mark is still waiting for the Realtor to call.

If It’s 99% True, Then It’s a Lie

Mark taught me a lot about the art of asking questions. Before I met him I would accept what most people had to say at face value. I would give them the benefit of the doubt. “Why would they lie to me?” I thought. Besides, they said what they said with such authority. They must be telling the truth. If there were a few holes in their story I would fill in the blanks myself. That was the polite thing to do right?

Like me, many people just fill in the blanks – especially when desperate. Back in 2007, l was a struggling real estate professional. My net worth went from $8 million to negative $2 million practically overnight. I would listen to any sales pitch and consider any investing strategy imaginable if it meant I could improve my financial situation. I wanted to believe these opportunities would work so I didn’t ask too many questions. It was like I didn’t really want to know the truth.

Fortunately, I learned from Mark that questions are like a shield. They protect us from the smelly stuff that my daughters always complain about whenever we drive by the dairy farm near our house. Questions can save you thousands and earn you millions.

If you’re thinking about paying someone to teach you how to invest in real estate then I advise you ask a lot of questions. Here are my top three suggestions:

  1. How many deals did you do last year?
  2. Can you show me HUD settlement statements for those deals?
  3. How many properties do you own right now?

If the sales person fidgets, fusses, stutters, stammers, sweats, delays or tries to change the subject then your shield worked.

My business partner Manny Romero likes to say that “if it’s 99% true, then it’s a lie.” (Tweet This Quote!) The problem with the real estate business is that many of the investors and educators you hear about or see on TV leave 1% of the story out. Why? Because that 1% will make you, and your checkbook, run for the hills.

The truth hurts doesn’t it?

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About Author

Marty (G+) is the Chief Financial Officer for Rising Sun Capital Group, LLC, a real estate investment firm based in Gilbert, AZ. His firm purchases homes at the courthouse steps and public REO auctions. They have two exit strategies, either fix and flip or seller financing.

23 Comments

  1. It’s getting harder and harder to find homes for 70 or 80 cents on the dollar, let alone 50!
    Not only should you always ask the right questions you should do your own research when working with someone new. I see a lot of investors blindly trust a Reealtor on post flip values and they list the home way too high. It sits on the market and they lose all their profit while they keep lowering the price. Most agents will not do this, but it is very easy with today’s technology to check comps and prices on your own to make sure they jive.

    • Mark, here in Phoenix it’s tough to find houses for 90 cents on the dollar! Very competitive here right now. I usually advise anyone interested in investing full-time to get their real estate license. This gives them MLS access, which has the most accurate comps.

      Thanks for reading.

      • Market is really heating up here too in Colorado. We have seen 20% increases in some areas over last year. I advise investors to get their license as well!

        I think a lot of agents who fudge on the possible reslae price aren’t doing it just to get the deal done, but also because they think that is what the investor wants and will try to do what they can to tell the investor the price they want to hear instead of the actual value. Most people prefer to tell people what they want to hear and not the truth or facts if they can help it.

  2. This is an excellent article. Unfortunately, some agents will only tell you what you want to hear and they will do anything just to make a sale. You are absolutely correct that asking the right questions is so critical in real estate transactions. Yes, that 1% will make or break you. Thank you.

    • Paul Ling wrote
      >”some agents will only tell you what you want to hear and they will do anything just to make a sale.

      That is certainly not limited to agents, most people tell you want they think you want to hear.

      Of course most people don’t understand, I want to hear good news, I expect to hear the truth, whether I am going to like it or not.

      Good post Mr. Boardman!

      • Ned, you’re right. It’s not just Realtors. I’ve met contractors, lenders, wholesalers and flippers that stretch the truth. I’ve found by asking just a handful of questions it’s easy to learn who’s full of fertilizer.

    • Paul, it surprises me how many agents will stretch the comps. They fail to see how bringing an investor a good deal will result in a lifetime of business. That said, many Realtors just don’t know what a deal looks like – they lack education.

  3. Thanks for the post Marty. I sometimes get the feeling I ask too many questions but now I know there is no such thing. This a good reminder. Now I can add this to there is no such thing as a dumb question. there is no such thing as too many questions.

    • Michael, there’s a bit of an art to asking questions. I don’t want to sound disrespectful – or dumb. I do want to sound curious. There’s a fine line. A few thoughtful, curious questions will unveil the truth without ruffling anyone’s feathers.

  4. The best way is to not pay someone to teach you!! Meet a person who really invests in real estate and makes a living off of it and only it, then follow them on their daily routine. Ask as many questions as possible. A REAL investor loves to showoff his success in his activities and properties so he will not have a problem with you tagging along. Help in any way you can while you are with them.
    Hands on experience is infinitely more important then some “guru” who does 2 deals a year just to have examples for his next class. Your mistakes will resonate with you much more than a DVD you watch or a class you attend.
    Mistakes+perseverance=success

    • Addison, excellent advice. However, I do believe it’s important to invest in your education. While I’m not a fan of real estate gurus, there are lots of classes out there that are valuable to a real estate investor. I’m a licensed Realtor in Arizona and Wisconsin and the money and time I spent to get this education was extremely valuable. I’ve also taken accounting courses and personal development workshops. Not to mention the various books I’ve read about business and finance.

      I appreciate the comment.

  5. I think this is also important when dealing with lenders. I recently worked with a lender who, at the time, was the only one who could do a certain type of loan. Everyone seemed too busy for me and when I finally got someone to assist after being bounced around and sending tax docs etc. to three different people over the span of a month or two (office going through turnover), I got a nice gal who probably did her best. I just found out after we closed (barely, as they over promised and under-delivered) that we were her 3rd loan! Being on conventional loan #5 required some extra knowledge from the lending side. It would have been ice to know this on advance but it’s a lesson for the future.

    • Tiffany, when dealing with a lender I don’t know I like to ask “have you done many of these types of loans before?” If I’m not happy with their answer I’ll generally steer them towards my preferred lender.

  6. Thanks for posting this, Marty. I’ve always been a very trusting person by nature, giving people the benefit of the doubt. I still want to see the inherent good in people, but I definitely need to – as you said – ask more questions to weed out the b.s.

  7. Fred Robertson on

    It is so refreshing to hear the truth. People often lie to promote their business or training offerings. They aren’t malicious lies, just exaggerations that they have become comfortable with as a part of promoting their business. This reminds me of my days as a trader in the stock and options markets. Traders/trainers would tell you about their great trades….but you would never hear about their losing trades, which would often times would be more frequent than winners. As President Reagan said, “Trust, but verify”. The questions you have posted are right on and will shake out the people who can’t help you get where you want to go.

    • Fred, thank you for bringing this up. You’re right – most people don’t lie maliciously. It’s just part of a bigger strategy to leave important facts out that take away from the story. I attended a marketing pitch for a real estate company recently and they put up some numbers on a deal one of their students did. After the meeting ended I asked the presenter when that deal was done – turns out it was four years ago!

  8. It’s often the case that most people will give you a quick and easy answer just to move on and get you out of their hair, whether it be a lender or realtor or whomever…while working as a set decorator years ago in LA, I learned the invaluable skill of confirming everything, but with respect. For example, I need to find a 20 foot high human head with real hair for a shoot and I’m given a tip on someone who has one. I call, and they say “sure we have what you need, it’s out back in storage.” I think my job is done, feel good about finding such an obscure item and plan to drive the truck out tomorrow to pick it up. When I get there, it’s gone and I’m in hot water because everyone is waiting for me to arrive with this head. It’s already been rented by someone else needing a 20 foot high human head with real hair at the same time. So, next time, instead of taking the guy’s word for it, I say “would you mind going out to check that both of its ears are still intact for me?” He does so, and then comes back saying, “oh sorry, that’s been rented and isn’t here right now.”

    Perhaps an odd example, but believe it or not directly related to your topic of always, always asking lots of questions. Tthrough a lot of practice and trial and error, I learned how to ask the right questions without offending, so I could be sure to get the answers I needed. Ask more questions, learn more answers.

    Disclaimer: In the real story it was actually a giant gilded globe made of metal, suitable for dancers to gyrate in during a music video, but I changed things around to protect the innocent.

  9. Rea TurRee on

    Hi Marty, as always, you always say what needs to be said. Questions are important, however, when new to the business, you sometimes don’t really know just what questions to ask, to fish out those that don’t tell the entire story. Thank you for giving directions on what needs to be asked in this particular situation. It really helped with direction.

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