The Art of Saying “No!” (Or How to Avoid Buying a House That Could Literally Kill Somebody)

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Real estate deals require critical thinking, judgment and understanding complex situations immediately when we walk into them. Sometimes we are scientists, contractors, plumbing experts, junk collectors, critical thinkers, these-people-lived-like-this data collectors, bankers, firefighters, geologists, foundation experts and even shrinks.

Probably that last one a lot. #truth

Why? People — you, me, everyone — we have problems. As we walk up to a house and speak with the seller about why they need to sell their house (because why would we be meeting with someone if they didn’t), we have to be prepared for anything. We must walk in with more knowledge, more understanding of how we can structure a deal so that when the opportunity presents itself, we can see it is a deal. And also know when to walk away.

Learning to Just Say No

The one thing that has taken me a long time to be able to do is say NO.

Practice with me. 

(insert breath here…) No.

Now, that wasn’t so hard, was it?

Yeah, yeah, yeah, everyone is like, no man, wholesale that thing. Wrap a sub sandwich on it and sell that baby. Make like $10k on it tomorrow with no money when you call all those guys on your list of buyers who are ready to dole out Benjamins like a bill shooting cannon…

Listen. Stop it.

Sure, there is SOMEONE for every deal. It doesn’t mean — let me repeat — it doesn’t mean that person is you.

Related: The Worst Real Estate Deal I’ve Ever Done (And How You Can Avoid the Same Mess)

Let me give you an example.

The House That Needed More Than Just “A Little Work”

I spoke with a woman a month or so ago who needed to sell, had some “work” that needed to be done and asked me to come a few days after our conversation so she could get the house presentable and work on the “drywall.” I said sure and scheduled the appointment with her two days later. I pulled into the neighborhood and did my pre-driving (I always pre-drive the surrounding 6-8 blocks before the meeting so I make sure and have a good boots-on-the-ground idea of the subject and surrounding neighborhood) and then pulled into her driveway. She met me at the door. I said, “Good afternoon, my name is Nathan, and I am here to buy your house today.”

Yeah, thanks, yellow letters guy…that’s a sweet line, man.

So I walked into the house, crossing the threshold of the door, and WHAM. Dude. Oh man. Ouch. Here we go…

Immediately to the left was the room they were “working on.” The drywall had been hung completely broken, crooked, sideways and backwards. Oh yeah, just wait. I walked farther into the house and turned left into the small 1/1 bathroom in the house. To my complete astonishment, the panel…

People, the electrical panel was IN THE SHOWER. #speechless

From there we walked into the first of the bedrooms, where sheetrock was completely missing on the ceiling and all walls and immediately noticed the joists in the ceiling were all sistered. It’s not like most people tear out all the drywall in their bedroom and sister their ceiling joists for fun, right? So the seller says family members had put the second story on the house, and the day they decided to rip the roof off to put it on, it rained. And they didn’t necessarily understand, say, the engineering, of say, the entire second story they put on. I also found foundation support beams placed (halfway sticking out) in between the studs. The only working light was a piece of romex laying on the top of closet connected to a single bulb fixture.

From the master bedroom, we walked through the living room to the other side of the house (total sqft is probably 1200), through the kitchen (also with water damaged from said second story roof situation) into the other bedroom on the first floor. I felt the floor move as I walked in. I asked her, gently pointing to the floor and giving the, what’s up with that look — you guessed it! — they built this room on too. Bummer. The whole floor shifted as I walked around. I seriously wondered if I would fall through the floor or if the whole back side of the house would come off itself. This is not a comfortable feeling.

Remember, these folks lived in the house.

But Wait: It Gets Worse

At this point we proceeded up the stairs into the second story. It was never finished — all sheetrock, in varying degrees of being hung and finished, newly installed windows and more OSB on the floor. A second bath studded out that will likely never be. I have to tell you, I did not want to be up there anymore. It was scary situation being in that house. I was concerned for my safety and the safety of the seller.

I looked at her and I said something to the effect of, “I hate to tell you this, but there is absolutely no way I am buying this house. I am a believer in karma and doing the right thing with everyone I meet, and I don’t believe you should be putting another dime into this house. This place is not safe. You need to get out.”

Then I went on to explain why. I didn’t feel that the house was sound. The second story would need to be torn down. Part of the first floor probably needed to be torn down. The electrical panel completely removed, rewired and redone. The kitchen needed to be completely gutted. It did not have a great floor plan anyway. There was no way I would buy it.

Related: Don’t Fall For the Hype: How to REALLY Discern a Good Deal

Investors: we are better people than what others think we are. Let’s act that way.

I then took another 15-20 minutes to talk her through what I thought her options were.

1. Short Sale

Get an agent who will work with you. Get a full comprehensive bid together from a contractor to send along with an offer when it comes in. This type of transaction is going to take some time to prepare, sell and close, and finding the special buyer who has the contracting either themselves or a contractor on staff not paying retail for those services. You will have to have people in and out of your house a lot before you most likely find the buyer. Then there will be months of dealing with the bank, their paperwork and then, if approved, to closing (hopefully not being asked to pay anything at closing).

And yes — for all of you agents/investors out there — while I lived in Florida I did dozens of short sales during the downturn of the economy and aftermath in both Collier County and Lee County, two of the worst counties in the whole country during that time. If you are going to work with an agent who “does short sales,” make sure you KNOW they KNOW what they are doing! Short sales are more complicated and take more time and dedication. Understand them or work with someone who does.

2. Deed In Lieu or Foreclosure

Call the bank. Send them the keys. Call your attorney. Throw a party. Move out. Move on with life.

I understand you have to protect yourself, and I even said this to her. I am not an attorney. She would need to contact one herself depending on her decision and how she chose to move forward. But one thing is abundantly clear: she would have to get out of this house. It was a death trap. Her son was sitting right there. He nodded his head in agreement. This is a situation none of us want to be in. Few options. No money. Owe a pile of money on a house you can barely afford, and investors who buy “ugly houses” didn’t buy.

The least I could do was talk it through with her. Sometimes people just can’t see out. Maybe they need a little push. Maybe they need a giant kick in the pants. Either way, to me, it’s our job as investors to call it like it is. This is a little morbid, but seriously, if they stayed in that house, I truly believe they were playing Russian roulette.

I didn’t want that on my conscience and neither do you.

I left their house, called my wife and told her I loved her. Told her how thankful for our life I am. The safe house we live in. We are blessed.  We…YOU… ME…we need to be grateful for what we have. Do the right thing. Help people. Grow a great business. And do what we can, even if we don’t make a dime.

Now, For a Moment — Back to the Art of NO.

There is a buyer for every deal, even for this crazy one. Just not me.

Some of you do a ton of deals in the family area, like divorce situations or out of probate. Some of you wouldn’t touch that. Too much waiting. Too hard to know if it will be a deal. Too much drama. You don’t like people in suits. Others prefer buying directly off the MLS, the use of a realtor and what we would think of as the most “normal” everyday transaction.

Some say you can’t get a great deal off the MLS. Others are on the front lines with homeowners wholesaling properties after getting leads from bandit signs or mailing to absentee owners. I’ve even knocked on doors. I’ve been yelled at. I’ve been invited in to the dining room table. You never know. There is a deal and a type of deal for everybody.

There are ultimately a ton of ways to skin the proverbial real estate cat — and over time, years of experience, learning, mentoring and being alongside others in the business who have done these deals over and over, we learn how to do them. I was reading the book The Warren Buffett Way by Robert Hagstrom a few years ago, and one of the astonishing things to me about Warren is how he looked at deals when he was buying them. This guy has a multibillion dollar company and owns parts of or entire major companies like Heinz, Benjamin Moore, Nebraska Furniture Mart and Geico. There were many things he looked at, but one of the big takeaways from the book — and yes, he had many more sophisticated investment analysts — but:

He Didn’t Buy What He Didn’t Understand

And we shouldn’t either.

Here’s the takeaway:

1. Focus: If you are new to real estate investing, find ONE thing that you are passionate about and start there. Fix and flip, buy and hold, whatever. But start saving your money. And start finding good people to work alongside; find a good deal and do it.

2. Find a Mentor: I can’t say this enough. A mentor is a must. They’ve been there. You haven’t. Take them for coffee, for lunch, actually care about them and their families. Don’t always call asking for help (or money), and use the two ears for listening, and the one mouth for speaking. In that order.

3. Get good: Do the deal, and do it well. Do it again. Rinse, refine and repeat. As you have success, make money and grow in your knowledge and understanding, you can slowly work you way into other areas. But not until you master this one. Once you learn one method, the others start to come much faster, and you can move into another area and repeat the process.

There are several moments in my real estate career that changed my life forever. Some amazing days, I collected a giant check or a wire to my bank account. That’s awesome. And some days I wrote big fat checks to an attorney and a bank. That sucks. In the case of the latter, if I would have had the guts to say NO to the deals in the first place, I wouldn’t have been writing the checks in the first place. I am not saying we won’t learn or that we won’t make mistakes, because we will. But it’s time to learn the difference between the opportunities that come that we understand and the ones that we should pass on.

Here’s to saying as many NO’s as necessary to get to the right YES’s.

When’s the last time you said “no” to a deal and knew you made the right decision?

Let us know in the comments!

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About Author

Nathan Brooks is a dad, husband, worship leader, and real estate investor in the Kansas City market. Foodie. Coffee addict. Crossfit junkie.

18 Comments

    • Nathan Brooks

      Hey Dawn! No … I didn’t. You know it’s one of those catch twenty two’s at that point … do I take pictures? I think honestly I really wanted to get OUT of that house! I think if they hadn’t lived there I would have undoubtedly taken them since I am in the habit of doing that.

      Any ones you have come across like this? I know you buy in a similar rental market like I do … I have another one I walked into the other day and I DO have a pic of … I’ll look for that pic and share it :) Let’s just say … floor joists and water combo #boom

  1. Good article. We are sometimes so programemd to tryt o turn every property into a deal that we miss out on the real deals that come along. Thanks for sharing.

  2. The first house I actually went to see with the owner and possibly make an offer on was one I had to say “No” to. The guy had bought the house as a REO with the idea that he would fix it up and he and his wife would raise a family there. He took out a 2nd mortgage to have the septic system completely replaced, put in a new furnace and water heater and replaced most of the wiring. He got the bathroom done and ran out of steam. Sheetrock needed to be replaced in most of the rooms, kitchen still needed to be redone, flooring needed done, roof needed replaced and the wiring finished. I found his ad on Craigslist (“Handyman Special”) and figured I’d take a look. Granted, the house had potential, but the numbers just weren’t there. $61k balance on the mortgages and probably another $30k of work to be done on the place…all for an ARV around $75k. I tried and tried. Crunched numbers every-which-way and tried to think of every exit strategy I could but like they say…if you have to tweak a deal to make it work…it ain’t a deal. I broke the news to him that I wasn’t going to be able to help him and that he’d likely have to do a short sale to get out. Last I saw I think he went ahead and put the roof on and listed it again on Craigslist. I feel bad for the guy but I’m glad I had the sense to pass on this one.

  3. Nathan Brooks

    Jim … man! Thanks so much for sharing your story. Amazing some of these properties we come by … but I know for sure there are the ones that I don’t lose any sleep over, and I move on to the next! Keep on keepin’ on!

  4. I had house that was owned free and clear but the owner was foreclosing on another house they were forced to leave. The garage door had a giant hole in it as I approached the house. Once we got inside the basement, it had a 2nd kitchen that smelt like someone had been cooking plastic and it would need a total gut on it. The main floor was actually in pretty good shape just dated. The main bathroom needed a full gut. The master bedroom had a half bath that was super dirty and barely big enough to stand in it. When we walked out on the the front porch they had tied a tarp under the plastic patio cover to catch the drips of water from the melting snow and had some buckets to catch the excess. The owner wanted $80k for the house because they were trying to save the other house. There was no way I could get anywhere near that amount she needed due to the amount of work that needed to be done. I am getting use to saying “No”, it feels bad to not be able to help them all but as yo mentioned Nathan someone is out there to help them.

    • Nathan Brooks

      Hey Michael, thanks for taking time to respond! Yeah, that’s a tough feeling. You want to put together the deal. You want to help the homeowner. But it’s just too far apart what they want to sell for and what you can buy. And in this case, you have to gut it … and who knows what all damage came from that tarp and water situation! Eek! On to the next man!! Good luck…

  5. Nathan,

    You must be ready to say No as fast as you’er ready to say Yes. Once you sign on the dotted line that property is yours until you sell it off. Don’t get emotional and get suckered into something that is not meant for you.

    I’ve seen it a thousands times when a guy will call, and give this sad story about how he just bought this house, and uncovered it have issues down the road. Now he is calling me to unload it…all I can say No, No, and No

    Like the post Nathan

    Antonio Coleman “Signing Off”

  6. Nathan Brooks

    Antonio … exactly! Couldn’t have said it better … going to sleep better tonight because I said NO! :) Thanks man, and thanks for your blog posts too … they are awesome!

  7. Loved the article Nathan! I have found myself in this situation quite a bit, though not to the extreme called out in your article, and it is definitely hard to say ‘no’. Your advice definitely strengthens my resolve going forward! So thank you!

    • Nathan Brooks

      Frankie… thanks for sharing and I am glad this can help you. Sometimes we just have to hear its okay. Frustrating, but there will be another deal that works. Take care and good luck!

  8. Yikes! Thanks for sharing the story. It sounds like they listened to you, at least. So do you know how it turned out for the seller, or is it ongoing? Did they get out?

  9. Hi Karin! Thanks for taking time to read and respond … when I left I told the seller she could call me if she had any questions but I haven’t heard anything. Hopefully she took the advice! Take care!

  10. When I heard Nathan Brooks explain what was in this blog, about the house that could kill you, and he recommended that the owner leave the structure immediately, that was great.

    However, is there a higher duty for the investor to tell the police, and/or tell code enforcement or the fire department or something that the house needs to be checked out because it is a major accident waiting to happen… with electrical in the SHOWER?

    I’m just curious what Nathan, and any other BP people think of reporting this dangerous house to some kind of authority to possibly help save their lives.

    Can you comment?

    • Nathan Brooks

      Barry,

      I hear you man. With what they were going through, and already knowing the issues in the house, and that they were going to be in the process of moving … it just didn’t seem to make sense to me to do that. If I didn’t feel like they were going to get out, or have the capacity to understand and move on … I think I would have been compelled to do something differently.

  11. Nathan,

    Great article. I appreciated your stressing being thankful for what we have. I was just talking with my wife this morning, confessing I kinda have a spirit of jealousy with RE investing. It manifests in that I get agitated that I am not getting better deals that I see others sometimes getting. I really need to practice being more thankful. I am definitely blessed.

    Larry

    • Nathan Brooks

      Larry,

      Thanks so much for your message. I do that too. Guilty! But I appreciate that you were able to remember back that you are still fortunate in your situation. And I do the same… have a blessed day.

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