The One That Got Away: The Top 8 Reasons I Lose Out on Real Estate Deals
Having been in the real estate business for a while now, there are many deals out there that I just did not get. As I drive around, I come across some of those deals from time to time, and almost every time I feel a sense of regret and mentally kick myself. I’ll say to myself, “That should be one of my properties.” Or, “I should have bought that one.” Honestly, seeing those properties makes me a bit angry with myself, but being angry serves no purpose. So I try to let those properties serve as little reminders to myself for what I did to lose those deals and what to do next time a potential deal comes along.
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So why did I not get those deals? There are I think several reasons.
The Top 8 Reasons I Lose Out on Real Estate Deals
My Offer Was Too Low
This is of course the obvious answer. Why was my offer too low? It was not for me. But perhaps the seller had unreasonable expectations. Or other buyers could have outbid me, either due to ignorance or the ability to make the deal work on a smaller margin. In the future, I need to see where I can cut costs and streamline processes to make my business more efficient and cost effective to perhaps make more appealing offers.
I Did Not Listen to the Seller
And because I did not listen, my offer likely did not give the seller what they wanted. Every seller wants money, but there are other things a seller might want or need. They could need time to get their affairs in order. They could need a way to move their stuff. They might want a new vehicle or boat, or even a trip to Paris. Listen to your seller, find out what they need and solve their problem. If a trip to Paris makes the deal work, then book it!
I Did Not Educate the Seller on the Value of Their Property
Sellers often have unreasonable expectations of the value of their property. They may not understand the current market. They may have been lied to by an unscrupulous real estate agent so they could get a listing. They may remember the property when it was nice and new and not be aware of its current condition. A little education here can go a long way. I am not afraid to show a seller my numbers, comps and pictures to help them understand where I am coming from. Sometimes it helps; sometimes it does not. Sometimes I will get the deal after some time has passed and the seller has let reality sink in.
I Was Focused on Other Things
This could mean that I was focused on other properties, on a current project, or perhaps on even going to a Tigers basketball game. Whatever the reason, I have learned when a potential deal comes along, you need to refocus yourself and look at the potential deal.
I Was Penny-Wise and Pound-Foolish
I was painting when I should have hired painters. I was fixing a sink when I should have hired a plumber. I thought I was saving money, but in reality I was so busy, I did not have time to focus on the deals. So was I saving money? I was saving pennies for sure, but losing pounds on missed deals.
I Did Not Follow Up
Potential deals can come onto your radar screen with relative frequency. The trick is to keep them there. Sometimes a seller is just testing the waters. They want to sell, but they do not want to make a mistake either. So they make a few calls and respond to a couple of letters. It can be hard to tell how motivated a seller is sometimes, so you have to follow up. A simple letter or phone call may just be the extra push you need to get the deal.
I Did Not Have The Money/Resources Lined Up
Deals seem to come in bunches. When they do, you can very easily find your money sources dried up or your contractors too busy. When you get in that position, you may find yourself having to say no. Think about what you would have needed to do to say yes.
I Was Scared
This was true when I was new to the business. I was scared to say yes too many times. I was scared to say yes even once. There are a lot of zeros attached to real estate prices, and fear is normal when starting out. Hindsight is however 20/20, and I do kick myself for being scared. So don’t wait to buy real estate, as a friend of mine says. Buy real estate and wait.
Who knows what the reason is. Perhaps I did not build the right rapport with the seller. Perhaps they liked the other buyer better because he could talk UT football better than I could. Perhaps my timing was off. Who knows? The point is there could be a myriad of reasons, and you may never know what the real reason is.
Whatever the reason, however, do not get discouraged. There is always another deal out there. Let the one that got away serve as a reminder to keep making your business and yourself better.
What are the most common reasons YOU lose out on deals?
Leave a comment, and let us know!