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Posted over 8 years ago

HOW TO DEVELOP A GOOD BS METER!

HOW TO DEVELOP A GOOD BS METER!

By: Bill Gulley

Hey, that real estate coach in a forum said jump in, take action, you can learn as you do things in real estate!

That guy on YouTube said anyone can make money in real estate, just follow me, take my course and I'll show you financial freedom!

Let's use some common sense for a moment. Who really gains from that?

Where did you start in school, the first grade or did you walk into the 8th grade to start your education?

Did one of your parents just hand you the key to the car when you were 12 years old and said here, go learn to drive the car?

The thought initially is that real estate is just another thing you buy like a car or a boat as you would any property. If that were so then dealing in real estate would be easier, maybe like running a small car lot or boat yard. But real estate isn't that type of property, it is “real property” also called an “estate” and it very different than personal property like a vehicle or an appliance.

Beginning investors or operators dealing in real estate usually begin by learning folklore about the business. What do I mean by folklore? Folklore is an accounting of some

thing someone did in the past, it's a story about things that supposedly happened. Folklore can be nothing but fantasy or partly true and exaggerated to make the story more interesting or exciting. The story of George Washington cutting down an apple tree is folklore.

Real estate educational materials sold to investors are full of folklore, some material is very convincing, easy to understand, giving a step by step approach as if you were buying or selling personal property. But, what part is true and what part is fantasy or an exaggeration or just down right deceptive? Not understanding the beginning of real estate or why real property is different from personal property you'll never know where the truth is starting out.

I have an imaginary contraption I call my BS Meter. It can sort out the truth from the BS. This is a necessary tool for every investor in real estate because, really, there is so much BS out there. Why should you have a good BS Meter? Because, it;

  1. 1. Can save you money, lots of money, so much money in fact, over a career it can mean the difference in successful investing and just getting by or even failure; and
  2. 2. Will keep you out of trouble, real estate is highly regulated and full of business and property laws, violations can mean financial loss, losing a property and even going to jail; and
  3. 3. Means you can be more successful in the business, real estate is a social business and following folklore can destroy your reputation, your chances of success; and
  4. 4. Not only protects you, but also the public you deal with, pulling BS games can cause a great deal of financial and even emotional harm to others. Inflicting or causing damages to others is, under the law, a tortuous offense or a civil wrong that you can be held legally accountable for.
  5. 5. You can grasp concepts of ideas, apply them in your situations for creative solutions that follow legal, ethical and a profitable path without dreaming up questionable tactics.

Everyone has a BS Meter, it begins developing around the age of 10 or 12. When my kids were young they couldn't grasp what a soldier was or what an Army was. I told them a secret and not to tell anyone, when daddy puts on his uniform he's Super Man! Even then that was a hard sell but they believed and it made for some funny moments in the family.

What got me busted as Super Man was taking the kids to a parade on the Army post where they saw a thousand soldiers in uniforms, the oldest asked “are they all Super Man?” Well, yes, in a way, I mean what could I say then?!

Their BS Meter was forming and they were beginning to “calibrate” it, to the difference of what is true and plausible in reality and what was not. Kids learn to question things early on as they develop.

From our education and experiences in life we fine tune our BS Meters, we know when we hear a whopper of a fish story. We can also be naive at any age, especially when we lack knowledge and want to believe. The more you want to believe the more your BS Meter is turned down, some even turn their BS Meter off wanting to believe something!

Real estate is fertile ground for financial predators, when you have the chance of financial success and you mix that with people who are not technically educated in real estate, you will have predators preying on that lack of knowledge. Giving instruction in real estate can be big business. This is the first aspect of reality that must be loaded in your BS Meter.

The functions needed to calibrate your BS Meter are basically easy to recognize:

  1. 1.Motivation is usually driven first by your economic circumstances and desire to make money. Who doesn't want to make money that doesn't have money? That's obvious. Your motivation is also anchored in psychological needs, the need to be secure, achieve something, gratification, self-esteem, social acceptance and success. These are all areas that marketers play to in order to convince a customer to buy most any product.
  2. 2.What is the promise? The promise hits on at least one and usually more of the psychological needs mentioned, the more the better. There are phrases to spot that tie into motivation to deliver the promise; “you can”, “just do it”, “you deserve” and “be successful”, you need to recognize when your psychological buttons are being pushed. It's a simple promise, financial security for you and your family.
  3. 3. It's easy! This function really needs to be calibrated closely. Not to be cynical but life isn't easy if you need to make money. Somethings are easier than others but nothing is easy. Digging a ditch with a shovel is hard work, acquire expertise and skills and brain surgery is much easier and more profitable. Real estate is not simple, it can be as difficult and risky as any other business, in fact, more so than many others. Any step by step program should be a red flag matter with your BS Meter.
  4. 4. You can do this anywhere! Simply marketing, as no strategy can be executed in detail as it may have been accomplished as it was in another time or place. Over a thousand deals and none were identical, there were always differences to consider. Local and state laws, as well as federal laws, dictates what can and cannot be done. You can't do a lease-option to buy in Texas as you might do in Ohio or California. The market dictates the strategies to be used as well as individual circumstances, going step by step will not apply every time or everywhere.
  5. 5. The proof of success! Wow! This is a BS Meter buster. I'll show you some of our past deals, here are the pictures and here are the copies of our old HUD-1! I've never seen a property with a sign in the air saying who the owner was. Closing states can be ordered by anyone and filled in, there is no registration number on a closing statement than allows you to verify anything! Do cars impress you?
  6. 6. The financial claims made! Along with the proof of success we have more folklore with claims of instant equity. Such is simply false accounting, if you made that claim to a bank in a loan application you could get nailed for bank fraud, but such claims to individuals are commonplace in real estate. The BS Meter goes off because they don't know the rules of valuations of assets and if you don't pay tax on it, you didn't make anything! Other financial folklore includes:

  7. a. Claims of acquiring millions in assets in a short period implying they made projected numbers. Real equity and owning are two different things, but it sure makes for a great story or folklore they way they tell it.

    b. An old saying in financial product marketing, figures lie and liars figure! Figuring numbers can be used to explain what may be sold from a logical point of view, simplified and you can illustrate about anything you want to show in a sales pitch. It's the devil in the details, the assumptions made and the omissions of reality that catch us every time.

    c. Another old saying that is so true, if it sounds to good to be true, it probably is!

These are the main factors needed to calibrate a good BS Meter. When emotions drive your business decisions, usually you lose. When your motivations are anchored in greed, you usually lose. If someone tells you that making money in something, know you're hearing exaggerations, untruths and folklore. When someone says they have a secret to share, know they aren't Super Man. Money is a motivator, people with money don't really talk about money, it's the ones who need it that talk about it.

Additionally, learn to trust your BS Meter, it was given to you for a reason, learn to calibrate it in real estate before you jump into real estate. You will need to learn the core aspects of real estate before you can calibrate your BS Meter, that means a basic understand of the business, why real property is different from personal property dealings. Understand real estate markets, location and what makes real estate valuable. With this type of knowledge you can spot the folklore and those trying to separate you from your money! :)  


Comments (13)

  1. Thank you for suggesting this to me @Bill Gulley. This was helpful in a few different ways! 


  2. Much needed post!


  3. Miranda, you got it, just keep calibrating your BS Meter!

    Curt, the seminars I've been to, the speaker puts up legal disclaimers for a few minutes before they begin. If you actually read it all, you'll know that what you're about to hear can be pure BS as they tell you to see your attorney and tax professional to see if this is right for you. A fishing guru might claim he dives off bridges and catches the fish with his hands. Now, if you try that method, your success may be different! LOL :)


  4. Tnx Bill,  I talk to groups of new RE folks now and then.  It shocks them when I say:

    - Never take advice as if it would work for you!   Ask the advice giver; when did this work for you and where and what deal type?  Make sure the giver is speaking of a recent deal, an area that you could work and a deal type that you are interested in.  Too often the advice giver is speaking about years ago deals, a scenario that doesn;t exist today.

    - Always customize advice to your own scenario.

    - If a room full of investors they all do deal ABC in zip 123.  The smart new person should think;  I'll NOT do deal ABC and it won;t be in that same zip as 100 other investers, I'll do it someplace else, like out side of town where there's few investors.

    Most of the BS I have heard fits into the first catagory above.  Advice from years ago that no longer is relevant... so today is mainly BS.


  5. Great article. My BS meter has definitely grown stronger since getting into real estate. I really felt I arrived when I heard a gasp over the phone after i told this "business consultant" (salesman of a get rich in real estate program) that I was probably better off reading more books than giving him $900 that he said would be returned to me 6 months into the program. But something tells me that I will see worse.


  6. This might be the most powerful tool in the industry 


    1. Yes, if you don't have a good BS Meter, you're had in this business! :)

    2. Yes, if you don't have a good BS Meter, you're had in this business! :)

    3. Yes, if you don't have a good BS Meter, you're had in this business! :)

    4. Yes, if you don't have a good BS Meter, you're had in this business! :)

    5. Yes, if you don't have a good BS Meter, you're had in this business! :)

  7. I enjoyed your BS meter on a few threads the last few days. I appreciate the time and rationale you put into this. 


    1. Thanks Ryan, there is so much of it you really need to know when it's dumped on you! :)