OMG I totally think I messed Up!

37 Replies

I believe I miscalculated my ARV and contracted a house for too much. I may have to get out of it. I have a clause in the deal so that's easy, but I'm soooo embarrassed and hate to tell this old lady I can't buy her house. This was my first contract. Smh. I wish I could start this one over.

At the end of the day you have to survive out here in this world. Can't feel bad about it. The good thing is you realized your mistake and you're correcting it. Hopefully this lesson will help you on the next one.

@Fe Kelly   Honesty is the best policy.. I know many wholesalers really don't go by those rules LOL

But you may find the seller will lower the price to make it work if your honest with them

I thought about that, I definitely will be up front with her. My initial exit is to wholesale. I have a few buyers who I just sent the info today so I'm going to hear what they have to say first. 

@Fe Kelly Hi, gj on getting the contract regardless. I have a couple of things to say. First calm down, it happens to everyone so dont feel bad and guess what, atleast if u messed up, u went out there and took steps to be successful. Most people give up but guess what, u didn't. Now how do u know that u miscalculated the ARV? have u talked to any buyers yet? If ur talking to buyers and they say its too much, ask them where they need to be. From there, go back to the home owner and just be honest with her. Say, i'm sorry, i talked to my business partners and their numbers are not near my numbers. They don't want to move ahead with the deal, i done everything i can, they want to be lower on the deal. I can offer you this xxx. If they are motivated and if u built rapport, she will understand where your coming from and come down. Also when talking to the buyer, when he/she said this number, try to come up alittle with his number that way u have more room to get a lower price with the home owner. At the end of the day like @Andrew Fielder said, its a lesson. Dont get down on yourself. You did a good job ;)

Thanks @Ryan Spinola ! I'm trying not to stress it. I Think I miscalculated because when I was looking at some of the comps it looks like I may have gone out a bit further than I intended on the map. But I'm not going to just give up when I'm so close to this deal. I'm going to call my buyer who's the most interested tomorrow and hopefully we can come to an agreement that she will agree to as well. She is willing to get a loan to pay off the remaining balance so I believe that speaks volumes to how motivated she is. 

@Fe Kelly I have yet to get into my first deal. I've heard many a successful investors on the BP podcast say they messed up on their first transaction. Sounds to me you are on the right path to being successful and building wealth.

Best,

Jorge

Thank you @Jorge Ruiz ! I found it driving through neighborhoods looking for fsbo signs. I heard that you gotta tear some stuff up right before you start making money so hopefully that's what this means. 

@Fe Kelly Good luck getting this sucker sold!  I completely agree with @Ryan Spinola ask your go-to buyer(s) what they are willing to pay for a quick close and see how far off you are where your contracted and where you need to be.  Take it to the seller and explain your capital partners can't get this approved at this price because (e.g. the layout, location, surrounding low comps)

 Good Luck!

Michael 

What makes you think you messed up the valuation? How much are you off by? From someone who has "wholesaled" for years. 

My 0.02 I don't ever tell a seller what the ARV or repair cost. If I give an idea I use terms like estimate or your contractors estimate my vary. Due your own due diligence.

Someone may disagree with my contractor or my estimate of the Arv. My reputation is too valuable to place it into a clients contractors hands. So I typically don't even give it. 

Now that doesn't help you if you really did blow the ARV it won't sell. But.... Why? How can you do it differently next time? Were you honest upfront with the seller? If so that will make being honest this time 100X easier.

Ex: Remember how I told you I was going to shop your house to some individuals. Well the problem is fixed up its not worth..... X it's worth Y. So that gives us a few options. You can either terminate or renegotiate. 

I've closed on every offer I've made that was accepted by a seller. Each person has to have their own set of business ethics and you lay the ground work for what yours will be. Even when I didn't know what I was doing, I still represented myself as the professional in the transaction and always kept my word. In this business, my philosophy is that my net word is more important than my net worth. Yes, I've paid too much for houses... more than once. But I swallowed that sometimes bitter pill and used it to learn how to do better next time. That is why my contracts have no escape clauses and also why I get second shot at a deal, last look at the highest offer and have purchased more than one property as much as $10K less than the next guy. 

@Fe Kelly , it's great that you now know better. My guess is you should 'fess up to the Seller, apologizing profusely all the while, cancel the contract, and consider yourself LUCKY that you found out your mistake in time! And - it's not the end of the world for the Seller, either.

Next time, I recommend: (or rather, I think you now already KNOW not to rush in again)...

Account Closed I think I messed up by accidentally zooming too far out on the map when I was doing comps. I definitely agree with not talking to the customer about how much money will need to be spent on repairs. They may have their own people telling them how "cheap" they can get it done for. I was definitely honest with her about speaking to my partner and colleagues about the deal prior to closing.   

@Aaron Mazzrillo being honest and professional is always my way of doing things. I've sold cars the past 10 yrs and I found that those 2 things are what made me the top salesperson in my store for majority of those years. That's not something I plan to change. I have built lots of rapport with the seller so if I can't get the numbers where they are with the buyer I'm going to lay everything out for her and let her make the decision.  That's amazing that you've closed all your deals. Hopefully I can do the same. We are going to find out here shortly. 

@Brent Coombs you are definitely right. I should've double and triple checked instead of letting my excitement take over!!

@Fe Kelly I'm sorry but i wouldn't cancel the contract unless there's no other options. Things go wrong but that doesn't mean to give up on the deal. Yes u should be able to walk from any deal but only after there's no other options. Never Give Up! Failure is never an option.

@Fe Kelly    love it.. More would be wholesalers would do wonders to go work on a car lot for 6 months to a year to get some very good sales and closing skills.

I bet you will do well with that foundation

@Ryan Spinola I'm thinking there's a financing option I can look at as well. Read up on a few yesterday. Cancelling is my last resort. 

@Jay Hinrichs selling cars gives you really valuable experiences skills for SOOOOO many other fields. It teaches you to run a business as well because for the most part you're technically working for yourself if you're more than the mediocre salesperson. 

@Fe Kelly you learn to read people as well. and wholesaling is not real estate investing its sales and marketing.. The better salesperson will almost always be more successful then one who just can't sell their way out of a paper bag :)

@Fe Kelly I was reading through the feed and there is so much great advice that was given. Being I'm new to the BP community and I want to use wholesaling to get started with my real estate business, I wanted to know what strategies you used to build relationships with buyers, how did you find them?

@Fe Kelly it seems your mistake should not become the sellers problem. You represented yourself as a professional to gain their trust, so backing out now is not fair to her. Reputations are earned and keeping your word is important. My suggestion is be willing to accept little to no margin on this deal just to make sure it closes. On the next deal, you can say with confidence that all your deals have closed! You can also legitimately say you are a wholesaler, rather than someone who wants to be a wholesaler. Don't sweat this. Everyone learns on their early deals.

@Ashley Blake hello! I'm new as well but I've been active on here because I just love the concept of the site and there's so much to learn and guide you. I build relationships by just being myself. I'm actually nervous when I meet new people and I have a fear of rejection that I'm trying to overcome so I try to put myself in situations that I can't get out of in order to force myself to talk to people. I'm always honest with buyers and sellers. I have found buyers on LinkedIn, Craigslist and Google. I find sellers using direct mail and sometimes craigslist. I just had bandit signs come in so I will be putting those out on Thursday with a "we buy houses" message. 

@Joe Splitrock you're right, definitely not the sellers fault. 

@Fe Kelly That's awesome! Way to go for overcoming your fear and sticking it out. Now you're in the process of closing deals! I head a lot of people refer to direct mail as a way to build their buyers list but I'm not completely clear on what that process looks like. Is there a podcast or blog on here that may dive a little deeper into detail?

I'm sure there is. I haven't come across one yet but there are so many podcasts I don't doubt there's at least one. I still have the fear. I'm fighting it right now because I have 2 phone calls to make. Can't let the fear win.