No one likes insincere people. Used car salesmen, infomercial kings and queens, telemarketers, may be on your list, but one thing remains: nobody likes them. Sure, thanks to the law of averages, they may make some sales or close some deals, but the cold, hard fact is that it’s done either through having to play hard n’ fast with some numbers or simply just the odds of the game.
Regardless, insincerity often breeds contempt. It’s also a great way to kill a potential deal. How do I know? I was recently asked what my specialty was in the real estate world and it’s simply this: I know people. To be successful in the real estate business, that’s something we should all specialize in.
How to Purchase Real Estate With No (or Low) Money!
One of the biggest struggles that many new investors have is in coming up with the money to purchase their first real estate properties. Well, BiggerPockets can help with that too. The Book on Investing in Real Estate with No (and Low) Money Down can give you the tools you need to get started in real estate, even if you don’t have tons of cash lying around.
Three Steps to Killing Your Next Real Estate Deal
There is a lot of great information out there on how to close deals. Although it may be sophomoric (bear with me), I want to lay out some thoughts on how to kill your deal. Specifically dealing with those homeowners/sellers who are facing a distressed situation such as foreclosure or default, here are some great tips on how to turn a potential deal into a disaster.
1.) Don’t Listen; Talk over Whatever the Homeowner has to Say!
Describing in detail the financial success you’ve had over the past year, how many flips you’ve done, and basically bombarding them with a bunch of real estate jargon will earn you a short trip to their doorstep, that is if you even make it inside. First of all, it is amazing what a homeowner will divulge if you aren’t busy talking about how successful you are. They will answer questions for you that you will never have to ask if you just listen, i.e. the condition of the property (and I mean the REAL condition), what their bottom line price is (and it’s always lower than the first 3 they give you), and the real reason they need to sell.
A distressed homeowner doesn’t care about your last big deal. They want to know two things:
- Do you have the cash/means to close this deal?
- Can you do it quickly?
Many are facing the grim possibility of foreclosure. That certainly doesn’t make this time of year jolly for them. Hearing about how great you are (even if you are the next Robert Kiyosaki) is not going to endear you to them. Believe it or not, that is important! Our family business has won out over other investors competing for the same property because we found out later the homeowner didn’t like or trust the other party. You’re not going to make everyone happy and some people are hard to connect with, but if you will take the time to really listen, you will gather a wealth of information before you even make an offer.
2.) Constantly Bag on Their Property
Secondly, pointing out defects may work for used car salesmen on a trade-in, but for a lot of people it is just insulting. They already know their house is a mess and in poor condition, whether they’ll admit it or not. My husband says nothing when he’s inspecting a house. He takes out a yellow legal notepad and silently walks around writing notes. Meanwhile, Mr. or Mrs. Homeowner follows anxiously behind revealing all sorts of tasty tidbits of information related to the property. I know some of the places an investor will look at are border-line condemned. I get it. We’ve walked into houses that I’ve literally had to talk my gag-reflex out of throwing up on the carpet. I have had to fight the urge to cover my nose with both of my hands and run screaming out the door. We are considering purchasing hand sanitizer in bulk and slathering it on our entire bodies BEFORE we walk into some of these properties.
However, what’s important is that you treat these people no different than you would if you had walked into a multi-million dollar property. Sure there are fleas crawling up your leg and the roaches look like you could throw a saddle on them, but resist any urge you have to freak out and offend the seller. It’s ok to point out the obvious when you submit your offer, but a little compassion goes a long way.
3.) Make Promises You Don’t Intend to Keep!
Finally, if your bandit signs say, “Quick cash close in 7 days”, or, “Cash offer within 24 hours”, and you can’t perform… guess what? You immediately appear to be, at best, unreliable and not a man/woman of your word. I know there are investment tactics that involve getting a property under contract and then wholesaling or assigning the property before closing. That’s fine, but you had better be honest with the homeowner. They are more than likely in a time-sensitive situation and you can quickly add anguish to an already emotional experience. If you can’t close the deal or assign it to someone who can, then they are going to lose their property. Additionally, if there is even a hint of a bait and switch, you could find yourself up to your neck in hot water. Like Momma always said, honesty is the best policy.
The Bottom Line
Ethics, compassion, and character will go a long way in the real estate business and will ensure the longevity of yours. A wise man once said, “For whatever a man sows, that he will also reap.” Call it the Golden Rule or whatever you’d like, but it’s simply a matter of doing the right thing. In the spirit of Infomercials… BUT WAIT, THERE’S MORE! You will have the added bonus of being able to sleep at night, and for me, after a day of chasing after a 2 year old, that’s much more valuable than the next “big deal”.
I’m off to purchase hand sanitizer… In bulk.
Photo: Chad Miller