Follow Up – Part 2Posted on May 2, 2014 by
At this point, we’re down to the area where we’re ready to fill out a contract. And we’ll come back to that in step five after we get through the follow up step which is the next one on our list. But before we do all of that let’s talk about the other steps involved in getting to the point where we’re ready to fill out a contract. I guess the first one is knocking on the door at the appointment time you’ve set. What I usually do when they answer the door is say, “Hi, I’m Ron. I’m here to take a look at the house.” They’ll greet you and invite you in and I’ll say, “Can I take a walk through the house?” and they say “Yes” and I say “Okay, no dogs or naked people?” and then they chuckle and say, “No”, and I do exactly that, take a walk through the house.
My walk through the house will take less than three minutes because I’m not going to pick it a part and point out any obvious issues that the seller is already aware are there. If the walls need painted, we all know that, I don’t have to point it out. If the house has an odor, no sense in mentioning it because there’s nothing the seller is going to do about it. Regardless of what the situation is, you do yourself no good by making the seller feel small because of the issues that are readily apparent with the house. The best thing you can do is walk around, take a look, shut up, and get to the next step.
The next step, in my case, is I always simply ask the seller, “Do you have any questions?” If they say yes, I’ll answer them as briefly as I can and go on to the next step. Be careful here, when you answer questions, your goal is to answer them briefly, not get in to a teaching seminar. The worst thing you can do for yourself is get diarrhea of the mouth. Your job is to get in the house, get the job done, and get out of the house. You’re not there to make friends. You’re not there to have a fireside chat. You’re there to answer questions, get an agreement, and leave. And believe me, the seller wants you out of the house probably worse than you want to get out of it. So when you ask questions, answer them briefly, shut up and move on to the next one until they’re out of them.
Remember, the more questions you ask, the more answers you’ll need and the longer you talk, the more questions the sellers are going to think of. Get to the point quickly and again, answer questions with questions as much as you possibly can.
For example, if the seller says, “What do you mean by a lease option?” Your answer would be, “Well, that simply means I’ll lease the property, make the payments, and take over the responsibility for all the repairs and I’ll have the option to buy it.” That’s a simple answer, no seminar required. The last thing you want to do is to go in to people’s houses and deliver a real estate seminar. That’s not why you’re there. You’re there to buy the house and leave.
However, please make sure the seller understands key issues. Don’t leave the house without addressing all of the elephants in the room. For example, if it’s an ACTS deal, your seller should be very clear on what your intent is, and that is to lease option the property from them and find a qualified tenant buyer they approve to install in the house and collect an assignment fee from that buyer. The seller must know their payment will not be made until after that tenant buyer is installed, and in fact, 30 days thereafter because you keep the first month’s rent plus the assignment fee.
Make sure this is clear so you don’t have to deal with it later and you can avoid misunderstandings. Also, be wary of trying to make the seller aware of your intent if not necessary. On an ACTS deal your intent is vital, they must know, but when you’re buying a property subject-to or you’re doing a sandwich lease where you intend to stay in it or you’re buying it with owner financing, what you intend to do with the property really shouldn’t be a subject of discussion with the seller. You’ll scare them away by having all these discussions about, you’re going to install tenants in the house and do all these things, and again there comes more questions that are needless.
Do not make problems for yourself by flapping your lips too much. If you’re asked “Who will make my payments?” Your answer “I will.” If you’re asked “What happens if somebody tears up the house?” Your answer “I’ll fix it.” This is true when you’re going to stay in the deal, of course it’s not true with an ACTS deal so your answers will be different. During this conversation is when you get a chance to lower the down payment if applicable. If we were discussing buying the house with owner financing, it’s here where you work real hard to get that down payment down and the same for the payment and of course get the term as long as possible. Don’t give up too easy. This is your opportunity to create a really good deal and if you don’t take that opportunity while you’re in the house you’re going to hate yourself later when you start thinking back and saying to yourself, “Golly, if I’d have worked just a little bit harder I could have saved a lot of money on that deal.” And it is true, you could have.
So prepare in your mind how you’re going to go about asking the seller for a smaller down payment and for the smallest monthly payment as you possibly can. And remember, never be the first to name the number. Ye who names the number first, loses. You’re always asking the seller what’s the least they can take, you’re never telling them what you will pay. If you tell them what you’ll pay, you’ll never get it for any less. If you ask them first, you’ll be surprised how often what they’ll accept is less than what you’re willing to take.
You’re not going to be an expert at this stuff in the beginning. Don’t worry about it. It takes time and a little bit of practice. But if you get out there and get these deals done and do the best you can, you’ll still come out with great deals even though they get better as time goes on. Right now, let’s be happy with OK deals and soon we will work to great.
One more thing, before you leave the house you might want to ask the seller for copies of all their documents, such as the deed and mortgage, and if they have extra copies go ahead and take them with you because you will want these before you close on the property. This is the best time to get them, while you’re in the house. OK, that’s enough for this lesson. Next month, we’ll talk about closing the deal.