Money Now or Money Later

Lately, we have been able to contract properties at larger than normal discounts through our aggressive marketing campaigns. The other day we sat down with our bookkeeper, who is also a wholesaler, and she was surprised at some of the prices we contracted some properties. She went on to explain that she recently contracted a property and assigned the contract for $11,000 and felt a bit guilty. I asked if she spoke with the seller after closing or keeps in contact with him to see what he thought. She explained that he was excited to close and even sent her a thank you letter a few days later. I told her that if that was the case she has absolutely nothing to feel guilty about.

Every week my team and I receive calls concerning the sale of homes, lots, apartment complexes, unfinished developments, etc. Once we have an address and a good idea of the property’s condition/situation we make an offer in the form of a range. We never give a hard number until after we have personally visited the property and have done extensive due diligence. If the seller can work with the range we schedule a meeting with the seller or his/her representative at the property. This is where I believe deals and relationships are forged. I get the opportunity to separate myself from all the other “buyers” that may be offering on this property as my competition. Before or while walking through the property I get to know the seller on a personal level. I ask what the reason is for them selling the property. If that question does not answer this question, I next ask what their goals are in selling the property. Try to build some rapport before asking the second question as it may be personal or they may think you are getting too nosey. These two questions tell me how serious and/or motivated they are in selling. I also do this for another reason that many investors may not expect. I do this to see if I can actually advise/help them to stay in their home, if they mention that would be something they wish they could do. Yes, if I am successful in assisting them in staying in their home I do not make money or not as much as I would make flipping the property. However, I make plenty on all the referrals.

As soon as this individual hears that a family member, friend, friend of a friend, co-worker, colleague, etc. is in a similar situation, I will be brought up in the conversation. This is where I make those killer deals. Why? Well again, if I can assist the person in keeping their home I try that first, if that is what they want. However, too many people wait until it is way too late for anything to be done. The only way to keep them from a foreclosure or tax sale is to agree to sell it or deed over the title. Many times the owners/sellers are to the point that they want nothing to do with the home. They want to cut their losses and move on. These are the sellers that give you an asking price that you usually do not need to negotiate too much. Therefore, I may not make any or too much money on the original deal but the referrals continue to pay it forward. Making a connection with a seller goes a long way. In fact, I had a seller contact me about 4 months ago. She was not interested in the range I gave her over the phone but gave me permission to call her bi-monthly to follow up and see how her sale was coming along. I was not surprised to hear that the property was still available. Just three days ago I get a call concerning another potential investment property. This seller mentions she was referred by the seller I have been following up with for 4 months. I was a bit shocked because I had not purchased the other seller’s home, according to her I gave her a low ball offer, and I have been calling twice a month reminding her that her house is not worth what she is asking. Why would she send me a referral/deal? She explained that I was the only person that took the time to explain my “lowball” offer and have always been professional on my calls. In this same phone conversation she admitted to asking too much for her property but she could not afford to accept less. I will continue to call her until she closes her property.

This is a perfect example of how helping others and creating win-win situations will, in most cases, earn you more in the long run.