Wholesaling Houses and Using the Right Contract

Hope you are having a great week! I am actually out of my home town and up north in the New England area. Even though I am up here my wholesaling business continues. My virtual assistant is still taking calls from motivated sellers, my direct mail campaigns are still going out, and I am still attempting to flip some of my wholesale deals to my buyers! On another note, My father-in-law is a pretty big time farmer in this neck of the woods. It is really cool to see his business and how he has made it into a really successful farming business. One of the ways he did that was by establishing a great name for himself in the area. If you ask anybody up here if they know who Gary is from Gary’s farmstand they will always smile and say “Oh, yeah Gary, he is a great guy!” The main purpose of my post today is not talk about my father in law but take the principle from it. Make sure you treat people right in your business and you will build a great name for yourself and start getting wholesaling business from word of mouth. Hey, and guess what?? That type of business cost ZERO marketing dollars! Ok, now to the main idea of the post. Have you ever wondered what type of contract to use in your wholesaling business? I mean there are so many right? All of the different real estate investing courses on wholesaling houses have various forms that range from 1 page to 5 pages. So which one do you use? One side of you thinks that the more a contract has on it the more professional you will appear. You think that if you show up with a one page contract the seller is going to laugh at you and say “HA, what real estate investing course did you get that one from?” You expect me to enter into a contract to sell you MY house on a one page contract that looks like you typed it up in the last 5 minutes?!??! If this is what you think is going through a motivated sellers head, you are wrong. I have dealt with all types of motivated sellers in my wholesaling business. One of my most recent wholesaling deals was involved with a very sophisticated seller. (We will talk about the different types of sellers that you will encounter in your wholesaling business so stay tuned!) In fact this guy is a financial planner. They needed to sell their house because it was in probate (Did I tell you that probate investing is a great way to make money wholesaling houses?). I have to admit to you that I did feel a little nervous with my one page contract. But get this….He actually preferred the one page contract over the official state contract. He said that it was a lot easier to understand and everything was broken down in a nice easy format. He even brought it to his real estate attorney and he said the same thing! Since I have been wholesaling houses, this is pretty much the story all across the border with motivated sellers. From the sophisticated seller to the seller to the unsophisticated seller they want a contract that is easy to understand and does not have a whole bunch of legal jargon that you need a team of 10 lawyers to interpret! If you have read this far, you are thinking,”Ok Alex, give me the dang contract!” LOL. Well unfortunately for legal purposes I cannot give you the contract that I use but I can show you where I got mine. It is the same one in the Real Estate Voodoo and Virtual Wholesaling course. You can get contracts for wholesaling houses on line for free but why not use one that has proven to be successful? Whatever contract you choose to use I wish you the best success in your wholesaling business. Please comment and let me know what you are currently using in your business or if you have any questions about contracts or wholesaling houses in general. Till next Time!

Negotiating with Motivated Sellers and Wholesaling Houses Part 3

Well Kris Allen is the next American Idol! I love watching stories where people go from completelty ZERO to HERO, literally over night! This guy came onto that show without really knowing if he was going to make any progress at all. Next think you know he turns around and he is the next American Idol! Incredible! It just shows that you can really do anything you put your mind to and the only person preventing you from success is yourself!

You see, Kris did not have to show up to the Louisville auctions. He did not have to get into his car and drive from Arkansas to Kentucky. He did not have to wait in line for hours to see Simon, Paula, and Randy. He did not have to do any of those things. Because he did and because he took action, he now has a million dollar recording contract! The key word is that he took action.

You have the same choice in front of you every day. You have options. You don’t have to learn to wholesale houses. You don’t have to learn to find and talk to motivated sellers. You don’t have to read this blog. The very fact that you are seeking the right info is a step in the right direction. Now take one more step of action and actually put what you learn into motion! You will be glad you did  

The next part in our series of negotiating with motivated sellers is crucial. When sellers first call you up they may think that you have all the money in the world and you are going to buy their house for top dollar! Obviously, we really do not want ot be talking to a seller who has such a mindest. Normally they can be weeded out in the prescreening process.

However, even when you are talking to a seller and they are asking way below market value sometimes it is not low enough! So what do you do? You learn how to properly handly sellers expectations.

Properly Handling Seller Expectations

When it comes to properly handling seller expectations there is a right way and a wrong way.  The wrong way would be to walk around the house and totally verbally trash the house.

Wrong way: “I can’t believe you can even think about asking 100K for this house. Don’t you watch the friggin news?? There are houses that are selling for like $3.00 right now and your house needs like  a million dollars in repairs!!!

Obviously that is the wrong way to handle things and even though you might feel like saying that, do yourself a favor and don’t…LOL…

Now the interesting thing about approaching this the wrong way is that every concept you need to convey to a seller is contained in it. You just need to be able to present it in a lot smoother fashion. Actually, you will find as we talk a lot more about the negotiation process it is all about the WAY you say certain things. You will also learn to apply this when you ask seller questions as we talked about last week. They can give you an answer and if you listen to the way they say it, you will find out more than what they are actually trying to tell you. We will talk more about that later.

Let’s look at the right way to break this down to a seller.

Right Way: I understand what you are asking for the property and believe me I would love to pay you 100K for the house. In fact, I would love to pay full price for every house that I get called on. However, the fact is that market is very troubled right now and I would be out of business very quickly, if I paid that type of money for houses. Because of the way the market is there are houses just like yours selling at prices that are really difficult to compete with. Given the fact that your house needs some updating we are going to have to purchase your property for considerably less than what you are thinking. I don’t mean to offend you but would you be willing to consider a lower price?”

You will be surprised what happens when you treat people with respect and honesty. People do not want you to beat around the bushes. I used to struggle with that quite a bit and I still do. I have found that if I just get right to the point with sincerity, I get a lot further.

Another way you can correctly handle expectations is by showing the seller what they actually would NET on the transaction. A lot of sellers are so in the dark when it comes to understanding what it REALLY cost to sell a house. There are a lot of different factors when it comes to a house sale.

Realtor Commission-This will be a minimum of 6%

Repairs or Updates to the House- What is it going to take to get the house in “sellable” condition. There is a difference between “good condition” and “sellable condition.”

Closing Costs for Seller and Buyer-This can actually end up being another 3-4% of the purchase price right off the top. You think I’m kidding. One of my investor buddies just rehabbed a house and actually ended up paying 18,000 in closing costs! Yet another reason why I love to wholesale real estate!

This is just a brief overview of this and can really be broken down into a lot more intricate details. Perhaps in a future post I will do that. Meanwhile if you are looking for more information and a great breakdown of the above process you can check out Virtual Wholesaling or you can look at Real Estate Voodoo. Virtual Wholesaling is the system I use every month to get consistent results. Real Estate Voodoo is a “lite” version of Virtual Wholesaling.

Anyway your overall goal is to show them that they really are not leaving that much money on the table by going with you. Really it would be foolish for them to try to get even 10 or 20K extra for their property and deal with realtors, contractors, and finicky buyers. They have a sure shot in you and should take advantage of it!

I hope you have a great weekend! My wife and I are going to dinner with one of my top buyers. We just closed a deal for 12K and he is paying for dinner

I love wholesaling!

Check out the Next Wholesaler in my Family

 

The Next Virtual Wholesaler

Negotiating with Motivated Sellers and Wholesaling Houses

Have you ever thought to yourself “I really love making money wholesaling houses, but I hate all the darn negotiations!” Why doesn’t the seller just take my offer price right away? You know sometimes that actually does happen. You will give an offer price and the seller will take it right away! But you know what the problem with that is? Lol…You offered too much! If the seller takes your first offer without any objections, that means they would have taken lower. I know it seems like an uphill battle everytime but this is just the name of the game.

 Negotiating with motivated sellers is an invaluable skill that will make you a ton of money in this business. So you better get good at it! I am thinking about doing a series of posts on the blog about seller negotiations and what I think are some key points to reaching a win win situation with the seller every time. This would be the first of a mini series if you will I am not sure if they will all be posted in succession but I will do my best.

Rapport

Remeber this key phrase: Motivated sellers will sell to people that they like. So be likeable, darn it! I have seen a seller actually sell to me for a LOWER price than the competition because they just happened to think that the other investor was a jerk! If you are not the best at being a people person, get better at it. You may have to fake it until it comes naturally to you. You have heard the old addage “Fake it till ya make it” Well it definitely applies to this situation. What does that mean? That means you have to convince your own mind that YOU are a great real estate investor and negotiatior BEFORE you become one. Listen, you can be greener than the fresh spring grass outside and still learn to wholesale houses successfully. It is really all a mental game and before you can conquer the mental games of negotiating you need to conquer your own mind and convince yourself that you ROCK! This may seem like a bunch of mumbo jumbo but it is true. You have no idea how powerful your mind really is!

What are some ways that you can build rapport or make the seller like you? You have to understand what makes a motivated seller tick. There is one main reason why you are sitting in their living room in the first place; the reason is because they have a problem. People who have problems like to be heard. They like to be listened to. Listening is hypnotism. If you can sit and listen to a motivated seller in distress they will listen intently to what you have to say and more often than not go along with it. The reason they will be more receptive to your ideas is a principle called reciprocation but we will get a little more into that later. You see a lot of investors get into the house or on the phone or whatever the case may be and just start talking. They start talking about how long they have been in business, how much money they have to buy houses, how much they know about the business, and they just don’t SHUT UP! These are the investors that lose deals because the fail to listen to what the seller needs and wants. This is so important when it comes to closing a motivated seller on why they should sell their house to you.

Remember the last time you had a problem or maybe you have something in your life right now that you are working through. Sometimes that listening ear even if it is from a complete stranger can mean the world to you. I am sure you have sat on a plane before next to a complete stranger and after the flight was over you knew their entire life story! They had you as a captive audience. You werent goin no where! Lol Now don’t just sit there and nod your head thoughtlessly. My mind goes a million miles a minute and sometimes I find myself thinking about everything under the sun but what that seller is actually saying. I guess you can say I have ADD:) You really have to listen in and identify with their problem.

The main reason to listen to their situation is so that you are fully equipped to provide a solution to it. So when it comes time to close the deal you can actually present your offer as the solution to their problem. For an example of a close, Mr. Seller I can offer you 56K for your house so that you will never have to deal with that terrible tenant again. Wouldn’t it be nice not to chase after him for that payment every month? 56K and you will never have to worry about your house again and I can close in a couple weeks. How does that sound? That is a line right there that I have used many times when it comes to closing out a deal.

Another way that you can build rapport is asking questions. Keep in mind these questions are geared towards the seller. As you listen and glean some information ask them more about what they have already told you. You want to expound on their statements. For example, the may be telling you about their problem tenants. You could say “So what did you do when you knew that tenant was not going to pay you and you were going to have to come up with the payment for that month?” You want them to talk more about their current situation so that the more they think about it the more they want out of it! So remember that you need to be liked if you are going to be a succesful wholesaler or negotiator with motivated sellers. Stop talking and listen to what the seller needs so that when the time comes to close them you will know exactly what to do, because they will have already told you.

Wholesaling Properties Review for the Week

Wow this has been a crazy week! I was actually thinking about doing video post for this but I have my 5 month old baby crying in the back round We went on a quick trip to NYC my home town and he got all off schedule. He is getting there.

Well anyway this week has gone UP and this week has gone DOWN. You know thats how business works, right? You will have your really good weeks and you will have your really bad weeks. You will have your kicking months and you will have months that absolutely SUCK!! This week I had three deals that I am working on and all of them looked really solid.

I had one deal where the house is worth 160K and they guy was seriously entertaining selling it for 80K. Hello? Thats 50 cents on the dollar! I will tell you exactly what went wrong with that deal. I am not sure you have heard this type of terminology but it is called the “one-legger.” Basically what that means is you are only dealing with half of the decisions makers. In this case it was his ex girlfriend that is on title with him. You don’t know how many times I have told myself I am not going on anymore “one leggers.” You see the problem with this deal is that both decision makers are not present and therefore the other party who is not present does not make their decision based on your influence. They make the decision based on what the other party’s take was of you. Not the best situation! Now I don’t care if you are the best closer in the world but you cannot close somebody that you cannot talk to! Long story short I thought I had this deal all wrapped up but two days later he finally answered my phone call….no, no, I am sorry, he finally had the decency to text me back and let me know they were going to go another route! Oh well, that one goes in the follow up file! You will probably be seeing my check from that in another 3 months or so

The next deal I was working on told me that they would take 55K for their house when I know it is worth at least 140K. Another good deal! However this lady lives out of state and we were supposed to meet with her on Friday but she cancelled because of a “doctors appointment.” Now sometimes I guess that could be true but sometimes they cancel on you to buy more time and you cannot do a thing about it. Oh well…people are people and you have to live with it. We are in the people business! She goes in the follow up file as well!

Another deal I have been working on has all been done via phone and fax. Sometimes this is cool because you dont have to meet with anybody. The negative thing about his deal is that you cannot really look into the sellers face to see what they are really thinking. You really have to be there sometimes to get their first reaction when you give them that LOW offer. A great thing about dealing with a lot of motivated sellers is that you learn how to read people. Once you learn this skill you will be unstoppable! I can give a seller an offer an tell before they say anything if they are going to take the offer or not. It all comes down to their body language. You cannot do that over the phone. To make a long story short, he finally faxed the contract back to me signed just a few hours ago! It is small deal worth 3K but every little bit helps right

Now for the fun part! I had a closing this week and below is the check!

Yep, thats right ten thousand dollars! I have another closing this week coming up for another 10K so that makes for a great month. There is money to be made so what are you waiting for? Start marketing, get the phone ringing, start talking to motivated sellers and get yourself a deal!

Wholesaling Houses and Cheap Marketing Tips

A lot of people are having trouble jumping into the wholesaling business because of low marketing capital. In the beginning of my wholesaling career I really did not have any significant money to market with. One of the original real estate mentors, Ron Legrand, said it best ” You have to crank up the buying machine!” He would also say that you could be the best at structuring all different types of real estate transactions but if you do not have anybody calling you, you are straight out of luck!

I have been in the position before where I was wondering where I was going to get the money for my next marketing campaign. The fact is that inconsistency of my marketing campaigns is what was keeping me from going full time and generating a significant income. I tried many different ideas to get some deals coming in and had some mediocre success at best. If this is exactly what you are doing, this should not be a shock to you.

The bottom line is that these cheap marketing tactics are what I refer to as fillers. They fill gaps but do not give you a significant income and cannot send you to full time status. The purpose of “filler” marketing is to get you to your next deal when your other marketing is experiencing a dip for whatever reason. Filler marketing will produce a deal once every couple months. This is fine, becuase this is the purpose of it.

If you are low on marketing dollars you need to get some filler marketing out there so that you can score a deal to get some consistent marketing going. This is exactly what I did to start my road to full time status. I heard that internet marketing was all the rage so I bought into a couple membersites. You know the type that you pay a monthly fee to and you get about 30 leads or so a month.

I got lucky and my first month into it I scored a deal that made me 13K! All I had to spend was 100 bucks for the membership site. I eventually cancelled the site because the results I got after that were mediocre because it is what it is—-a filler site. So I took that money and invested it in direct mail to really get my marketing machine moving and have not looked back since!

I just thought about this post because I was out running an errand for my wife returning a movie to redbox. Redbox is one of those DVD vending machines for a buck a day. Normally I leave a business card right on top of the credit card swiper. There is a great little shelf for it! It is almost made for Real estate invsestor marketing! However this time if you could believe it–I FORGOT my business cards! I missed out on some great filler marketing.

Oh well learn from my mistakes and use every opportunity to get some filler marketing out there. Leave business cards whever you go. I leave them at gas pumps in the credit card applications clear box. Leave them at restaurants after you finish your meal. You can leave your business cards everywhere and actually end up getting a deal from it. So get your cards out there, start getting some calls so that you can invest in some real marketing to finally be on the pathway to financial independence!

Wholesaling Houses with Confidence

I have been talking to a lot of new people lately who are interested in learning how to wholesale houses. It seems there are a lot of people out there who are trying to break into the real estate game and make a great stride towards freedom. Maybe you are in a situation to where you need money right now for a personal reason or maybe you are just looking to break free from the J O B. You know what J O B stands for, don’t you. Just Over Broke!

I will tell you one of the main reasons that people do not take that one step towards breaking free–FEAR. Fear that you won’t know what to do, fear that you won’t know how to find these houses, fear that you won’t know what to say when you speak to a motivated seller, and fear that you will not be able to flip the property to buyer once you have it under contract.

There are a lot of different fears that you can encounter and the only cure to these fears is the direct opposite of fear and that is CONFIDENCE. The only way to get confidence is through experience. You need to get out there and start talking to motivated sellers. That means you need to start putting out the bandit signs if you don’t have a lot of money for marketing or if you have a little bit of money to invest you can start with a direct mail campaign. The main thing is it is going to get the phone ringing and you are going to start to speak with sellers and learn what to say to them, how to say it to them and when to say it to them.
If you are just starting out you don’t need to worry about all the mechanics of speaking to motivated sellers. Don’t get me wrong there is a whole science that goes behind talking to motivated sellers and the better you get at it the more money you will make. But don’t worry about that right now! You just need to get out there and do it. If you put your marketing out there you will speak to sellers and you will actually find that they will just give you an excellent price without you even having to negotiate one bit! That happened to me today! A seller is asking for 60K when I know the house will sell for 135K I have not even talked to the seller yet! My virtual assistant got all the information on the deal! Do you know how he did that? It is really simple….He asked Questions! In another post I will talk about the right questions to ask so stay tuned.

Pretty soon you will showing up to a seller’s house in shorts and flip flops like me! I walk in like I am ready to go to the beach and I walk out with a signed contract! Sometimes I do go to the beach afterwards ! So get out there put out the marketing and start talking to some sellers. You WILL get a deal YOu WILL make some money and you WILL be on the path to financial freedom.
If you have any questions feel free to comment!

Handling Incoming Seller Leads

How do you handle your incoming motivated seller leads? The answer to this question will give you a good idea of where you are in the
development of your business.

Please don’t tell me you have all of your leads go to your cell phone. That is the worst possible thing that you can do! I used to do that myself
and when I was working back in my JOB that was very difficult to maneuver. Especially if you are spending a lot of money on marketing you don’t want to waste a single dime! You try to get every call that comes in.

Since most of my marketing is done through direct mail I use a pre recorded message line. I will tell you that it has given my life back. When you get 500 calls at a time like I do, you will know what I am talking about. I can actually sit down to dinner without worry about missing a call. The cool part is that the voicemail is emailed to me as well!

When you really want to take your business to the next level you can hire a VA to screen your prerecorded messages so that you only talk to the most motivated and actual deals. I recently did this and it has helped a ton!

My recommendation is to keep having the calls go to the prerecorded message line and keep talking to the sellers to gain experience but as soon as you are ready–outsource it!

Any suggestions or comments? Let me know what you think?