Epic Real Estate Investing - EPREI 025 : Closing the Deal

Episode Date: January 31, 2012

Closing the deal is an area that can trouble even the most experienced investors sometimes, but if you understand two of the great truths of real estate investing... the next time one doesn't close for you, it won't hurt so much. On this episode Matt shares the one element of the deal that MUST in place in order for a "real deal" to be closed. Learn more about your ad choices. Visit megaphone.fm/adchoices

Epic Real Estate Investing Podcast, episode 25. Without further delay. Your guru. Sorry. Your guide to a better life through real estate investing. Matt Terrio. Hello and greetings from the Epic Real Estate Investing podcast, the podcast that will show you how to build wealth through creative real estate investing.

So you'll have the option to realistically retire in the next 10 years or or less and enjoy the good life while you're still young enough to do so. That's why we're all here. It's why I'm here. I hope it's why you're here. That's what I want for everybody listening to me right now. My name is Matt Terrio, author, full-time real estate investor, and family man. If this is your first time listening to this show, you're going to want to do two things. First, go back and listen to episode one for the ground rules of the show. And two, download the free real estate investing course, how to do deals no money required. And you can get that at free real estate investing course.com. It's a step

step course of where I unveil the mystery around doing deals with no money or credit, and that's yours for free at free real estate investing course.com. Now, before we get on with today's show, I received another great comment over at iTunes. This one comes from Thomas Mountain. And Thomas writes, Love it and Made Me Money. Five stars. That's the headline. After listening to the podcast, I made a deal today that I would have thought impossible. Real world advice that works and will make you money. Keep up the good work. Thank you, Thomas, thank you for the endorsement. And if you could put that in video format and send it to me at Matt at Epicprofessionals.com,

if you could put that on video format and share that with me and send it to me and allow me to use it, I would show my gratitude with a lifetime membership to the Epic Pro Academy. And that actually goes for anybody that's listening. And I only make this offer on this podcast, by the way. This offer is not made anywhere online or offline just right here. You see, I receive a lot of emails from my podcast listeners, from the those that have taken action on what I've put into my free real estate investing course. And inside of those emails, there are some really fantastic stories.

There's great stories of success, great stories of breakthrough, and some great stories of nice paydays. And these emails cite what they've learned inside of my free course as to the reason for their newfound success. And I love receiving these emails. It makes me feel really good. It confirms what I'm doing is actually making a difference. And that's why I'm here. So I appreciate the emails.

Keep them coming. But so you know, if you send me your testimonial in a video format with a copy of a check that you earned as a result of what you have learned in my free real estate investing course, I'll express my gratitude with a free lifetime membership to the Academy. I received one from Miguel Loza and another from Keith Hutchison just before we launched. So thank you to you too. I really appreciate it. And I hope you're enjoying the lessons within the Academy.

Okay, so that's my offer to you all. Just a simple exchange, a win-win, if you will. And that brings us actually to today's episode, the subject of today's episode. You know, last episode, we discussed how to create win-win deals with sellers. We created five steps. What to actually say once you get inside the door of the property, the five steps that you want to take to close the deal. If there's a deal to get, a little bit of a caveat, and we'll get to that today. So step one, you want to build rapport.

Okay, build rapport. Step two, create an upfront agreement or an upfront agreement. or an upfront contract. Sometimes you'll hear them referred to as either or. Step three, establish the seller's motivation. Is there seller motivation? You have to know that. And step four, money.

What does the seller actually want for the property? And step five are the terms. What are the terms of which you'll pay what the seller actually wants? And I'm not going to go into detail on any of those steps because we did that in our last episode. So if you want to go check that out, make sure you go download that episode. But I did leave you with a little bit of a cliffhanger. So I'm going to address that part today.

So with regard to steps four and five, the money and the terms, how do you get to the final amount that's going to be paid for the property? And how do you get to the final terms of which that price is going to be paid? I could give you a magic sentence or two that would bring the whole deal to a close and you'd have this pretty little deal all wrapped up and you could take it to escrow and collect your check and you'd be done. Unfortunately, it doesn't quite work that way. I mean, I could give you the greatest closing script in the world. But what you'll find out there in the real world is that the sellers don't know they're part of the script. They don't operate from a script. They're not going to say what you think they're going to say or what you hope

they're going to say. I mean, up to this point, I've given you some really good leading questions in these steps, and they've given you a good structure for the conversation with the seller. But the reality is, you just never know what the seller is going to say, or when the conversation will head off into an entirely new direction. Like it'll take a sharp left turn. You'll be like, whoa, what happened? You'd never know when that's going to happen. And it happens all the time.

I mean, every conversation, every negotiation, every transaction is going to be a lesson in and of itself. You'll learn something from every transaction that you couldn't have possibly been prepared for. And when I say every transaction, I mean every transaction, especially when you're dealing with motivated sellers. And maybe you've heard this before.

There's a customary answer for every real estate investing question. I mean, any question that you could possibly think of, I can answer it. There's one answer that satisfies every question. I mean, I have never heard a question of which it didn't apply. You name it. What's the property worth? I've got an answer. What's the best way to invest?

I've got an answer. Is this a good deal? What should I write on the contract? What should I say to the seller? I've got an answer. What should I say to the buyer? I've got an answer. I've got one.

How do I know? narrow in on the final price in terms of a deal. It doesn't matter what the question is. The answer is always the same. The answer is, it depends. It depends. And that answer, it depends, should tell you something about real estate investing. There are hundreds, if not thousands, if not countless variables at play all the time.

All the time. So there's no one way to do things. And there's no one way to narrow in on price and price. terms and close the deal. There's no one way to do that. You can have your own system in place. You can have your own structure. You can have what works for you. You can borrow what works for someone else, but it's all different. There's no one way to do it. But I'm not going to leave you hanging with it depends. Okay. I won't do that to you. We're going to go over how to narrow in on the price and terms and close the deal. But first, not every opportunity is going to be a deal. And in fact,

most of the opportunities in negotiations will not turn into deals. So just accept. So just accept that before ever quitting or ever saying something stupid like this real estate investing thing doesn't work. I hear that all the time and it drives me nuts. I mean, if it didn't work, how has it created more wealth in the world than any other vehicle or industry? It does work. It works really, really well.

In fact, it works better than anything else. Or also, it wouldn't have produced more wealth in the world than anything else. Just know that most opportunities will not result in a deal. And that's just the nature of real estate. That has nothing to do with the system that you're using. That has nothing to do with you. Okay? Second, the center of every one of these opportunities that does turn into a real deal for you will be the seller's motivation to sell. And I'll repeat that. The center of every real deal, the foundation, the nuts and bolts, the thing that makes it happen of every real deal is the seller's motivation to sell.

If there's no seller motivation, you're paying full price, baby. There's no real deal there. I don't care what script you've got. I don't care how much experience. you've got. I don't care what book you've read, what webinar you've watched, what course you take, or what podcasts you listen to. If there's no seller motivation, there's no deal. Well, let me, I guess there could be a few exceptions. The first would be the seller just flat out doesn't care. But how often do you find that? And even if you did, it could be explained away by their motivation. It's just that their motivation lies elsewhere. So the seller's motivation would actually be at the center of that deal too, wouldn't it? So that one doesn't count.

So I guess there are only two exceptions then. The next would be the sellers just flat out ignorant. They don't know any better. And I suppose you might come across that every once in a while. I certainly have. But at some point, you being experienced real estate investor will realize that the seller doesn't know any better. And that's up to you whether you want to do a deal there or not.

Some people have a conscience for that type of thing and some don't. I do not. And that actually leads us to the other exception. You're being dishonest in some way. That's how you could put a deal together without seller motivation. You're lying to them. You're cheating them. Those are the exceptions.

Outside of those, the center of every real estate deal is the seller's motivation to sell. Okay. Got that? Good. Most opportunities will not be deals. And of those that are deals will be a result, a direct result of the seller's motivation. If you understand those two dynamics, accept them and embrace them. You're going to save yourself a lot of frustration.

and if you can do that, I have hope for you. I have hope for you because it's frustration that runs people out of this business that causes them to give up on their dreams. Don't want that for you. So if you accept those two dynamics that most opportunities will not be deals and of those that are deals will be a result, a direct result of the seller's motivation, if you can accept those, you've got a shot. If there is seller motivation, now all you've got to do is decide on price,

and terms. And here's your decision. This is what you're going to decide. Which one am I going to control? Are you going to control the price or the terms? That's the decision you get to make. You've got to control one or the other. You're going to control the price or the terms if you expect to get a deal. I mean, if you've got control over one of those, you do have a deal. You've got a real deal. You see, I buy property in one of two ways, and I recommend you start thinking this way as well. because if you adhere to this, it will keep you out of trouble, meaning it's tough to lose money if you buy in one of these two ways. As long as you're competent with your property evaluation,

you really can't lose as long as you can control one of those two aspects, the price or the terms. See, I buy property at my price with the seller's terms, or I buy property at the seller's price with my terms. Meaning, if you're going to buy at your price, that means you're going to buy at a steep discount because what are darn near the only terms most sellers understand? Cash. Cash now.

Yep, that's the seller's terms most of the time. So if they want cash, their terms, then I'm getting my price, a steep discount. Half off, that's a good place to start. Or if the seller insists on their price, you're going to have to control the terms. And I want the terms. I mean, the terms are what creates wealth.

and if you want to create wealth, that's really what you're going to want to. And you want to get really good at crafting your terms. You want the terms. And you're going to get the terms most of the time, and that's okay because it works out for you. So it's nice how it ends up that way. You know, not too many sellers are going to sell their property at half price. And if they want my cash, that's what they've got to do. You're out to create a win-win deal, not a win-lose deal.

So, Mr. Seller, when I asked you what price did you realistically want for the property, what did you say again? $300,000. Okay, I think I could probably make that happen. And when I asked you earlier if you would be open to receiving payments for a period of time and being cashed out at some time down the road, you had said we could discuss it, right? All right, okay, good. So I asked you that because I purchased property in one of two ways.

I either pay my price with your terms or your price with my terms. And since you want $300,000, would you like to break that up into 200 monthly payments or 100 payments? That is one way in which it could be done. It's one way. And when I say this in my live workshops, the hands start shooting up in the air, like sky rockets, and then the questions, they start coming at me.

But Matt, what if the property isn't worth $300,000? But Matt, how do you know it will cash flow divide it into 100 payments? But Matt, what's the interest rate? But Matt, what seller in their right mind would take that deal? But Matt, couldn't you do it this way? Oh, but Matt, wouldn't it be better this way? But Matt, what if he says this?

Or what about the existing mortgage? Matt, what if the property is upside down? The questions are endless. You see what I mean when I say the answer to every real estate investing question is, it depends. There are too many possible variables. There isn't a one-size-fits-all close the deal, or a one-size-fits-all way to do real estate.

you just got to get out there and do it. You got to get out there and do something. You will never know it all. You'll never be prepared for it all. So stop waiting for the day that you will be. As I mentioned, every transaction is a lesson in and of itself. Keep investing in your real estate investing education. Keep taking action and moving at the speed of instruction.

And when you get to as far as you can see right now, you'll see further when you get there. That's the only way to do this business. all the lights will never be green at the same time. Keep reading, keep studying, keep taking action, keep collecting the real world experiences. Keep getting good at this. But get good at it by doing it.

Real estate investing is a skill, and it takes practice, and it takes time to nurture a skill, to the point where you are good at it. Real estate has created, it has created more millionaires and billionaires than any other industry or investment vehicle. And if they all did it, why not you?

And the experts are saying that there's going to be more millionaires and billionaires created in the next few years than any other time in history. And if they're going to do it, why not you? I don't want to leave you with a big giant raw-rah pitch. I want to leave you with some substance. I want you to walk away from this show with most opportunities you encounter will not end up as deals. Might not sound like a whole lot to you right now, but that's gold. That's golden wisdom.

Most opportunities you encounter will not end up as deals. As soon as you realize that and accept it, your real estate investing experience is going to get a whole lot more fun and easier. And the deals that you do get will be a direct result out of the seller's motivation to sell. That's another invaluable piece of wisdom to carry with you while you're doing your deals. And when you do start getting good at this and you start picking up deals consistently, because if you do this long enough, you do the right activities, you do it consistently, you will start picking up deals. It might not seem like it for you right. now, but keep doing it. It will happen. It has to. It's just the way the world works. You do the right

things. You do them consistently. You're going to get the result. And when you do start picking up deals consistently, it's wise to check in every once in a while with your stats. My own little rule of thumb. And this helps put this business into perspective for a lot of people. My own little rule of thumb, if I'm closing more than one out of seven deals, I'm probably paying too much for real estate. I'm probably not getting the great deals that I think I'm getting. If you're closing more than one out of seven deals, you're probably paying too much for real estate. So, know that most of them you're not going to close. And if you find yourself closing too many, check in to see if you're paying too much. That's all I've got for you today. So until

next time, as a very wise person once said, in theory, there's no difference between theory and practice. In practice, there is. Get out there and do it. To your success, I'm Matt Terrio, living the dream. Thank you for spending this time with Matt Terrio and the epic real estate investing podcast. When you have a moment, stop by iTunes to leave your comments and let us know what you think of the show. And if you haven't done so already, get started investing today by visiting free real estate investing course.com to access Matt's free course, how to do deals, no money required. Until next time.

To your success. To your success. This podcast is a part of the C-suite radio network. For more top business podcasts, visit c-sweetradio.com.