Epic Real Estate Investing - Getting More Offers Accepted | Episode 151

Episode Date: March 30, 2015

Epic listeners have started adopting the new daily goal of getting at least 1 offer rejected each day, and the results have been amazing!  Now Matt is sharing the simple tool that will help you to improve your results on the offers that you are already making.  The episode ends with Matt explaining the exact system that he uses to submit offers and follow up with his sellers.  Enjoy! ------- The free course is new and improved!  To access to the two fastest and easiest strategies to a paycheck in real estate, go to FreeRealEstateInvestingCourse.com or text “FreeCourse” to 55678. What interests you most? E ducation P roperties I ncome C oaching Learn more about your ad choices. Visit megaphone.fm/adchoices

Broadcasting from Terrio Studios in Glendale, California. It's time for Epic Real Estate Investing with Matt Terrio. Yeah. What's up? Hello. And welcome. If this is your first time here, welcome to Epic Real Estate Investing. If this is not your first time here, welcome back.

This is the place where I show people how to escape the rat race using real estate. You just shift your phone. from making piles of money to making streams of money. Do that. Do that one thing just one time and you're on your way to financial freedom. It's not the most exciting path, but it is the fastest. And once you get there, life then becomes exciting. So how did you do this last week?

Did you get an offer out each day? Did you get at least one offer rejected each day? If you didn't, you didn't run your business last week. and if you're just tuning in, meaning it's your first time listening to this show or your first time in a while, you'll want to go back a couple of episodes and catch up to us right here as the last two episodes that we've covered. We've covered the simplicity of this business, how painfully simple it can be. And it's really a place to look for a breakthrough in your business if you're not succeeding or not succeeding as much as you like. So when I say if you didn't get at least one offer out each day last week that you'd

didn't run your business. What I mean is you are in the business of writing offers, of submitting offers. That's what you do. That's your business. Making offers to purchase real estate. That's just the most valuable use of your time, negotiating contracts. You know, it's the activity in your business that pays you the most for your time. So that's not only where you want to spend most of your time, you also want to get good at it. You know, good at it in the sense that you're getting more and more offers accepted. The better you get, the more offers you get accepted is the more offers you get accepted, the more money you make.

And you don't have to get, this is the cool thing about what we do. You don't have to get that much better at it to reflect a huge impact to your bottom line. For example, if you're submitting an offer a day, that's your average. That's 30 offers per month. And you get one out of 30 accepted. That's a little better than a three. percent acceptance rate, a measly 3 percent acceptance rate. What if you improved your acceptance rate by just another measly 3 percent,

being a 6 percent average acceptance rate on your offers? 6 percent. That sounds terrible, doesn't it? But if you went from 3 percent to 6 percent, what would that do to your bottom line? Think about that. To improve your acceptance rate from 3 percent to 6 percent, means all you'd have to do is get one more offer accepted per month, two out of those 30 offers, and you would double your income.

Your business would double with just a 3% increase in your business. So you want to spend your time making offers, and you want to get as good at it as you can, because just small, little incremental improvements in that area of your business can have an exponential impact on your bottom line. And the tool that we use here in the office that has caused these incremental improvements in our acceptance rate, positively impacting our bottom line, is the three-option letter of intent. And that's what I want to cover today is I believe if you're not using this tool, you're missing out on opportunities and you're missing out on money. Money that's yours had you just made a little incremental shift with the presentation of the offers you're already making. For example, last week I was contacted by an absentee owner who had seven properties to sell. And I sent him this three-option letter of intent.

I actually sent him an individual letter for each property. So I sent him seven letters. And he accepted all seven of them. His response via email, although I'll be losing money on these deals, these are fair offers. Let's do it. So let me ask you, what did a seven-for-seven acceptance rate of offers all built around my minimum deal standards. What did that do for my bottom line?

I'm going to explain to you why I got seven for seven accepted. What did that do for my bottom line? I know, big time, right? And more on that, and how to implement this tool in your business in 30 seconds right after this. Listen, when it comes to your financial future, I've got some good news, I've got some bad news. The good news is you can make a million bucks in real estate.

The bad news is there are a million ways to do it. Which strategy do you choose? Picking the right one can be a problem. The new book, Epic Freedom, is your solution. Get a free copy at Freeepicbook.com. Epic Freedom. The two easiest and fastest strategies to a paycheck in real estate. Go to free epicbook.com.

Free epicbook.com. When making an offer, when presenting an offer, you have options on how to do this. You can present in person, you can present via email, you can present over the fax machine, you can send it via mail, you can do it face to face, you can do it via FedEx. I mean, these are all different ways to present. And we've used and continued to use them all. Now, there are different ways to add to your presentation. I mean, you can include cover letters, you can include an extra piece of paper listing the

the pros and cons of accepting your offer. You can include testimonials. You can include a bio of yourself, maybe a pamphlet about your company, maybe a photo of yourself or a photo of you and your family. Or you could include a signed purchase agreement. Don't forget that, but you can put your signature on it. Or maybe you can send it in duplicate, send them two copies. So they'll have a copy.

And then you can include a self-address stamped envelope to make it easy for them to send the signed offer back to you. I mean, you can get really creative with your presentations in the interest of making these incremental improvements in your acceptance rate. And I'm going to share, I'll share with you how we do it. First, everybody gets an offer. That's number one. Everybody gets an offer.

Everybody? Yes, everybody. No offer, there's no deal. So everybody gets an offer. You know, no deal is left behind without receiving an offer from us. Nobody gets through our marketing machine without getting an offer. So that's first. Second, unless the seller exhibits, you know, major motivation and a deal is reached

verbally, unless that happens on the phone, we send a three-option letter of intent instead of a purchase agreement. You know, if we reach a deal verbally, we'll go ahead and we'll cut to the chase and we'll just send a signed purchase agreement with a self-addressed stamped envelope and some instructions on how to complete the transaction or how to complete the paperwork. But if you're going to take on the practice that everyone gets an offer, you know, you'll probably only operate in this manner with a signed purchase agreement. And that only happens what? Maybe 90, I mean, 95%, 99% of the time will, I should say the other way around.

Only 5% of the time will that actually happen. So for the rest of the leads that call in, for the other 95%, we go ahead and we send a three-option letter of intent with the cover letter and instructions on how to proceed. So what's a three-option letter of intent? If you're just tuning in, you might have never heard of such a thing, or you've heard me talk about it and you've been a little bit unclear about it. So let me bring you up to speed real quick. A three-optional letter of intent, actually directly, it's exactly what it says. It's a letter of intent to purchase.

It's not a contract, okay? It's a letter of intent. It's not a contract. It's a letter that states, based on what we currently know, based on what we currently know, we're prepared to purchase your property at this price in these terms.

That's all it is. Based on what I know right now, this is how I'm prepared to proceed. Now, when you add three option to the description, it's just that. The letter now states, based on what we currently know, we're prepared to purchase her property per any of the following three options. You've got three different structures of price and terms. Now, notice what I said, based on what we know, there's your out.

That's your real safety net. It's not a contract, but that's your real safety net. Should you come across some information that you didn't have prior to the presenting of the letter of intent, some information that has an impact on the value of the property, then you have the opportunity to now go and make an adjustment to your price and terms, or you have the opportunity to just decide against pursuing the deal altogether. No harm, no foul. That's good, honest, and ethical business.

It's being straight with people, but also leaving you a whole lot of flexibility in how you operate. So directly, that's what a three-option letter of intent is. Indirectly, and this is why I believe it works so well, the indirect part. It's because indirectly, it's just a presentation. It's a presentation of your offer. You see, if option number one is your all-cash offer, and, you know, if you paid attention to the formula that we had in the last episode, this offer may be one that you feel is a little bit low, maybe even insultingly low.

Well, if you have a three-option letter of intent, and option one is this all-cash low offer, you're kind of afraid to present to the seller. Then you have option number two and option number three to soften the blow. You see, option number two for us, it's an increased price, one that's not quite insulting or it's not insulting at all,

but we just adjust the terms from all cash to a little bit of money down now and sell it to carry back the finance. the rest. We'll give you your price, but we're going to pay you over time the rest. And for us, this, how we structure this, this is an interest-only loan with a balloon payment in 10 years. That's our starting point. That's option number two. Option number three is an even increased price offer. Sometimes we'll even offer more than fair market value. But here, too, we also adjust the terms from all cash to a seller carryback financing. And in this third option,

the carryback terms will be ultra-simplified to, we'll give you some money down now, and we'll divide the balance into 200 monthly payments. And because the second option is typically right around fair market value, and the third option is right at or above fair market value, you see, option number one doesn't look like an unfair offer. I mean, it may still look like a low-ball offer, but not unfair, because you've presented that here's how we can make.

this work. If you want your price, Mr. Seller, Mrs. Seller, you're going to have to give me my terms. If we use your terms, then here's going to be my price. And indirectly, the seller is seeing a fair trade-off. And now, so one, your super discounted all-cash-offer is given greater consideration that it would have been given had it been presented all by itself. And two, the seller's wheels are turning. Their wheels are spinning. They're wheels are spinning. they analyze option number two and option number three, frequently creating another conversation where there wouldn't have been

had you tried to explain these options verbally before putting pen to paper. Remember, as I stated two episodes ago, when we were going over how to simplify your business, I had said the dynamics of the deal changes when an offer is put in writing. So that's why you always want to put the offer in writing. So the dynamics of the deal changes,

it changes when an offer is put in writing. Because you put these options in writing rather than try to do your best Glenn Gary, Glenn Ross impersonation and talk the seller into a seller financed offer, you and your offer are taken more seriously. So after we send the three option letter of intent, here's our follow up. We'll call the seller and say, hey, we just put an offer in the mail to you. Would you like us to email it to you as well? Why would we do that? Because now we get their email address so we can follow up later. We can put them on our auto responder.

And then we'll wait a few days. We'll follow up with a call and say, hey, Mr. Seller, just following up to see if you received our offers, which do you think makes most sense for you, option number one, number two, or number three. Very simple, right? It's a very simple follow-up system. Now, I'm not going to tell you that all of a sudden

you're going to get every offer accepted. No, it's not going to happen that way. And it doesn't have to happen that way. So you see, you only need incremental, improvements in your business to exponentially impact your profits. So back to my story. As I was sharing earlier, I came across an absentee owner that had three properties they wanted to sell, seven actually, seven properties.

He sent me over an email with their addresses and his asking price. And he was asking me for almost exactly fair market value. So his asking price wasn't a discounted price whatsoever based on Zillow's estimate. I mean, I think he might have looked up Zillow's. himself and just wrote that down, these properties when presented to me weren't discounted at all. But that didn't matter to me. I don't care what he wants. I don't care what he's asking for. I still have to get what I want for this to be a deal. Now, I'm going to try and make it happen so we both get what we want. But I got to feed myself. I got to feed my family first. So I don't

really care what. And I never care what they want. I like to know what they want, but it doesn't matter to me. It has no impact on how much they're going to get out of. me. So regardless of what he wants, I'm not going to buy these properties unless I get my minimum profit per deal or my minimum ROI per deal. So I logged into the Epic Pro Academy. I used the very same tool that I share with all of my students. I clicked on the three option letter of intent calculator and created a three option letter of intent for each property. I saved them as PDFs and I emailed them back to him as attachments. And this really took me 10 minutes to create these seven letters, max to calculate my offer.

I pressed the make PDF button on the calculator, which plugged all my numbers into the letter of intent. I downloaded that letter to my computer, all of those letters to my computer, and I just emailed them off as attachments, 10 minutes max. Now, three of the properties, they did have mortgages on them, of which balances were exactly the same as fair market value.

So there's no equity in there whatsoever. So I didn't create letters of intent for those, actually. So I only did four letters of intent. And on those three properties, instead, to address those, I wrote in the email, please find attached four letters of intent for four of the properties. Regarding the other three, I would only be interested in no money down subject to deals on these. Let me know if you find any of these acceptable. To close in 14 days or less, all I would need to do is confirm repairs and encumbrances on the property.

So that's what I wrote. Okay, so those three, I was just like, you know what, I'll still have to, I still have to go. go ahead and call the bank and get the terms and the payoff on the loan to see where they really are, to see if they make sense for me. But I'm not putting any money down on these. There's no equity in them. But if I can get, you know, if he's still 25 years on the loan, then that might make sense. I'll still cash flow them.

So that's my logic behind that. So anyway, I sent that email off and three hours later, I received his response. Although I'll be losing money on these deals, these are fair offers. Let's do it. Oh, and I'll take the no money down subject to offers too. No. It doesn't always work out like this. Seven for seven.

Seven offers presented. Seven offers accepted. But the reason I wanted to share this with you is there is no doubt in my mind that had I presented just my all cash offer of which was more than 50% lower than his asking price. It was half of what he wanted. And I mean, my cash prices were half of that. And those were offers that he, you know, most certainly would.

have laughed at based on our previous conversation and his asking price. That was my gut instinct. I mean, there would have been no deal here. But because of this letter, I just added seven properties to my cash flow portfolio, increasing my monthly cash flow by more than $3,000 per month. Actually, I'm sharing these deals with the people here in the office. I'm helping everybody here on the team build their own portfolios too. So we're going to pass these around and everyone's going to get, have the opportunity to pick one of these up. But that's the gist. $3,000 of positive cash flow happened because of presenting options to a seller. And here's one more reason I like the three-option letter of intent is the seller somehow

forgets they do have a fourth option. And I think frequently the seller just flat out forgets they could actually say no. Meaning if they don't say yes to one of the options. Say have those three options, they don't like them. they don't say no you know what they come back and say they come back and say stuff like you know I like option number two but could you come in with a little bit bigger of a down payment or they'll come back and say I'd rather just cash out if you could come up just a few grand on option one we'd have a deal or they'll say like option number three I like option three but I have got a mortgage on the property

how would we work our way around that and that's what I mean when I say that this three option letter of intent creates conversations or negotiations that otherwise would have never happened had I presented just a single all-cash offer to purchase. You know, when he says, you know, I've got a mortgage, I like option three, but I've got a mortgage on the property. How do we work around that? Boy, he just asked me to tell him all about a subject two deal, didn't he? Yeah, that's what I mean.

It creates conversations and negotiations that wouldn't have existed or they might have been shut off to if I had I led with that. All right. So I'll go ahead and I'll share with you. how you can get this three-option letter of intent calculator and a copy of the letter template that we use, how to get that for free. I'll share that with you right after this. If waiting for your investments to grow feels like waiting for paint or dry, there's a powerful secret your financial planner doesn't want you to know. You can accelerate

your investments growth by two, three, or even four times. That's bad news for Wall Street, but great news for you. We're cash flow savvy, and we'd like to offer you free information that will show you how to take control of your investments and double, triple, or even quadruple their returns. And it's yours for free. For the secret your financial planner doesn't want you to know, go to cashflow savvy.com. That's cashflow savvy.com. Two ways that you can get access to this tool that we use here in the office. First way, go back and listen to episode 80, number 80 of the Epic Real Estate Investing podcast. Or you can just go to Epic Real Estate.com and search the show notes for episode 80.

And there you can get the docs and a video tutorial of this three option letter of intent. Some other cool stuff too, but that's inside of that little package there. Or the quick and easy way, not the free way, it's not a free way. It's the quick and easy way, though, is just become a member of the Epic Pro Academy. And you can, as a member, you can use the automated tool that will you just click a button and it splits the letter right out for you. And if you want to do that, go to Epicproacademy.com and become a member. If this three-optional letter of intent

enabled you to do just one more deal in the next 30 days, or even just one more deal in the next 90 days, wouldn't it alone be worth the price of membership? How about if you increased your monthly cash flow by $3,000 working with just one motivated seller from this letter? What's your ROI on membership there, just with this tool? I mean, it's just a math equation. You know how to figure out ROI.

We've done that several times. That's just a math equation. But hey, it's your call. You know your situation better than ideal. I'll see you next week. I'm Matt Terrio, living the dream. You've been listening to Epic Real Estate Investing, the world's foremost authority on separating the facts from the BS in real estate investing

education. If you enjoyed this show, please take a minute to visit iTunes and share your thoughts. Thanks for listening. We'll see you next time here at Epic Real Estate Investing with Matt Terrio. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.