Epic Real Estate Investing - How to Simply Secure the Deal | Episode 231

Episode Date: November 9, 2016

Join us as we continue our mission of rebuilding our real estate business to generate more leads, secure more deals and foster better deal flow. Learn creative techniques that will let you dominate the competition in your market. Finding the deal and securing the deal are the most important stages of the real estate investing process. Secure real estate deals with the right strategy and tools to achieve your income goals faster. It’s time to refocus on our goals and redouble our efforts to secure more real estate deals.   ______   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

This is Terrio Media. Broadcasting from Terrio Studios in Glendale, California, it's time for Epic Real Estate Investing with Matt Terrio. Hello, and welcome to Epic Real Estate Investing, the place where I show people how to escape the rat race using real estate. And if you're just getting started and or you're looking for new and creative ways of making money in real estate, I've put together a free course just for you, including. a checklist on how to find motivated sellers. Those are property owners that are willing and able to sell you their property at a discount. So to access that free course, go to free real estate investing course.com.

Don't go to free real estate course. People go there by accidentally. It's free real estate investing course.com. All right. Yesterday, we're resuming this week on returning back to the basics. And we discussed yesterday the basics of simply finding the deal. We went over your core belief. as a real estate investor, the tools needed, the necessities of getting motivated in sellers

to contact you, to get your phone to ring, to get your inbox to fill up. If you miss yesterday's episode, you're going to want to go back and listen to that one, and then you can catch up here because today we're going to go over what to do once your phone does start ringing, and it will. And then we're going to go over how to secure the deal. So if your phone isn't ringing, there's nothing for you to learn here. So make sure you listen to yesterday's episode so that motivated sellers will ring your phone that they'll call you.

All right. So leads are coming in, right? The phone is ringing. The emails are flowing. What do you say to these people? Okay. So first thing is first, most of the people that contact you will not be motivated sellers. Most of them will not be.

I mean, what we're finding this past year is there's at least one deal within every hundred seller inquiries. So you're going to get 100 phone calls, basically, is what that means. 100, um, 100, uh, seller inquiries. and maybe five of those might be like really motivated and one of those is going to be a deal at least one. Right. So it's a hundred for at least one deal within every hundred seller inquiries, whether that's 100 phone calls or or 100 emails or any combination thereof.

Those are kind of the numbers we've noticed this last year. So expect most of the people you talk to to not be motivated enough to meet your minimum deal standards. If you know that that's the likely reality, then this process is going to go much easier for it. It's going to be a lot less frustrating for you. So you know you made 20 calls and say no one was motivated. Hey, doing it right. Got to get 100 of them, right? Before we find that one deal.

All right. So the phone rings. What do you say? Well, there are countless approaches to what you could say and how you say it. There are a lot of right ways to do this. I'll just let you know how we do it. We don't operate from a script, but we do stay within a framework, a conversation framework. Understand that the purpose of every call is to build rapport and set an appointment in order to present the offer.

That's the purpose of that first call. So we work within a framework. And our whole goal on that very first call is just to build rapport, just to make a friend, let them know, hey, we're your problem solver, you're your neighborhood problem solver. And the whole intent is just to make an appointment so you can get in a position to present an offer. That's our mission for every call to build rapport and set an appointment in order to present an offer. So this is how we do it. Our conversations with sellers, they stick within this specific framework and it's woven among these three basic questions.

One, tell me about your situation. We've actually changed that. It still works. Nothing wrong with it. But we just kind of like, when we get the call now, we're just like, why me? Why now? Hello, thanks for calling. Why us?

And why did you call now? So that's how we get more into their why. That's really what that call is for. So tell me about your situation or why me, why now. Number two is what would you like to have happen, right? So what do you want to have happen here? And then if I could make that happen, how soon do you need to sell? That's the third question.

So, and also within those three questions, if it doesn't come out in the conversation because typically it always comes out in the conversation. But before we hang up, we'll ask, so how much would you like to get for your property? We want the seller to state that price first. We want to know what their expectations are. We know if we can give the seller what they want, we'll get what we want. But we need to know what they want. I don't want to plant that or suggest that.

I want to know what they want up front because sometimes they want a lot less than you think they would want. Okay. But so if we know what the seller wants, we can get what we want, but we don't know what they want until they tell us. So we want the seller to state their price first, knowing that number is really important part of the process of knowing what they want. Okay, so back to simplicity. Let's stick to a framework, not so much a script.

You may know your script backwards and forwards, but the problem here is the seller doesn't know theirs. And when they don't know theirs, it's easy to get thrown off of yours. So a framework works best. Plus, it's much easier to build rapport within a framework because of the flexibility that you have than it is with the confines of a script. So our simple framework is, tell me about your self. situation, why me, why now? What would you like to have happen? And if I could make that happen, how soon do you need to sell? Now, there will typically be extended conversation there in between these questions, especially questions one and two. So don't necessarily have to rush to the

next question. You want to take those times in between questions, take your time, build rapport, just kind of speaking naturally, okay? It's just another person. That's all it is. So there'll be some time in between those questions. That's how it should be. And that'll typically mean that there's some motivation in place and that you're building rapport. Because people that don't, aren't motivated, and if you're not build a rapport, they're not going to say a whole lot. But if you get them talking, that means there's some motivation there and they're building rapport.

Those are two critical components to consistently finding deals. Now, to sort the prospects from the suspects, prospects being property owners that need to sell and suspects being property owners that want to sell. You've got those that need to sell, those that want to sell. And so you're going to be listening there for a time frame, for urgency. and that's why the last question of the framework is, if I could make that happen, how soon do you need to sell?

How soon do you need to sell? Now, if you hear, whatever, or when you hear, oh, when I get the right price, or you're going to hear, I'm really just curious at this point. I got this postcard. I just want to see what this was all about.

If you get those types of answers, that's a suspect. That's somebody that wants to sell or is interested in selling and probably not someone that needs to sell. So the suspects, they go right into your follow-up bin. They go stay in the CRM and they get followed up with at a later date. Okay.

Now, if you hear how soon do you need to sell and you hear them say right away or you hear by the end of the week or the end of the month or if you hear, I need to sell this today, then you've got a prospect and an appointment should be set. Okay? An appointment should be set. So that's it for the phone calls. Don't over complicate this part. Don't be nervous about what you're saying.

don't be afraid to say the wrong thing. A lot of people get afraid of looking silly or being looking dumb. It's just another person on a line that called you. That's all. Further, keep in mind, they're calling for help. They have a problem and they're hoping that you can solve it. What is there to be afraid of from someone asking for help? Additionally, you are a professional shopper of deals.

You are a professional investor. They are not professional sellers. They have no idea what's going on. idea whether you're doing this right or wrong. They'll never even know if you messed up or not. Okay, so nothing to be afraid of here. Just pick up the phone, talk to them and see if you can solve the problem. All right? After the phone call, the suspects, they stay in your database for follow-up. The prospects, you set an appointment for where you can present an offer. And once that appointment is set, you want to run your quick and dirty math on the property to know where you want to be

with regard to your price when you do present that offer. Okay, so quick and dirty math. understand that this is quick and dirty math, right? We'll clean it up later. We're going to make it all nice and clean, and we're going to do slow and clean math later, but we're just doing quick and dirty math because we want to make fast decisions, right? We want to get under contract fast.

So we're going to take fair market value, what the property is worth, we're going to run some comps, take fair market value, multiply that by 70%. You're going to take 70% of that number. You're going to subtract your repairs and subtract your profit, and boom, there's your offer.

Fair market value times 70% minus repairs minus profit, that equals your offer. Now, this is the basic structure of your quick and dirty math. It's your dirty math framework. The number that's going to adjust most of the time from market to market is the amount you initially discount. So I said 70% of fair market value. That's going to go up and down.

The initial discount, what that does, a lot of people say, why 70%? Why do you pick that number? Well, that initial discount represents the equity that you'd pass on to a fix and flipper if you were to wholesale it. That's really where that number comes from. Or it could represent your margin for error. Or it could represent your money costs if you were going to, fix and flip it yourself or you're going to buy and hold it. Okay. So in most cases, that discount will decrease as your property value decreases. Okay. For example, if,

if I say that right, if it's going to decrease, if your property value decreases, no, the other way around, it's going to decrease as your property value increases. For example, if you're in a $100,000 market, 70% that's probably going to be fine in that $100,000 market below. However, if you're in a $250,000 market, you're probably going to have to raise that up, not be 70%. You're going to increase it a little bit. It's like 75 to 80% would probably be more fitting. Or if you're in a market where inventory is really low and demand and competition is high, that might be a reason to adjust that number up a bit too. But resist doing so. Okay, just don't say it because I said to. Don't be so flexible to just get a yes for the sake of getting yeses.

Because, you know, you don't want to just go for a yes because it's been a while since you've done a deal because you're dying to get your first one under your belt. Now, be disciplined, be a shopper. If you flex too much, it's going to end up not being a deal, which will be painfully revealed to you in the subsequent stages of this epic approach. So still, you're a shopper. Use your judgment there.

Like I said, if you're a $100,000 market, 70% is probably going to be fine. The higher you go up in market value, probably the lower that's going to, the higher that discount is going to be. Or the lower the discount would be, the higher the number of it goes. okay i've just totally confused you so if you're going up to 250,000 market it's going to be 7580 you go up to a half a million dollar market maybe it's 80 85 percent okay all right um just beat

discipline there okay beat you're still a shopper if you flex too much in that that negotiating part um it could end up not being a deal and then you got a whole other deal of or issues to work with there or to deal with all right now the sliding scale though that I'm sharing it's not an exact science, nor is this going to be a foolproof offer. It's just called your quick and dirty math equation for a reason. So if I confuse you a little bit, just ignore what I just did. And don't put too much weight on this. Your goal is to merely get the property under contract within the ballpark of your quick and dirty math result or lower. Your goal is just to get the property under contract with that quick and dirty math equation or lower. Your goal is to get

every property under contract for the lowest possible price. the lowest price possible. The result of your quick and dirty math really just represents your highest offer. I feel like I should start saying that a little more often because people like, they go for that number. No, through that conversation that you're having with the seller, it could be a lot lower than that.

And that's perfectly okay. I will allow it. I will allow you to pay less for the property. All right. So when you go to visit the seller, you're going to have that quick and dirty number in mind. And the second number you're going to want to have is what the property is going to rent for.

So you need your quick and dirty math number and you need to know what the property is going to rent for. See, with these two numbers in mind, you're going to have all of the basic information that you need to analyze for any exit strategy. And remember, you're a problem solver, right? And they have a problem. So if you maintain that mindset,

the right words are going to come to you. The right equation is going to work for you. Or the right equation is going to come to you. The right word is going to come to you. You're going to get it as long as you have that quick and dirty math number and you know what the property is going to rent for. All right. So when you arrive to the property, continue a rapport building.

That never stops. So you want to be that person's problem solver. You want to be their friend. You're there to help them solve their problem. And then we're going to ask questions about the property. I recommend using a seller questionnaire of some sort, and one that you can actually read from so you don't forget anything. And let the seller tell you everything that they know.

Again, we want the seller to tell us what they know, what they think it's worth, what they think the repairs are needed, and how much those repairs are going to cost, what they think it would cost to fix all that stuff, and get their opinions. And everything that they know about, the property because this is how you want to when you have that information now you can start becoming the problem solver and giving them what they want so you can give what you want now when you

go to present this offer you're going to do it you're going to present the offer at least five times okay and this is what I mean first time I'm going to say mr. seller the current market conditions have your properties your properties value right around $100,000 and based off what you shared with me about the repairs needed and then making room for small profit for myself, you're saying we're right around $65,000. Is that right? Okay. So what I did is I just presented their offer, but it was their idea because I got all the information from them. And so I'm saying, you're saying we're right around $65,000. Is that right? Cool. So if they agree, then just get the contract signed. Okay. And then we'll go on to the next stage. But if they,

if they don't agree, then you'll take the next step is, okay, well, based off what the market is saying and what you've shared with me, what is the lowest number you would accept? Okay, that's the second swing. Second swing at the plate. You get five strikes here, but there's no strikeouts. You get five swings.

Okay, based off what the market is saying and what you've shared with me, what is the lowest number you would accept? So if they give a number that you agree to, then go ahead and get the contract signed. Don't waste no more time. Get the contract signed so you can move on to the next stage. Now, if you don't agree with the price that they offer,

okay, and then it's like, hmm, you know, my biggest goal here, Mr. Seller, Mr. Seller, is not to make the biggest profit. Although it is to make a profit, it's not to make the biggest profit. This is my business. This is how I feed my family, so I've got to make some money. But my bigger goal is to make sure that I am safe and that I don't lose money. And based off the current marketing conditions and what you're proposing, it's really beyond my risk tolerance. What dollar amount would be doable if I could close quicker?

Okay, so now you've introduced another variable into that negotiation. So you're asking them for, again, for a price if you could close quicker. Okay, because sometimes fast money is better than the slow money, right? So if the number that they propose and you agree, get the contract signed. If they don't agree, then we're going to go right here to swing number four. Mr. Seller, you know my biggest goal. You now know my biggest goal. So what is yours?

Is it to get the highest price or is it to sell it fast? Find out where their real motivation is. the high price or is it to sell it fast. And if you're still unable to reach an agreement at that point, Mr. Seller, I'm sorry, it doesn't look like the market is going to allow us both to get what we want. As a final attempt in creating a win-win scenario for us, what I can do is leave you with this letter of intent. Now, you'll see on this letter of intent it has three options of how I'm prepared to purchase

your property. So go ahead, take a look at it and let me know if anything there resonates with you. My number is right there at the bottom of the page if you'd like to. call me and discuss further. I'm sorry we haven't been able to find a solution for your problem, but let's not give up. Something may come up. Take a look at that. One of those things fit.

Give me a call and we'll make it happen. Right? So you'll notice that we asked here five times, right? Meaning, don't take no for an answer. You've done a lot of work to get to this point. Don't let one no crush it. This seller has a problem. They called you to solve it.

And they merely didn't accept your first solution. that's all it is. So you take five more stabs at solving their problem at least. Now, if you've been unable to reach a solution, then this prospect stays in your database to follow up with it a later date. They basically could become a suspect or maybe like somewhere in between, a hot suspect. All right? But if you were able to reach a solution, meaning you've got a contract sign,

then we just move on to the next stage. And that next stage is promoting the deal, which we're going to cover in tomorrow's episode. All righty. But notice this. up to this point, recognize all deals, all methods, all strategies, all investment classes, they all look the same up to this point. You know, once you've got the property under contract, that's when the differentiation begins.

But up to this point, they all look the same. And these two stages, finding the deal and securing the deal, are the most important two for you to master. For if you do, everything else is a piece of cake. You get past these first two stages. Everything else is a piece of cake. And I'm stressing these two stages right now, just in case you've been, you know, you've been stressing about, I remember, yeah, where am I going to find the money for all of this, even if it does work?

Or how am I going to find cash buyers? How do I build a big cash buyers list? Or where am I going to find a closing agent that's going to do double escrows? Like, if you're thinking about all that stuff, you're putting the cart before the horse, okay? I want you to focus on finding the deal and securing the deal. These are the two things you've got to get straight. And realize that the stress over all that.

other stuff. It's all just giant wasted emotions. For none of that matters until you're generating enough leads to hit your income goal and you're securing enough deals to hit your income goal. Nothing else matters. So don't stress over step three before you've taken steps one and two. Don't worry about stage three, four, five if you haven't mastered and gotten through stages one and two. The mystery of step three tends to disappear after you've taken steps one and two. So don't try and figure out three before you've done one and two. Got it? All right. So here, let's run this. checklist on how you secure your deals. So number one, do I have a conversation framework to sort prospects from suspects? Okay. Do you have a conversation framework to sort the prospects

from the suspects? Do you have a system for sorting those prospects and suspects? Two, am I always asking the prospect to suggest the price first? Okay, make sure you're always asking the prospect to suggest the price first. Number three, am I positioning myself as a problem solver for the prospect's problems. Am I presenting my offers in a way that it's me and the seller versus the world, me and the seller versus the market? Am I positioning myself as a problem solver to solve the prospect's problems? Number four, am I asking to solve the seller's problems at least five times?

Okay? You did a lot of work to get to that point. Don't let one no kill the deal. All right? They called you for a solution. And the first one you proposed just wasn't a good fit. So you try to make it fit five more times or four more times. five times total.

Number five, am I leaving a written offer or letter of intent with every prospect? You've got to leave something written. You've got to leave something in writing with every single prospect. Okay. So tomorrow, we pick up from where we pick up from here. And we'll go ahead and we'll cover how to simply promote the deal. In detail, that means finding cash buyers, finding lenders, finding money partners, finding the person that's going to help you complete the deal in a simple way.

You know, up to this point, we've made our money as you make your money when you buy real estate, right? Or you secure it, if you will. But you don't get paid until you exit real estate. And so tomorrow's episode will be all about finding the people that will help you exit, that will help you get paid. That we're going to find those people that are going to get you paid. So don't miss tomorrow's episode.

Right. So now you know what time it is. Yes, it's time to give away this episode's $100. dollar Amazon.com gift card. And I'm going to do this on every episode in November as I've been sharing with you. And all you have to do to be eligible to win is to go to iTunes and subscribe to this podcast, leave a review for this show. And if you've already left a review at some point in the past, there is nothing for you to do.

You are already entered. And if you'd like to enter, that's what you do. You just head over to iTunes. Type in Epic Real Estate investing into the search window. Click on the podcast and hit subscribe, then click ratings and reviews. And there you go. leave a review. And since we're here right now, I'm going to go ahead and I'll show you how it works. Let me spin the scroll bar.

All righty, here we are. Headline says, Best Real Estate Podcast, Nick Dana 2001. Matt's content is real and applicable. In six months, I did my first deal already. Well, congratulations, Nick Dana 2001. Send me an email to podcast at epicrealestate.com, and I'll reply with a $100. Amazon.com gift card that you can use for yourself. you can use for your business, use it for the holidays, whatever you want.

So that's how works. Every episode in November, I'm going to give one of these away. And if you've already left a review, nothing for you to do. If you'd like to leave a review to end of the contest, go on over to iTunes and do it. Hit the subscribe button, leave a review. All right, so until tomorrow, God bless, and to your success, 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.