Epic Real Estate Investing - How to Sort Your Leads, Get Your Offer Accepted and Close the Deal | Episode 94

Episode Date: March 24, 2014

Learn how to sort your leads, get your offer accepted and close the deal. Matt shares his very simple system for acquiring property that he used, and continues to use, to exit the "rat race." Say goodbye to your favorite podcasters. It's the end of podcasting as you know it.http://fundanything.com/patenttroll  ------------------------- Join Matt and his team on the next Cash Flow Savvy Property Tour on May 1st & 2nd. Get the details and register here: EpicRealEstateTour.com Download the free real estate investing course "How to Do Deals | No Money Required" at FreeRealEstateInvestingCourse.com or text FreeCourse to 55678 "Click" what interests you most:    Education Properties Income Coaching Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi, Matt. My name's John Purcell. A few weeks ago, I got turned on to your podcast just by poking around, seeing what I could find. And ever since I've discovered it, it's given me a whole different level of confidence to get into this business, which can be very daunting at times. And you break it down, layman's terms. It's worth every second I spend. So I'm getting started, doing yellow letters, and I'm on my way. Thank you. Broadcasting from Terrio Studios in Glendale, California, it's time for Epic Real Estate Investing with Matt Terrio. Hello, and welcome. Welcome to another episode of Epic Real Estate Investing. If this is your first time listening to the show, welcome. Glad that you're here. If this is not your first time, welcome back. And as you may or may not know, this is the place where I teach people.

how to escape the rat race by investing in real estate. And if I were to do it all over again, I wouldn't change the thing. I do it exactly the same way. And I do it exactly the same way whether I had money and credit to work with or not. You see, while I was figuring this whole thing out, I stumbled upon 12 different strategies of investing in real estate with little to no money. And in hindsight, by thinking that, you know, since I was forced to invest with little to no money and investing with no credit.

I mean, I had a terrible credit score. In hindsight, I think it was an absolute blessing. I think it made me a better investor. And that's why I'm here because I want to help you be a better investor as well. So I put the first two strategies of those 12. I put those two of which I believe are the easiest and fastest strategies to a paycheck. I've put them into a free course just for you. And you can access that course at free real estate investing course.com.

or if you're listening on your smartphone and you just can't wait to get back to your computer to get that free course, I've got something for you. You can download it right now on your phone by texting free course to 55678. Free course to 55678 and you'll get the whole course right there on your phone. The two easiest and fastest strategies to a paycheck in real estate. Okay. So picking up from last episode in our Living the Dream series, we covered lead generation. and I gave you a wide variety of sources to generate leads.

And we touched on how to do that as well. And the most important part of that episode, though, it had to do with you being very clear on that the more leads you generate, the faster you will reach your goals. There's a direct connection between those two things. Lots of leads, you reach your goals fast. Not many leads. It'll take you a while.

And to generate lots of leads, if that's the goal, because you want to reach your goals as fast as you can, to generate lots of leads, the method of generating those leads isn't nearly as important as the volume, frequency, and duration of which you execute your chosen method, your chosen strategy. Okay? So it's not the perfect postcard. It's not the perfect letter. It's not the perfect script. It's not the perfect email. It's not the perfect roadside sign or billboard. That's not what's going to make the biggest difference. Certainly, there are aspects of those things that you can tweak to make them more effective, but nothing is going to compete with the volume, the frequency, and the duration of which you

work, whatever method that you do choose. And I recommended that you at least implement three different lead generation strategies. You got to get three of them going at least. But I want you to just start with one. I want you to take a slow, start with one, get that first one up and running, and before you implement another, make sure it's working. And then your choices of lead generation strategies, you know, being networking, prospecting, and advertising, you know, go ahead and just choose one, get it going, because they all work, they all work, and they are all directly affected by the volume frequency and duration of which you work them. So pick one, get it up and working, then add the second, get that one up and working,

repeat the process, get three. You can handle more, go for it, but you need at least three. Okay? So as those leads, as they start coming in, because they will, if you're working the volume, frequency, and duration, they absolutely will start coming in, and you'll need to qualify them, meaning everyone that comes through

is not going to be, you know, a potential opportunity for you, you know, that you're going to have to do some sorting. You'll have to determine whether or not there is a potential deal there. And, you know, look at it as sorting apples. You got a big stack of apples in front of you, and you got two barrels. So you put the green ones in the left barrel, you put the red ones in the right barrel. And you just kind of look at the apples, this one, red or green, and you decide which barrel it goes in. And to do that with leads specifically, I use three specific questions.

And so I'm going to give you those questions to help you sort. leads. So you know which ones to spend more time with and which ones to not spend any time with. So the initial question is, what's your situation? Okay, that's question number one. What's your situation? And that can be, you know, that can be when someone calls you off of one of your ads or that could be even if you're prospecting. You know, you might not be able to ask it directly like that, but maybe it's kind of like, hey, do you have a house for sale? And they say yes, they do or maybe and well great so what's your situation what has you in a position to to sell your house okay so what's your situation that's that's essentially what you want to get down to and you

you see you want to know the seller's situation what has them in a position to sell or what has them in a position to consider selling you know basically why why do you want to sell mr. mrs and and i like to phrase it as what's your situation because i think i it gets a better response. At least I've always gotten a better response from that. And it feels a little more natural, too. You see, the foundation, this is why you want to know why, because the foundation of this real deal lies within that seller's motivation to sell. That's where the deal is. It's in their motivation to sell. So when asking about their situation, you know, you're just getting down to their motivation. You're digging. Asking why they want to sell? That's a little obvious. You might get a little

resistance. It might be a little bit forward. But if you ask about their situation, it's a little less threatening. And the seller is more likely to open up. And when you ask this question, this is key. When you ask this question, it's your job to listen. This is the essential component of this question. You ask it, and then you just shut up and listen. And you can nod your head and you can go, mm-hmm, you can agree. You can even offer slight little moments of, of yes, I know what you mean, or yes, that happened to me too or something like that. You want to relate with the seller. You want to build rapport.

You want to make a friend. Don't get real estate specific here if you don't have to. At least not too quick. Don't rush to the punch, okay? You want to be genuinely interested in the seller's situation. And you see, by being interested, the seller will view you as interesting. and what that translates into is rapport. It translates into rapport being built.

And the stronger the rapport, the more the seller will disclose about their situation. Got it? That's so key. That's so important. There's a girl that I'm working with here in the office, and she is excellent at this. And she's got, in our first day of receiving calls

from her yellow letter mailing, she got three calls and three appointments because she built rapport. She knows nothing else other than what I just shared with you right there. And she has three appointments for those properties. Okay, so that's key. That's key. You got to build rapport. Now, once that portion of the conversation, it comes to a close and you've pulled out

as much about their situation as possible. The next question is, what would you like to have happen? Okay, that's the next question. question, what would you like to have happen? And from this question, you can get any number of responses. Typically, it's, I want to sell my house. But it's not uncommon, though, to get something to the effect of, I just want out from underneath this headache, or I want to sell this house fast, or I just want someone to take over the payments. So listen closely to the answer of this question. What do you want to have happen? Listen closely, because your best shot at getting a

exactly what you want is by making happen what the seller wants to have happen. Got it? So that's a cue. That's kind of an indicator of what you're going to have to do if you expect to get everything that you want. Make sense? Cool. So third question, there's only three of them.

So here's the third question. If I could make that happen, how soon would you be ready to sell? Okay. If I could make that happen, how soon would you be ready to sell? And again, ask the question and just shut up. Listen. Okay, just listen. Even if they don't respond immediately and it's starting to feel a little bit uncomfortable,

it's okay. Just listen. All right? And, you know, from these three questions, you should be able to detect whether or not you have a motivated seller ready to sell to you. So that from there, use your intuition. Do they sound motivated? Is there any sort of urgency?

Is there any sort of pain that they need relief from? Any of those types of things are really good clues as to whether you have a motivated seller or not. So if you do have a motivated seller, if you don't, then you're just like, okay, sorry, I guess we're not a good fit. Have good luck to you. Whatever it may be. But you're only really interested in the ones that do, the ones that are motivated and are willing to sell to you if you can make happen what they want to have happen. Okay. So there are a couple ways to go about the next step.

Preferably, I like to make an appointment to go see the property and meet the seller face-to-face. I want to meet them in person. You know, so much more gets accomplished when you meet in person. And when you get there, take that seller information questionnaire with you. I think this is key. This is one of my most powerful tools. There's two or three of them. But that's one of the more powerful ones.

And I'll give you the other one in just a second. The same questionnaire, if you don't know what it is, it's the same questionnaire that I give you to use inside the free course. I give it to you right there in a free course. There's a free download. So take that with you and get an answer to every question. There's a bunch of questions on there. Get an answer to every question. Get it filled out completely.

Okay? Get it filled out completely. Now, if you can't meet the seller face-to-face, you would say something like, okay, Mr. Seller, Mr. Seller. I'm not sure if the market conditions will allow me to put a deal together that meets both of our needs, but if I could ask you some questions

and, you know, these are the same, questions I ask everybody. If I could ask you these questions, I'll have a better idea of what's possible here. It'll take about 15 minutes. Do you have time to go over the questions right now, or do you want to make an appointment to go over them later? So you're just asking for permission to ask these questions. And again, get an answer to every question. Get it filled out completely. And see, you'll need it filled out completely to be able to draft your offer. It's all the pertinent information that you need so you can make a real bona fide offer. So once you have it completely filled out and, you know, this is whether you're meeting in person or you're meeting over the phone, you'll say

something to the effect of, okay, Mr. Seller, Mr. Seller, I think I've got everything that I need. Let me go on and see how the market conditions are currently affecting the value of your property. I'll run some numbers. And if it seems there's a solution that will get us both close to what we want, I'll put an offer together for you. I might even be able to come up with a few different options. Can you give me 24 hours? Okay, something like that. So you're asking for permission to go ahead and run the numbers. But if you notice, there's some very specific keywords in there, key phrases.

And one of them is, let me go see how the market conditions are currently affecting the value of your property. Something like that. You want to state it in a way that I have to go check to see what the market is doing. What is the market saying that I can give you? So that way it's positioning you and the seller against the market. It's not you and the seller versus each other. So that's really important. And then you also put some doubt in there.

You know, if it seems that there's a solution that will get us both to what we want, you know, I'll put an offer together for you. So that's like maybe there is something. Maybe there isn't. Okay. So they're like, they're sitting there like, gosh, I hope he finds something. I hope she finds something. And then you say, I might even be able to come up with a few different

options. Can you give me 24 hours? Boom. Now you've got some time to breathe. You've got some time to go and collect your market data, collect your thoughts, and go in and put together a really nice offer, one that meets your minimum deal standards, one that meets your minimum criteria. Okay? And to do this more and more these days, my offer consists of a three option letter of intent. And it's actually, it's exactly what it sounds like. It's three different options. That's why they call it the three option letter. It's three different options of how I intend to purchase the property. Okay.

So that's why it's the three option letter of intent. It's very self-explanatory. And it's just, it's a very informal single piece of paper. And, you know, for a detailed step-by-step instructions, I'm not going to do that now because we've done it before a couple times. And we even did an online training on it as well. So you can go back to episode 70 and episode 80. Very easy to remember.

70 and 80 where I decided. discuss how to create cash flow with little to no money. And a big part of that episode or those episodes is the three-option letter of intent. So on those two episodes, I go over how to put that letter together. As well, I give you a copy of the spreadsheet that I used to come up with my numbers and a copy of the letter so that all you have to do is just fill in the blanks. And it'll also show you where to find the full online training of that as well. So once you've got your three-option letter of intent complete, you can stop by the seller's place, if possible.

I like to do it in person every single time that I can. Okay. And don't be lazy. If you can make it happen in person, do it. But if you can't, if you truly can't, go ahead and you can mail it, you can email it, you can fax it, just make sure that the seller does actually get it. But in person, it's absolutely always the best way. And a little sidebar here, I want you to always submit an offer. Okay, so don't get lazy here either.

Always submit an offer, always. Leave no lead behind where you failed to submit an offer. Everybody gets an offer. Got it? Cool. Now, make it a point to speak to the seller before you do submit your offer too. And you'll want to say something like, Mr. and Mrs. seller, I've reviewed my numbers and I've reviewed the current market conditions,

and I have come up with an offer. I'm afraid it's not exactly what you were hoping for, but I was able to create a few different options that might make this possible. You know, only you will be able to decide that. But here are three different options of how I'm prepared to purchase your property. Upon your approval, all I would need to do is confirm repairs

and confirm clear title, and I can close in the next seven days. Okay, so there's an example. Then you just hand them in the letter, email them letter, fax it, whatever. But try to get this little speech in first. Because what this speech does, again, it reinforces the idea that this is what the market said I can offer. So it's taken that pressure off of you. Okay.

And what it also does, and this is really important, it lowers the seller's expectations. When you say, I'm afraid it's not exactly what you're hoping for, but I was able to create a few different options. that might make this possible. That lowers the seller's expectations, regardless of what your offer is, even if it's a great offer, and then you give them exactly what they want. Now, you want to lower their expectations. You want to lower them as much as possible, actually, so that they're not too disappointed if you happen to present the offer, a low offer, a disappointing offer.

So it removes that disappointment. And if you do it right, they might even. be pleased or relieved when they receive your offer. Because you never really know what was totally going on in their head. They might have been holding their position, holding their posture, playing their game and trying to negotiate with you. And that was their poker face. So they might even be pleased. So if you lower the seller's expectations before they actually see your offer, it tends to, I think it has a better chance of getting accepted and a lesser chance of offending them.

A lot of people are afraid that they're going to offer too low and it's actually going to offend or upset the seller. So, you know, lower their expectations before they even see the number. Okay? Now, they're going to do one of three things when you give them this letter. The seller is going to reject all of your options, which is why I like the three option letter of intent because they rarely realize that they have a fourth option to reject. So they're looking at three and they're trying to pick one.

They forget that they could say no. That's one reason. I really like the letter. So, but that still is an option. They may reject all of your options or they may accept one of your options, which would be great news because all three will be acceptable to you. Or they may counter one of your options or might do some kind of hybrid or something like that, but at least it keeps the conversation moving forward and you're still, the ball is still

in play of which you just go back and forth. You keep hitting that ball back and forth until you reach a meeting of the minds. And then you can officially put the offer on a formal contract. Got it? Get an agreement on the price and terms prior to going through the hassle of putting a bunch of paperwork together. That's what I think that's just, it saves you time. It's less threatening.

And it just kind of, it's a happier ending more often. So once you have a signed contract by both parties, your inspection period now begins. Boom. Escrow period. It's now open. So whatever the protocol in your state, take the contract to your whatever, maybe your escrow office, your title office, your closing attorney's office, however you do it in your area, just take the contract to them and say, hey, we just bought a house and I have to do my inspections and begin your inspections. And in the majority of the situations, it's a good idea to get a property inspection, a physical inspection. So that's just a general inspector inspection.

I think they're licensed by HUD and they'll go in and they'll just do a general inspection and tell you what's wrong with the property. And they will find everything that they possibly can. That's wrong with the property. But don't let that scare you either. Okay, that's their job is to find what's wrong with the property. They're not going to say, hey, this is a great property and this should last you for the next 200 years. You won't have a thing wrong with it. I've never seen a property this great.

They will never, ever, ever say that. Everything that, every, every piece of news that they deliver to you will be negative. They are, their job is to find out what's wrong with it. So just take that in stride. And then you don't get all emotional about it. Just go and get a bid from a contractor or two on repairing whatever comes up in the property inspection. Okay. So that's, that's part of it.

Get a physical inspection and get a contractor's bidder to, to see what it's going to take to bring that property up. up to par. Then go ahead and run your comps again. Look at both the solds and the actives. You want to see if there's anything that happened, you know, while you were in escrow or happened since you looked at the numbers last. You want to look at the market rents again and get the opinion or confirmation from your property manager or maybe two property managers because that rent number is extremely important to your ROI. And so after you kind of run through all the basics and if nothing crazy has come up, I mean, if everything

checks out against the data you used to originally prepare the offer, then go ahead, move forward, close the deal. And that can be a done deal. Now, if something doesn't check out, and often, something doesn't check out. So, like, for example, perhaps the repairs are going to be more than what you allowed for when you were originally working your numbers. Or perhaps, you know, maybe two comparable properties sold while you were in escrow, of which changed your fair market value or perhaps maybe three new for rent signs went upon the very same street that week. So now you've got some major competition in getting a tenant in that property. Whatever it may be, you may have to modify your offer, meaning you'll have to go and

renegotiate. And the seller never likes this, by the way. Okay, so I don't expect them to receive your renegotiating with open arms. They never like this, you know. So to soften the blow, again, it might sound something like, this, Mr. Mrs. Seller, when I originally put my offer together, the estimated repair costs were $5,000. But after the property inspection and a revised bid from the contractor, it appears that the repair costs will be more in the area of $7,500. And unfortunately, this pushes the deal

out of my minimum deal standards. So in order for me to close this transaction, in order for me to move forward, I would need you to share this newly found liability with me. of $2,500. Are you okay with that? And just be quiet and wait for the answer. You see, what I've done there is, I've blamed the price reduction on the inspector. I blamed the price reduction on the contractor.

And because of them, not because of me, because of them, the deal no longer fits my criteria. Hey, it just is what it is. It is what it is. That doesn't fit now. And sometimes the seller will agree to a price reduction, Sometimes they won't. And at that point, hey, it's your decision. Do you move forward with the deal, or do you walk away?

And if you know your criteria, if you know your minimum deal standards, the way that we established them at the beginning of this Living the Dream series, it's a very easy answer. It shouldn't be confusing or take any time at all to answer that question. It's a yes, let's do it, if it fits your criteria. It's a no and I walk away if it doesn't. You know, in this case, you should be just as happy with a no as you are with a yes. You should be just as happy with either answer because you have your minimum deal standards established. Both answers, a yes or a no, as long as you're keeping your eye and those yeses and no's

are decided by your minimum deal standards, a yes or no both move you closer to your goal. What I want you to avoid is making a decision based on chance. For example, if you're thinking to yourself after the seller has refused to give you a price reduction, if they said no, I'm not giving you a price reduction, I don't want you out there thinking, well, if I can cut back on the bathroom repairs a little bit, and if I can, you can, can find a tenant right away at $50 a month more than what the property manager said, then this deal could work. No.

Mm-mm. Don't do that. It's either a yes or a no, and that yes or no is based off of your minimum deal standards. Making decisions based on maybe's, that's how investors lose money. When you make your decisions based off of maybe's, you now turn the decisions. the safest investment in the whole world, real estate, you take this extremely safe investment, the safest investment. And by making a decision based off of maybe, you turn that safe investment into a risky one.

Just by the nature of you making a decision on hope, on what if, or on a possibility, that's not investing. That's gambling. Don't do that. Be clear on your minimum. deal standards and stick to them. Be a disciplined investor because it's the disciplined investors that get to live the dream. But specifically, they live the dream with confidence, with minimal, if any, doubt or worry.

And that's how you want to live the dream. You don't want to live it any other way. So let's say you are able to close this deal. within your standards. First, congratulations. Super work. Wasn't that hard, was it? No, just a little series of steps.

You executed the steps and boom, here you are. Congratulations. Second, now what? I mean, you've got this great deal, right? You are one step closer to live in the dream. But your work is not done. It has only begun. I'll see you next week and we'll go over the next.

Next step. I'm Matt Terrio, living the dream. Podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.