Epic Real Estate Investing - What to Do When Nobody Will Buy Your Deal | Episode 209

Episode Date: June 13, 2016

This podcast is tackling one of our most common questions: what do you do when nobody will buy your deal?  Should you throw in the towel and conclude that real estate investing isn’t for you?  Of course not! Today Matt gives you the 4 options you have when your properties aren’t moving and encourages you to keep pushing to make your ok-deal into an EPIC deal!  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

This is Terrio Media. Broadcasting from Terrio Studios in Glendale, California, it's time for Epic Real Estate Investing with Matt Terrio. Welcome to Epic Real Estate Investing, the place where I show people how to escape the rat race using real estate. Creative, real estate. Just got to shift your focus from making piles of cash to making streams of cash, change that one thing just one time, and you are on your way. You're on the way to financial freedom. That's where you're going. Now, it's not the most exciting path, but it is the fastest.

And once you get their life, then becomes exciting. All righty. And speaking of exciting, let's solve a problem today. This is a common problem. And I get a lot of questions through email. I get this question frequently through our private Facebook group. I get this question frequently through our follow-through crew coaching calls. And that question being, when your wholesaling houses, you know, as your.

primary strategy even if it's your secondary strategy this is inevitable this is going to happen to you you're going to get deals under contract that nobody wants or at least not for the price that you need to get for it you know maybe um there's a shift in the market that caused the price to no longer be valid maybe you miscalculated the comps maybe you misjudge the amount of repairs needed or maybe there's just something in the air that's conveying it's just not a deal there's nobody in the market at that time to validate your pricing so if this has happened to you or if it's happening understand that it's normal okay you didn't mess it up it's just normal it's very normal it happens and depending on the volume that you're doing

it probably happens frequently more times than you'd like to for sure I mean just one time is really too many times but if you if you're doing a high volume this is gonna happen okay so when it does you've got four options what are those four options well option number one you can just walk away. As long as you have the proper contingency clauses in your purchase agreement, which you should always have, you can just walk away. Now, a contingency clause, what's that?

Well, a contingency clause, that's a conditional statement, meaning this can't happen until this happens. Or if this, then that. That's a conditional statement. So in the context of real estate, if you're unsatisfied with the property inspection, then you can cancel the contract. That's a contingency in most contract.

That's the one that's inside of the one that we use inside of Epic Pro Academy. It's pretty much in all contracts about there's an inspection contingency. So if you don't like what the property inspection turns up, then you can cancel a contract and you walk away. No harm, no foul. You have the total right to do that. And that property inspection, by the way, that can be anything that is directly or indirectly impacting the property's value in your opinion.

You got that? So it doesn't have to be, oh, there's a, the plumbing is bad, so I can back out of the property. No, it could be something like, you know, you just heard that they're building, they voted at the city council and a new freeway is going to pass right through your front yard. That would affect the property's value. That would be a good enough reason. So, yeah, pretty much anything.

So that's option number one. You can walk away. Option number two, you could ask for an extension. So if you feel that, you know, you're close to finding a buyer and you just need a little bit more time, then you could ask for an extension. That's very simple. I mean, I'd say something like Mr. Seller, Mrs. Seller, I've completed my due diligence,

and it turns out that it's not going to be a good fit for my personal portfolio, but I think I know someone whose portfolio it might fit. If you just gave me another two weeks or so, I could try and put that together for you and get you the money that we agreed upon up front. Would you like to extend the contract? Just be quiet and wait.

Be straight with people. And remind them why they entered the contract with you in the first place. They want to get their money, right? They want to get the property sold. They've got to go where they got to go. They want their money. So always remind them of that when you're having these conversations.

That's option number two. Option number three, renegotiate the price. Now, if your brow just started to beat up a little bit and your heart rate just picked up a bit and your blood pressure spiked, I get it. You know, because you're like, oh my gosh, I have to go back and ask them to reduce their price. You're anticipating this hostile conversation that you'd really rather not have. You'd like to avoid this.

But this doesn't have to be an uncomfortable conversation, not at all. Remember, you're a problem solver, and it's the seller's problem. This is not your problem. Okay? You're a problem solver. It's the seller's problem, and it's the market conditions that are causing this problem for the seller, not you. You know, ill-informed people think that going back to a seller,

to renegotiate the price, they think that's unethical. And I see that frequently. I see a lot of forums. They talk about how that's just a bad practice. And it's not unethical. That could not be further from the truth. Understand this, that in a traditional real estate transaction, the transactions that go on every single day,

the ones on the multiple listing service, with realtors involved, brokers involved, lenders involved, retail buyers and sellers, 95% of all properties that are sold this way, they're all that's 95% of all the transactions are sold this way by the way renegotiations happen every single day yes even after both the buyer and the seller agreed to a price and terms in writing these negotiations happen every single day in 95% of the deals us as investors looking for the discounts we represent just 5% of the transactions

how is it unethical for us when it's not in with all the licensed individuals when they do it every single day, right? And this is, this is what the escrow period is for for the buyer to conduct their due diligence to determine whether or not the property is worth to them what they agreed to pay for. That's what due diligence is for. That's what the escrow period is for. They call the escrow period the problem solving period. And it's very common after the buyer has performed their inspections on the property to find something that wasn't disclosed originally, whether that was intentional or accidental. But it's very common for them to find something that wasn't disclosed originally or

turns out to be worse than what it was disclosed. The buyer has the right in that, the buyer has the right to reevaluate the purchase after he discovers that. They have the right to walk away per the contingency clauses. That's the right in the contract. And they have the right to renegotiate as well. It's not unethical to ask for a price adjustment after more information about the property has been revealed.

Now, the seller has the right to renegotiate as well. And the seller also has the right to say no. See, you have the right to ask. They don't have the obligation to say yes. So they've got the right to say no. And they've got the right to issue a notice to perform to the buyer, saying you need to close this deal or I'm canceling the contract. The seller has that right.

This is the real estate transaction. It's a level playing field in which everybody's rights are spelled out right there in the contract. And both parties read it. and both parties agreed to it and both parties signed it. No surprises here. It's all in the contract. So hopefully that lowers your temperature and your pulse a bit. Now let's renegotiate the price.

Here's how you do it. Mr. Seller, I've completed my due diligence. I've found some issues with repairs needed, more recent comps, plans for the community, whatever it is. You might want to show some evidence if you have it. And blame it on the evidence or blame it on the market or blame it on the inspector or the city, whatever. Just don't make it because of you in your opinion. not why we're renegotiating the price.

There's some outside force that has caused this. Okay? So I found some issues with the repairs needed. That's not going to allow me to close the transaction as we originally agreed to. But I'd rather not cancel per my contingency clause. I don't want to do that. Based on what has been discovered, though, if you'd like to still close this deal, I just need you to share in this newly found liability with me.

And I just shut up and listen. And you'll know how to proceed. them based on their response. They might say yes, they might say no. But that's how you do it. So I want you to, you're going to blame it on something else. That's point one. Two, you want to show them some evidence.

And then three, you want to remind them that you have a contingency clause in place. And then say, four, I'd rather get this problem still solved for you. I'd still rather do this for you. But we have a newly found liability that we need to discuss. Got it? So they might say yes, they might say no. If they're not open to it, hey, cancel. the contract, we go back to option one and we walk away. If they are open to it, I like to ask,

great, how much of this new liability are you willing to share with me? Again, shut up and listen. How much of this newly found liability are you willing to share with me? And based off their response, you decide if it's acceptable or not. And if it's not acceptable, ask for more if you need it. All righty. So that's option number three, how you, uh, you're going to negotiate the price. Now, option number four, and this pretty much the same scenario is number three, right? Something happened and it's not worth what you thought it was worth. So option number three is renegotiating the price. But if renegotiating the price isn't an option for the seller, what do we do next?

That's right. We renegotiate the terms, right? So remember, you purchase property in one of two ways, either buy your price in their terms or their price in your terms. That's how you buy property. So if you can't get the price, then you got to go for the terms. terms. As long as you can control one, you can turn every deal into a deal. And in most cases, there's probably somewhat a relationship now that has been built between you and the seller. Right? You spent, you spent probably at least two, three weeks together, most likely a month.

And if you've been honest and you've been fair and you've been upfront with the seller and you've kept an open line of communication, there's likely a level of trust that has been established as well. And whatever that level, it's going to be more than what it was when you two first met. And at this point, they said no to price. So what do you do? Well, you pull out your three-option letter of intent and show them some additional deal structures. You show them some additional terms.

If we're stuck on the price, I can get you your price, but they're going to have to work with my terms. And then you get the conversation flown around alternative options of getting them what they want, their price and solving their problem. But if you're going to give them their price and solve their problem,

then in exchange, it's only fair that you get the term. That's how it works. The point being, just because you can't find anyone that will buy your deal, you're not done. No, you've got options. There's going to be times where none of these options work. But there's going to be times when one or more of them do. And because you've gone that extra route or that you didn't quit, you're closing more deals now because of it. And you don't need any special tools or any special resources to go back to the seller when things aren't paying.

handing out the way that you would expect of them to. You should have everything you need to do this, and you have no excuses not to do it. If you haven't picked up a copy of that three-option letter of intent and its calculator, if you haven't done that yet, you still can at epicl-oI.com. That's free to you. But that's it.

That's all you need. You know, other than all of that, it just takes a little bit of grit, a little bit of tenacity, and you can get deals like this done. More of them than you have been getting done. All righty. So the bottom line, don't throw in the towel just because you misjudge the deal.

somewhere down the line. Keep fighting. 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.