Today, I’d Like to Break Down the FIVE Steps
of How We Do What We Do:
I’m writing this for you because many times, new investors come in to this business wide-eyed and feeling absolutely overwhelmed with information.
And I can certainly understand WHY! This business of creative real estate is HUGE, and we’re truly only limited by our imaginations, what we negotiate, and the law (of course).
So I thought I’d take it upon myself to write this brief post to help clarify and simplify the process for you so that you can either eliminate or greatly reduce that ‘overwhelmed’ feeling.
Another reason why I’m writing this: One of my lovely students just expressed some of that frustration in an email to me. (Shout out to Sally)
If ONE person is thinking & feeling this way, surely there must be others that I can help here, right? 🙂
So without any further delay, let’s get to it!
What we’re going to cover here is, quite simply, the ESSENTIAL, BASIC breakdown of the WHAT and HOW we set up our business in order to do what we do to BUY HOUSES as a BUSINESS.
This is in conjunction with how Ron has set things up. This is what is working for many people, myself included. So wake up here & take some good notes!
As you (hopefully) know by now, everything really breaks down into FIVE Simple Steps.
Those steps are all listed below, and broken down accordingly for your convenience.
You may find further breakdown of each of these steps in the BLUE Menu on this site.
For the purposes of extreme clarification, we’re going to look at each of those steps below.
This will allow you to see how they all work together as a whole in order to get you to where you want to be.
Here We Go:
The Five Steps To Success in Buying Houses
1. Generate Leads
This is done using various means, such as the Gold Club, Craigslist, Zillow, this Secret Source of Leads (Click Here), FSBO Signs, Yellow Letters, Referrals, Networking, Bandit Signs, etc.
You’re simply looking for people who have a house to sell. The house could be either Pretty or Ugly.
But keep in mind that this is simply the Starting Point.
It’s important to know that just because someone wants to sell their house doesn’t necessarily mean that it will be a good fit for US to be the one to buy that house.
For more information on how to Generate Leads, look at Step One in the Blue Menu on this site.
There are MANY factors to consider if we are going to be a good mutual fit to buy, and those factors are discovered and found in the NEXT step…
2. PRESCREEN the Leads
This is either done by YOU, your VA, or someone on your staff (in the future).
When this Lead Form is filled out, we’re essentially probing for flexibility and motivation on the part of the seller.
If it’s an ugly house that needs a lot of work, we’re looking to get a LOW purchase price, so we’d need the seller to have price flexibility.
If it’s a pretty house and we’re looking to work a terms deal, we’d like to get a YES to either ‘will you sell for what you owe?’ (if they don’t have much equity) or ‘would you take monthly payments for your equity’ (if they do have equity or own it free & clear).
If they say NO to either of those questions, we consider it to be a ‘NO’ lead.
Regardless of whether it’s a YES or a NO lead, we (you) must still CALL (or text) them back and have a conversation to verify the information that was provided on the PI sheet (if the VA did it) AND see if we can get further. That part of the process is called a “Closing Call,” and is covered in the next step (#3, below).
Some of the MAIN things we’re looking to discover here are:
-What is the seller’s situation?
-What are the numbers of the house?
-How FLEXIBLE is the seller to sell for a low price or to sell with TERMS?
-How MOTIVATED is the seller to sell at this time?
-If they don’t have much equity: Will they Sell for What they OWE on the house?
-If they own it free & clear or have a lot of equity: Would they take payments for a while until we get them cashed out?
–WHY are they selling at this time?
-What is the PAIN of their situation?
-Essentially: What are their NEEDS and GREEDS?
-This information is used to determine what TYPE of seller they are: Suspect, Prospect, or Project.
For MORE Information on HOW to Prescreen Like a Boss, I happily refer you to Step Two in the Blue Menu on this site.
After you or your VA gather this info, we now move on to…
3. Construct and Present an Offer
This is usually initially done by going through a Closing Call with the seller and getting to the point where we are lightly negotiating a deal on the phone by finding out the answers to “The Big 4” questions, aka “The Million Dollar Script.”
This is where we find out the answers to the questions we have about:
a. The Price; b. The Downpayment; c. The Monthly Payment; and d. The Term (length of time)
We are really trying to find out:
-How REASONABLE are they with how they sell?
-Do they want too much for the house? Too much down? Too high a monthly payment? Or too short a term?
The NEW WAY of negotiating to Construct and Present an Offer is brilliantly effective.
Although you’ll most likely need some intense additional training (provided in the mentoring program-just ask!) on how to do this properly, the basic idea of how it’s done is simple:
Of course, the MAGIC is in HOW we ask – what specific WORDS we use, as well as our TONALITY of voice.
No worries. I’ll be helping you out with that.
For more info on Constructing and Presenting Offers, look at Step Three in the Blue Menu of this site.
However the call goes, we will look to…
4. Follow Up.
Truthfully, it will be a rare thing that we’re able to negotiate a deal with the seller on the first call. It usually takes more than one conversation with a seller to be able to successfully work a deal.
On those occasions when we’re able to do that, and we like the answers we get (dealing with true Prospects), the follow up action we’ll want to take with those sellers is to get over to their house asap to negotiate a deal!
For the rest (the majority) of the sellers we talk to, we’ll want to follow up by either sending them information and/or scheduling a time for us to contact them again to have another conversation.
Remember that everyone’s mind will change with time and circumstance.
Also remember that 80+% of the business we successfully do will come AFTER the 6th-8th contact/communication with someone.
Due to these facts, it is VITAL that you continue to follow up with your prospects, suspects, and projects until they either sell to YOU or someone else (or just decide to not sell their house after all). Make sure you stay organized. You may use the Lead Tracking Spreadsheet provided on this site if you like.
For more information on Following Up, you should already know to check out Step Four in the Blue Menu on this site.
Once we finally get all that in place, we finish up with…
5. Close Quickly.
This is simply where we get the agreements signed, check the title, and have a closing.
Depending on the type of deal we’re doing, there may or may not be funds needed at the closing.
Quick Story: When I first got started in this business, we used to do “tabletop/kitchen” closings, where we often just had the seller sign all the paperwork right there at their house. We would bring in a Notary (or take them to one) to get those certain docs Notarized.
But those days are long gone, due to the fact that we live in such a litigious society, where anyone can sue anyone else for any reason whatsoever.
Because of that, what we now do is have the legal docs signed in front of a real estate attorney or title company, at their office.
HOWEVER, that only applies to the FINAL docs that are needed.
We still have a few docs that we WILL have signed by the seller at their house!
WHENEVER we go out to a seller’s house to meet with them, our intention is to have them sign the appropriate document(s).
With that in mind, we will ALWAYS want to bring the following docs with us when we go to meet with a seller…
We want to bring (at a minimum) TWO BLANK COPIES of EACH of the Following docs:
1. A Purchase & Sales Agreement (aka “P&S”)
2. An Authorization to Release Information (in case they have a mortgage)
3. A Lease Purchase Agreement (for Buying. The shorter one – without the TOC)
Make sure you also bring a crisp $10 or $100 bill to give the sellers as Consideration, aka ‘Earnest Money Deposit,’ so that your contract is considered to be legal.
KEY: Our GOAL is to first orally negotiate a deal with the seller on either PRICE or TERMS, then put the details of what we’ve negotiated down on paper (contract), and get everyone to sign that Contract, either a Purchase & Sales Agreement or Lease Purchase/Option Agreement!
After we’ve successfully gotten our agreements signed, we will immediately send that contract & instructions to our real estate attorney or title company to CHECK the TITLE of the property to make sure that we’re dealing with the right people AND to find out if there are any title issues, liens, etc. That’s the first step of our Due Diligence.
Should be obvious by now – if you want more information on Closing Quickly, check Step Five in the Blue Menu.
Couple Quick Pro Tips to Keep in Mind:
1. Getting a property under contract gives you the RIGHT but not the OBLIGATION to buy it.
2. Don’t worry if you don’t get everything perfect. You won’t, especially at first.
Remember that WE CAN ALWAYS FIX IT LATER!
To Summarize: There are FIVE Steps to Success in Buying Houses:
- Generate LEADS
- Prescreen the Leads
- Construct and Present Offers
- Follow Up
- Close Quickly
– And There We Have It! –
The main secrets of HOW we do what we do have just been laid out for you in simple, succinct fashion right here.
And that’s all on the BUY side.
We’ll have the same 5 steps on the SELL side…just with different ingredients.
With that in mind, I strongly suggest you re-read this post now AND in the future whenever you get ‘stuck.’
Now that you know this, there should be NOTHING to STOP YOU from getting out there and tearing it up.
Just remember to touch base with me, your trusty mentor, if you need help.
And be sure to write a nice Testimonial as often as you like!
Hope this helps you out.
Until Next Time,