Ten Things to Do to Avoid Making Deals by Vena Jones-Cox
Let’s face it: making deals complicates our lives.
When we first become involved in real estate, buying a property can be very anxiety-provoking: I mean, really, even though we’ve done all of our due diligence and run the numbers 15 different ways and talked to our favorite mentor about it and it STILL looks like a great deal, how do we ever REALLY know? And this leads to self-esteem problems, as we’re constantly second-guessing ourselves and berating ourselves over our lack of confidence.
And even for seasoned investors, taking on a new deal is stressful—an accepted offer means that we have to find a buyer, or start a rehab, or put an ad in the paper to get a tenant. Plus, there’s the additional bookkeeping when the checks roll in, and, of course, the taxes to pay on the profit at the end of the year…
Since stress and anxiety lead to psychological and medical conditions, including high blood pressure, overeating, bad hair days, fear of success, and a whole host of others, making deals should obviously be avoided at any cost. So I think it’s important, for the sake of our own health and well-being, that we all learn how to NOT to get trapped into making a deal. Here are some suggestions:
- Make Sure You Know EVERYTHING Before You Do ANYTHING.You can avoid making deals for years on end simply by repeating the mantra, “I don’t know enough yet.” You’ll get the fun of attending more and more meetings, workshops, and bootcamps, plus support the economy through your constant expenditures on home study courses until you know EVERYTHING there is to know about real estate. And the beauty of this strategy is, there’s ALWAYS something else to learn! By waiting until you know everything, you’re sure to be dead before you make your first offer. Mission accomplished.
- Wait until ‘the time is right’ to start doing ANYTHING.Be sure to take on new projects, accept new responsibilities, and, above all, LET SOMEONE ELSE (your boss, your spouse, your kids, your team) control all of your free time! The great thing here is that you can avoid making offers WHILE STILL looking really good to others. I mean, who doesn’t admire a hard worker, or a great indoor volleyball player, or a devoted parent or spouse? Saying, “I would make deals, but my kids really need me to ferry them and all of their friends to extracurricular activities 364 days a year” doesn’t make you a failure, it makes you a SAINT!
- NEVER do anything to encourage a seller to call you.Under no circumstances should you make a business card, hang a bandit sign, place an ad, or send out a piece of mail with your phone number on it. If you do, sellers will call you, and eventually one will have a deal that you just can’t resist doing.
- If a deal finds you anyway, wait at least 10 days before calling the seller back.Or, if you are caught in a bind and HAVE to talk to the seller, don’t make an appointment to see the property for at least a week. Or if, for some reason, you’ve gotten trapped into seeing the property, take at least 2 weeks to complete your figuring and make the offer. Either way, you’ll be assured that any trulymotivated seller will find someone else to buy his property, leaving you only with the bad deals, which you can easily be forgiven for not doing.
- If forced to make an offer, load the contract up with so many contingencies that no intelligent seller will accept it.Some suggestions: whole-house inspection AND lead paint inspection AND mold inspection contingencies PLUS a financing contingency PLUS a partner approval contingency. If your seller happens to be desperate enough to sign the contract anyway, you’re sure to find a way out by not getting all the paperwork to the bank in time, or by convincing your partner it’s not a good deal.
- Spend the hours you’ve blocked out to work on real estate doing anything other than talking to sellers.With a little effort, it’s possible to work as many hours as you like without doing anything that will actually bring you in contact with a seller. Here are some of my own favorites:
- Perfect your website. Make it beautiful, informative, interactive, and fun. Just make sure you’re not driving anyone to it. (Note: this strategy works best if you also have to learn how to create a website in the process; this you can spend months just learning to code before you can even START on your site!)
- Make sure you have the perfect business name that reflects all of your personal values, is easy to make into a great logo, and will absolutely compel everyone who sees it to sell you their property. I’m sure if you spend just a few more hours on it, you’ll come up with it. Of course, once you do, you’ll find that someone else has already registered it in your state, but then you can spend a few more weeks thinking about it and come up with another one that’s just as good.
- Organize your desk, files, and office. It’s such a great feeling to have everything color-coded, labeled, and in its place, and yet it makes you no money at all!
- Find out everything you can about properties you don’t even know are for sale and have never seen the inside of. Think of the time-wasting possibilities! All you have to do is identify some vacant, ugly houses (MLS properties also work) and go to town! Be sure to comp them to find the after-repaired value, go to the courthouse to find out what liens are on the property, and spend hours tracking down the owner. Then, email your mentor and ask her for an opinion on whether you should offer cash, try to do a “subject to”, or buy with a lease/option or land contract. Make sure that you send at least 6 lengthy emails with 7 embedded questions each before you mention that you haven’t talked to the seller, don’t have any idea what the asking price or repair costs might be, and, in fact, don’t even know if the seller wants to sell!
- Call your other investor friends. You can burn at least an hour on the phone with each one discussing how there are no deals out there.
- Under NO circumstances allow anyone to motivate you to make offers!Do NOT attend association meetings, do NOT read motivational literature, do NOT listen to real estate CDs in the car, and do not ever, ever tear the shrink wrap off of the home study courses you’ve purchased! All of these things have an insidious effect on your psyche and your determination to avoid making deals. Those motivational speakers will convince you that your life can and SHOULD be better than it is…and the whole goal here is to stay exactly where you are! Group meetings lead to networking with successful local investors, which removes your convenient “there are no good deals in this market” excuse. And if you read books and listen to CDs, you might well fall into the trap of believing that this whole real estate thing isn’t that complicated, and that you can probably do it…which leads you to wonder why you’re NOT doing it, which just leads you to beating yourself up about not making offers.
- Be really, really picky about what you want. Limit your offer-making to properties that need no work, are in great neighborhoods, and that you know for sure you can get for 50 cents on the dollar or less.
- Do NOT put the supporting pieces of your business in place.If you’re a wholesaler, for instance, do NOT start to build a buyer’s list until after you’ve gotten an offer accepted; this way, you back out of the deal because you can’t find a buyer in the 3 days you’ve given yourself to do so. If you plan to buy and hold properties, don’t pre-apply for financing; wait until after you’ve gotten a deal under contract first. It’s a near-guarantee that you won’t get approved within the contract period, and you can get out of the deal under the financing contingency.
- Whenever possible, AVOID MAKING OFFERS! It’s an unfortunate fact that people who make offers make deals; the corollary is that if you don’t make offers, you will never make deals. If your goal is to avoid the stress of all that extra cash, income, and success that good deals add to your life, the simplest solution is to avoid making offers altogether. It’s a guaranteed way to succeed at being unsuccessful.