One of the primary reasons this blog exists is to help you save time as a real estate investor.
Time is our most valuable resource. If you haven't realized this yet—believe me, you will. It took me a few years to grasp how valuable my time actually was.
Why I Needed to Manage My Time
In mid-2011, I started experiencing some significant time constraints in almost every area of my life, and it all seemed to be happening at the same time.
- I had just enrolled in an MBA program.
- My business activity was starting to explode at an exponential rate.
- My automated systems were generating more leads than I could handle.
- I had gotten involved with a few other joint-venture projects that were requiring some significant attention to detail.
I hardly had any time to sleep, and my most important priorities (my wife and family) were having to compete for my attention.
Things were getting crazy, and my time was getting pinched in ways I had never experienced before. After getting pushed to the point where literally every minute mattered, I had to make some changes to start managing my time effectively.
Identifying the Biggest Time-Suck
One of the most time-consuming areas of this business was the research process. Unfortunately, this was an important step in every real estate transaction, especially when I was about to invest a significant amount of money into a deal.
In a perfect world, I would be able to invest only as much time as necessary to accomplish only what was needed at present. Since I know it's impossible to work at 100% efficiency, I tried to avoid in-depth research on each property UNTIL the seller has accepted my offer. Once this happened, then I could justify spending a lot more time digging into the details of each property.
But how could I possibly know what to offer for a property until I thoroughly researched it?
That's a good question, but a more important one is:
How can we know if we're dealing with a motivated seller in the first place?
Wouldn't it be great to know up front whether a seller is willing to work with us? I mean, let's get to the point here! Are they motivated to sell or not?
Finding a Motivated Seller
As I found out, it is VERY helpful to know this sooner rather than later. Instead of blindly researching dozens of deals and sending out 20-30 offers just to get one acceptance (playing the numbers game), I didn't have time to fish around for motivated sellers and hope for the best. I needed results fast!
If you want to know whether you're dealing with a motivated seller, you need to get very direct with them.
Whenever I start a conversation with a potential seller on the phone, I only have two objectives in mind:
- Objective #1: In the Seller's opinion, what is the FULL market value of their property? At this point in the process, accuracy doesn't matter. I'm just trying to nail down a starting point for understanding what the seller thinks their property is worth (if they have any opinion at all).
- Objective #2: Is the Seller willing to sell their property for 10-30% of their property's FULL market value (whatever number they quoted above)? I know, 10-30% is a ridiculous offer price. That's the point. How they respond to this question will tell me quickly whether or not they are willing to cut their losses and knowingly let their property go.
In other words, my brief conversation (3-5 minutes on the phone) would go something like this:
Me: “Tell me, in your opinion, what is the full market value of your property?”
Seller: “Oh, I don't know… maybe $200,000?”
Me: “Okay. If we could pay you cash, pay for all of your closing costs, and close on this transaction in the next 2-4 weeks, would you consider selling your property for $40,000?”
There are a couple of ways a seller could respond to this, and whatever their response is, the following steps are pretty simple.
Seller: “No, I won't take $40,000.”
Me: “Alright, if we could pay you cash, pay for all of your closing costs, and close in the next 2-4 weeks, what would be the absolute minimum that you would accept for your property?”
Me: “Thanks for your time. I hope you're able to find a cash buyer elsewhere.”
Seller: “Yes, I'll take $40,000.”
Me: “Alright, we'll continue to do our research on your property and if we can make you an offer, we'll send it to you within the next 7–10 days.”
Note how we're not making a commitment here. This ultimately boils down to a screening call. It is short and to-the-point; we aren't hiding the fact that we intend to buy properties for dirt-freaking-cheap prices.
If the seller isn't willing to play ball (and believe me, many of them will make that clear), they won't! As soon as you know the seller isn't willing to take your low-ball offer, get off the phone and move on to your next prospect.
Saving Time by Hearing “No”
Once you realize how much time you're saving by simply knowing whom you're dealing with upfront, you won't mind hearing the word “No” anymore.
Getting turned down quickly is actually a blessing in disguise because it means you can STOP wasting your time chasing after deals that will never happen. Instead, you can focus your energy on sellers who are actually motivated to sell.
Getting these answers quickly will save you a TON of time. You'll also find that your acceptance rate (when you actually do send out the offer) will go through the roof.
Why? Because you already know the seller's answer before you send them your offer.
I used to avoid these kinds of “direct” phone conversations because, frankly, I was scared. I didn't want to offend the seller or deal with their wrath on the phone. It wasn't until my time was being seriously threatened that I learned to start getting very direct with these people.
I am a serious buyer, and I don't waste people's time (especially my own). If the seller and I are never going to see eye-to-eye, it's in both of our best interests to figure this out as soon as possible. That way, both parties can stop holding out for something that is never going to happen.