Finding houses you can buy from motivated owners is the real key to being able to accumulate equities. No matter how many techniques you master for financing, renting, exchanging and selling houses; none of them are of any value unless you can apply them to real situations involving real properties and real people who will agree to do business the way you want to. To that end then, let’s see what we can learn about the process.
The first thing you should internalize is that you shouldn’t be looking for properties per se. Instead, you should be looking for owners who need to dispose of their ownership obligations. Ideally, they will be motivated by personal reasons other than greed or expectation of sale profits. Let’s dissect this concept to pursue its ramifications for the buyer:
One of the keys to success in any business is to avoid competition. If you can operate in a noncompetitive atmosphere, you can focus on expanding your assets and net worth rather than on beating out the other fellows for the few deals for which a transaction may be possible. The easiest way to avoid competition is to as much as possible avoid doing what all the other people are doing. You shouldn’t follow the crowd if you don’t want to wind up old and broke like the average American. If you want to achieve extraordinary success you must use extraordinary methods? What might they be?
The fastest way to distance yourself from the competition is to identify the most difficult way to make money, then become good enough at it to offer prospects a better deal. Let’s examine how most people go about buying houses.
First of all they leave all the initiative to others. They usually get a licensed broker or salesperson to show them properties that someone else has listed. They then make a conventional offer to buy for an amount at or just below the listed price with cash to the mortgage or with a new loan. Or some sort of junior lien or contract which incorporates various combinations of high payments and balloon notes over a short period of time.
Since the brokerage network is fairly efficient when it comes to finding buyers for houses, and the listing process educates sellers to expect an all cash offer at the time they list the property for sale, the home owner is often confronted by a variety of fairly similar offers from which to select. The entrepreneur who would make a ‘creative’ deal must compete with roughly similar pieces and terms or be shunted aside. The result is that he pays retail prices on retail terms with new loans for which he signs personally.
Almost everything about the above scenario is wrong when it comes to making money with houses. How can we rectify it? One way is to learn how to use brokers effectively. The other way is to avoid using at all.
BUYING WITHOUT BROKERS
But don’t despair if you must go it alone without a broker in your corner. The sellers won’t mind. Let’s face it, ninety percent of those who list their homes with a broker who’s a member of a multiple listing system rarely sees him or her once the listing agreement has been signed. They wind up dealing with total strangers anyhow. You’ll be able to save the home owners all this anxiety when they deal with you.
Your job is to explain this to the homeowner, and to build confidence in your presentation by having the proper forms available at hand to help you negotiate and document your deal. But, first, you’ve got to find the owners to talk to as efficiently as possible. That’s the real secret to just about everything else that’s in this book. Without a motivated seller, none of your creative negotiation and financing techniques are going to work well.
I first started out knocking on doors in the evenings and on weekends during periods when I thought someone would be at home. This worked well, and enabled me to present myself as both a buyer and a real estate agent to a lot of people, but it took a lot of time, and restricted my efforts to a limited period of time each week. I also experimented with the idea of leaving business cards at the various homes with a message that I’d like to speak to the owners if they wanted to sell. My handwritten message on the back of my cards read:
WANT TO SELL?
PLEASE CALL ME.
ANYTIME!
While this worked fairly well, it didn’t say enough. So I developed the ‘door hanger’ which is portrayed as Figure 2 in the Buying Houses from A to Z seminar manual.
I found it best to deliver about 200 of my door hanger calling cards between noon and 4 PM on Fridays while the occupants were at work. This helped me avoid fruitless conversations with curious onlookers. I placed cards in the most logical door that a person might use to enter the house. Usually the front door, except where there were carport doors.
This way, I’d spend Friday night and Saturday taking calls from motivated sellers and writing up contracts to buy or getting options.
This technique alone enabled me to buy literally hundreds of houses over a period of 5 years. In one period, I closed at least one purchase, and often more, every week for 153 straight weeks. You can also mail these cards by shrinking them down to postcard size. Or use newspaper carriers to deliver them.
See exactly what Jack put on his door hanger and learn many other ways to buy houses in Jack Miller's Buying Houses from A to Z seminar Manual.
