Getting Experience with a New Investment Strategy.
I had a great chat with a graduate of my Deal-Ready Documents Focus Workshop. He had a closing scheduled, and so we met up to sign the paperwork.
He was pretty excited because this purchase was his first using the Agreement for Sale creative real estate investment strategy. As we worked our way through the documents my client said, “I’m sure glad to get this one done, my other three are going fine.” I shook my head a little bit and said, “didn’t you just tell me this was your first Agreement for Sale deal?”
His reply reminded me of investing truths that we all know but sometimes forget. “Yes,” he said, “this is the first deal I negotiated but it has taken a long time to actually complete.” Naturally, I couldn’t resist asking, “why is that, what was the problem?”
He gave me an answer that had a few parts. Here’s a paraphrase of what he said:
The sellers really needed to sell. They were underwater on their mortgage; they had to sell the house and no one was buying. They liked me, I liked them and it was a wonderful, classic win-win deal.
But, when they took it to their lawyer, he told them that I was a scammer, he didn’t like the deal, it was probably illegal, and he wasn’t going to act for them. They called me, reported what the lawyer said, told me they trusted me, and that they still wanted to do the deal. I referred them to a different lawyer who understands Agreements for Sale, who didn’t scare them. Instead, the new lawyer provided explanations, support, and let them make their own decisions. Now this long process is almost over and here’s what I’ve learned.
Make sure your seller uses a lawyer who understands and, more importantly, supports Agreements for Sale—or any other creative strategy you are using.
I’m a personable guy and I established a trusting relationship with my seller. They knew I was on their side and believed I was doing my best to turn their awful situation into a real win-win. When we hit a few bumps our relationship allowed us to overcome the problems.
This was my first Agreement for Sale deal and part of the problem was that I was still a little unsure about exactly how it would work. My offer to purchase and financing schedule were a bit unclear. My second deal was much better. By the time I wrote up the third and fourth it was like I’d been doing it all my life.
Lessons Learned:
- The ‘other’ lawyer is critical for creative real estate deal.
Nothing kills a deal faster than a lawyer who scares the pants off his client with predictions of doom. Develop a list of real estate lawyers in your area who understand your strategy, give calm advice, and let their client assess the risk. Find a way to insist/ensure your other party use one of these lawyers. - Real estate is a people business.
Many of you will be dealing face-to-face without a realtor involved. Your deal-closing success percentage will rise dramatically once you understand and focus on understanding motivation and making sure the deal is a win-win. The result will be a trusting relationship that overcomes all bumps in the road. - The first time takes more time.
For any new strategy your first deal is scary, difficult, and often takes a while. Your second deal is 50% better. By the time you do your third deal, you will be comfortable with the technical process and much better able to focus on negotiations and relationship.
Understand and apply these three truisms
and watch your success rate go through the roof!
Buying or selling property in Alberta? Contact Barry now.
“Be creative” image by Ramdlon used under CC0 Public Domain.