Real Estate Investment Advisory – Learn from My Experience

The moral of this story is best said to be “No good deed goes unpunished”. A new investor called me and said she had a deal with a potential $30K profit. As a Realtor®  she had worked her way through a short sale and found a cash buyer for a property in a distressed area.  The original loan amount was $149,000 and it had been shorted to $55,000. She had two hard-money lenders who would finance the deal and since she had a cash buyer there wouldn’t be any seasoning or markup issues. The closing agent for the seller’s lender wouldn’t allow a double closing so she had to borrow hard money to close the deal because her buyer couldn’t close until two days after the buy side had closed, so hard-money for a short time was the best answer.

She even had a backup buyer for $5K less so the deal was seemingly cast in stone. Remember the word “seemingly” because the trouble started just before the first closing when both hard-money lenders decided they wanted to be transactional funders only. This meant that the end-buyer’s money had to be in the account before they would close.

Frankly, it seemed cruel that these hard-money lenders had decided to change the rules. No longer did they want 14% and three points, now both wanted 50% of the profit. The Realtor® /investor was panicked and called me crying, and couldn’t stop crying. She had sacrificed everything including selling her car to get to this point. So, I made an emotional decision and simply said “I’ll close it for you.” I have to admit I definitely felt special that I could help this person. Yeah, wait for the rest of the story!

I went to work doing my due diligence on the deal and noted that the investor had only a $1,000 deposit.  I had never heard of the closing agent but he was an attorney (later found out he wasn’t licensed in Florida). I asked for the HUD-1 to review it before the closing and didn’t get a comfortable feeling about why I couldn’t get a copy.

Undaunted, I went to see the property on the way to the closing and found out the rehabber who did work on the property and had lived in it, did a really, really bad job. Not to go into details but there I stood in this rag-tag 30% finished property and said, “I need to speak to the buyer”. I called and spoke with her and asked how many times she had seen the property. She said three times and that she had someone to do all the work needed. Her grandmother had the money for her and had to cash in a CD that was due in a couple of days.

I kept moving forward to the closing and next realized that the address of the closing was a title company. However, the closing agent (unlicensed attorney) just comes in to use their conference room. When I finally got to see the HUD-1 I noticed that the broker for the deal was getting a 6% commission and the Realtor® /investor works for him. That bothered me but I sat and saw the Realtor® /investor sobbing when I started resisting about closing.

I kept getting re-assured the buyer was closing in two days and suddenly she made me a “partner in the deal” for a 50% interest. So I proceeded to close, but I decided not to lend any hard-money, but rather buy the property and after it was sold to just take “my” part of the profit. That way I wouldn’t have to foreclose if something happened. Note – this was the only clear vision I had in this entire deal. It was probably a change in my blood pressure meds that had me previously brain-fogged.

change your life mentoring click button j 300x236 1Needless to say, the first and second buyers disappeared, no forfeited deposit ever came to me.  I was busy doing deals so time flew by. The Realtor® /investor was sending “buyers” to the property until one day she called and said “There are bees in the house!”

Bees are beautiful creatures of nature but not in a house you are trying to sell. The first bee removal cost about $150 and she paid for it. The second removal cost $595.  I paid for it because by this time she was not sending prospects by and now I realized that I really, really owned the property. Unfortunately, a few of you know this dilemma.  I could rehab the property and sell it for about $25K more than I paid for it or I could pay someone to do it for me, risk a worker getting injured and financial ruin, but either way I would lose money on the deal. I opted to sell, take a loss and put it behind me.

I hadn’t tried this very specific method of selling a property in probably five years. You’ll read about it in Part 2 of this article. Also in Part 2 you’ll see another “life lesson” that you can use in your everyday business to create a flurry of buying activity.

To your limitless success,

Dave Dinkel

Real Estate Mentor Program Founder

Visit davedinkel.com for full privacy policy, terms of use, etc.  Be sure to contact us through the website at davedinkel.com if you have questions or concerns ([email protected]).  Results mentioned in this presentation and any video, article, and/or material related to Dave Dinkel and his associated businesses are not typical nor are a guarantee of any earning potential.  No advice is to be construed as legal, accounting, or professional advice EVER.  Please consult related licensed and qualified professionals before taking any action.  No person(s) mentioned in the articles and /or shown on videos received compensation in any form for their opinions.

Real Estate Investment Advisory – Learn from My Experience

The moral of this story is best said to be “No good deed goes unpunished”. A new investor called me and said she had a deal with a potential $30K profit. As a Realtor®  she had worked her way through a short sale and found a cash buyer for a property in a distressed area.  The original loan amount was $149,000 and it had been shorted to $55,000. She had two hard-money lenders who would finance the deal and since she had a cash buyer there wouldn’t be any seasoning or markup issues. The closing agent for the seller’s lender wouldn’t allow a double closing so she had to borrow hard money to close the deal because her buyer couldn’t close until two days after the buy side had closed, so hard-money for a short time was the best answer.

She even had a backup buyer for $5K less so the deal was seemingly cast in stone. Remember the word “seemingly” because the trouble started just before the first closing when both hard-money lenders decided they wanted to be transactional funders only. This meant that the end-buyer’s money had to be in the account before they would close.

Frankly, it seemed cruel that these hard-money lenders had decided to change the rules. No longer did they want 14% and three points, now both wanted 50% of the profit. The Realtor® /investor was panicked and called me crying, and couldn’t stop crying. She had sacrificed everything including selling her car to get to this point. So, I made an emotional decision and simply said “I’ll close it for you.” I have to admit I definitely felt special that I could help this person. Yeah, wait for the rest of the story!

I went to work doing my due diligence on the deal and noted that the investor had only a $1,000 deposit.  I had never heard of the closing agent but he was an attorney (later found out he wasn’t licensed in Florida). I asked for the HUD-1 to review it before the closing and didn’t get a comfortable feeling about why I couldn’t get a copy.

Undaunted, I went to see the property on the way to the closing and found out the rehabber who did work on the property and had lived in it, did a really, really bad job. Not to go into details but there I stood in this rag-tag 30% finished property and said, “I need to speak to the buyer”. I called and spoke with her and asked how many times she had seen the property. She said three times and that she had someone to do all the work needed. Her grandmother had the money for her and had to cash in a CD that was due in a couple of days.

I kept moving forward to the closing and next realized that the address of the closing was a title company. However, the closing agent (unlicensed attorney) just comes in to use their conference room. When I finally got to see the HUD-1 I noticed that the broker for the deal was getting a 6% commission and the Realtor® /investor works for him. That bothered me but I sat and saw the Realtor® /investor sobbing when I started resisting about closing.

I kept getting re-assured the buyer was closing in two days and suddenly she made me a “partner in the deal” for a 50% interest. So I proceeded to close, but I decided not to lend any hard-money, but rather buy the property and after it was sold to just take “my” part of the profit. That way I wouldn’t have to foreclose if something happened. Note – this was the only clear vision I had in this entire deal. It was probably a change in my blood pressure meds that had me previously brain-fogged.

change your life mentoring click button j 300x236 1Needless to say, the first and second buyers disappeared, no forfeited deposit ever came to me.  I was busy doing deals so time flew by. The Realtor® /investor was sending “buyers” to the property until one day she called and said “There are bees in the house!”

Bees are beautiful creatures of nature but not in a house you are trying to sell. The first bee removal cost about $150 and she paid for it. The second removal cost $595.  I paid for it because by this time she was not sending prospects by and now I realized that I really, really owned the property. Unfortunately, a few of you know this dilemma.  I could rehab the property and sell it for about $25K more than I paid for it or I could pay someone to do it for me, risk a worker getting injured and financial ruin, but either way I would lose money on the deal. I opted to sell, take a loss and put it behind me.

I hadn’t tried this very specific method of selling a property in probably five years. You’ll read about it in Part 2 of this article. Also in Part 2 you’ll see another “life lesson” that you can use in your everyday business to create a flurry of buying activity.

To your limitless success,

Dave Dinkel

Real Estate Mentor Program Founder

Frequently Asked Questions

1. What Should I Do If a Seller Ghosts Me?

If you feel you have been ghosted, act decisively and quickly. If you have tried texting and calling, it’s time to drive by the seller’s location. I always take the recorded Notice of Interest or Memorandum of Contract to leave, so the seller knows it exists. Go by at a time when you know they will be there and don’t be confrontational, just get the facts.

In our experience with new investors, the chances of losing a deal with no contract is likely over 85%. Verbal commitments do not apply in contract law; get everything in writing, especially contract changes.

Different ‘gurus’ have different opinions, but our experience is finding motivated sellers and then a buyer for your deal. Ideally, you should be finding motivated buyers from day one, so you are ready when you find a seller. Buyers are easier to find as you can see at https://davedinkel.com/products/

Prevention only comes about by thinking a Black Hat wholesaler will be coming after your deal. First, educate the seller that an unscrupulous investor may come by and illegally offer more money, have the seller sign your “Notice to Homeowner,” stating that he understands he cannot accept another offer.

There is nothing illegal about changing their mind, it is called seller remorse and occurs about 25% of the time. However, if they have signed your contract, it can’t be cancelled for any reason unless acceptable to the investor/buyer.

If price is an objection, you need to find out how important it is to sell fast and for cash. If the seller isn’t under a time constraint, has a money issue, or has a personal dilemma, he may not agree to the price you need. Offer to help move and build it into your price before you make your offer. However, never give the seller money; only pay the moving company, and only after closing (escrow with a closing agent). If fear is the seller’s issue, break it down into what the real problem is and answer their objections one at a time.

You can get to the root of motivation for a seller by asking a few questions. First, “Why are you selling?”, “How soon can you close?”, and Are you ready to sign an AGREEMENT today, if not, what do I have to do to make you comfortable?’. The answers to these questions will determine the truth about your seller’s motivations.

The best times to involve your attorney in your deals are to have him review your contracting, review the signed contracts from the seller and end buyer, have him open escrow and start the title work, negotiate with city or counties for lien reductions or mortgage payoffs with lenders, and to close the transactions.” Your attorney is not the adversary; it’s the opposing party’s attorney who is a deal killer, and having your attorney allows him to help overcome this obstacle.

The key to successful prospecting and bringing back deals that didn’t close is to follow up until the property is transferred in the public record. Some of our deals have been where the seller came back to us months and years later because they felt comfortable with us and not the other “pushy” investors who contacted them.

Your contract’s most important clauses are inspection period (as long as possible), when the EMD must be deposited if at all, your ability to access the property, any added clauses specific to the property that will protect you against seller claims later that were verbal only.

Visit davedinkel.com for full privacy policy, terms of use, etc.  Be sure to contact us through the website at davedinkel.com if you have questions or concerns ([email protected]).  Results mentioned in this presentation and any video, article, and/or material related to Dave Dinkel and his associated businesses are not typical nor are a guarantee of any earning potential.  No advice is to be construed as legal, accounting, or professional advice EVER.  Please consult related licensed and qualified professionals before taking any action.  No person(s) mentioned in the articles and /or shown on videos received compensation in any form for their opinions.