The 6 Key Elements for a Successful Real Estate Purchase Negotiation

Understanding how to conduct a successful real estate negotiation can be the difference in finding and securing great properties.  Every real estate transaction involves negotiation between the seller of the property and the buyer.  As a new real estate investor, you want to secure the property at a price that builds in both short and long-term profits.  These are your objectives.  The seller, on the other hand, has different expectations.  He undoubtedly expects to sell his property for the highest price possible.  A great negotiator has the skills to bring the objectives of the buyer and the expectations of the seller into balance.  When this happens, you have a true win/win proposition.

Is it possible to always match the objectives and expectations?  The answer is no, and the landscape is littered with the carcasses of failed real estate failed negotiations.  You don’t want to be one of them.  Your goal should be to learn simple ways to negotiate a better deal while still meeting the major expectations of the seller.

Once you have identified a potential property, how do you proceed?  Let’s compare the negotiation process to a campaign to win a war and reach a peaceful agreement, because in essence, that is what we are doing.  There are six key elements for a real estate purchase negotiation campaign.

 

Key Element #1 – Define Your Objectives

Everything starts with your overall objective in purchasing the selected property.  Why did you select this specific property?  What specific strategy had you selected to further your investment goals.  Perhaps you based your purchase on rental properties and this property seemed to meet the requirements of a good rental property.  Maybe you identified the property as a good property for doing some fix up repairs and reselling the property, or possibly you thought the property was a potential long-term property for a buy and hold strategy.  Regardless of the reason you identified the property as ideal, you now need to define the price and terms you would offer for the property.  In order to do this, you will need to know a lot more about the property, the seller, and the market in general.

Let’s assume that you are following a proven investment strategy and that you have set some preliminary objectives as to the initial price you would like to offer, along with certain basic terms, conditions and timetables.   Once you have done this, you are ready to implement the next key element of the negotiation campaign.

 

Key Element #2 – Prepare Your Attack

Preparation in war is essential for victory and the same is true when preparing to negotiate a purchase agreement with the seller.  The initial agreement is called An Earnest Money Offer to Purchase and will be the basis for all further negotiations.  Nothing should ever be left to a verbal understanding.  If nothing is written, nothing is agreed to.  When preparing your attack, you are actually looking ahead to the purchase of the property.

  1. Prepare Your Team. The first thing you are going to do is to prepare your real estate purchase team. If you are going to be successful, you will need to add additional members to your team.  Besides yourself, you need to understand the role of the buyer’s agent.  A good buyer’s agent will represent you in the purchase process.  The buyer’s agent is NOT the listing agent.  The listing agent of the property is the seller’s agent, and as such, will represent the seller in order to get the highest price possible for the property.  This is the fiduciary responsibility of the listing agent, but it is not necessarily in your best interest.  The buyer’s agent will be the individual who will actually present the earnest money offer to the seller or the seller’s listing broker.

SEE ARTICLE: 5 Key Factors that Will Help You Understand the Importance of a Buyer’s Agent

As you prepare for the attack, you will also need to identify other potential professionals besides your buyer’s agent.  You may need a real estate inspection, an engineering survey, or construction help to remodel or fix up the property.  If such is the case, prepare by finding individuals who can complete these tasks.  It’s also possible that you will want to verify zoning or legal issues and may need to contact the proper city official.

  1. Complete Investigation of Property and Seller. Your investigation is much more than a simple viewing of the property.  You must decide if the property will meet your major investment objective once the property is purchased.  In addition to meeting the overall objective, you must determine if there are problems of any kind that could hinder your investment objective.  These problems could be related to the property or they might be related to legal or zoning issues.

Perhaps even more important than the property itself is information concerning the seller and his or her reasons for selling the property.  This information can be ascertained by finding out the answers to the following questions:

  • Why is the property for sale?
  • How long has the property been listed for sale?
  • Are there any other offers on the property?
  • What are the encumbrances and mortgages outstanding on the property?
  • Are all payments current and being made on time?
  • How anxious is the seller?

The answers to these questions may be gathered by having your agent check multiple listing service records and by meeting with the listing agent.  The more information you have on both the property and the seller, the better prepared you will be when drafting your offer to purchase.

  1. View the Property. Every time you view the property, you should be with your agent.  There are some caveats that you should keep in mind when inspecting and viewing the subject property.
    • Act Interested but Not Overwhelmed. It is important that the seller or the seller’s agent understand that you are a credible buyer.  What you don’t want to do is to alert the seller that you think the property is a “must have” property.  If you do this, your ability to negotiate is diminished.
    • Measure and Pace Off Distances. Bring a tape measure with you when you look at the property and measure distance and walls.  It shows that you are serious.
    • Keep Body Language in Check. Your body language can alert the seller to you being over anxious.  Even though you think the property is ideal, don’t say it aloud or advertise the feeling through body language.
    • Ask Good Questions. In most cases, you may already have the answers through your prior investigation, but go ahead and ask questions that show you are serious.  There are 5 specific areas that you should address:
    • Take the time to find out how old the appliances are and what repairs have been needed.  Appliances are often an expense that needs to be taken care of immediately after purchase.
    • Recent Repairs. If there have been repairs made to the property, you need to make sure that they are identified.  This also goes for any repairs that need to be done before closing.
    • City Ordinances. Are there legal restrictions that will inhibit or stop you from using the property for your investment strategy?
    • Not only do you need to know what the mortgages are, but you must know if the property is facing foreclosure proceedings of any kind.
    • REASON FOR SELLING. You need to know if the seller needs all the money for a specific purpose, along with the timing requirements for closing.
  1. Draft the Initial Offer to Purchase. This is your first offer and may not be your last offer.  When drafting this offer, make sure that your agent understands what you are trying to accomplish.  Even though you may be willing to pay more and offer better terms, it is better to keep this information to yourself.  Before you tell your agent everything, make sure that you have chosen the best buyer’s agent possible.
    • Price. The price you put on your first earnest money offer is not usually the highest price you will be willing to pay.  You should have investigated what similar properties have sold for and offer a competitive, but lower price.  Unless there are other offers on the property, it is usually best to offer something less than the full price.
    • Terms. The terms of purchase can be even more important than the price.  If the seller is willing to carry the financing of the property, terms are extremely important. The following items should be addressed within the offer to purchase:
    • Who is going to pay for the appraisal? Once the appraisal is completed, what recourse do you have if the appraisal is too low?
    • Inspection of Property. When will this be done and what outstanding issues should be initially addressed in the offer to purchase?
    • Furniture and Personal Property. If you see something on the premises, make sure that you address it specifically in the offer.  Don’t assume something is staying unless it is documented in the offer.
    • Possession and Closing Dates. If you want possession at some date prior to closing for doing repairs or some other purpose, you need to spell it out in writing.  Make sure the closing date is reasonable.  Don’t include the phrase or clause “time is of the essence”, as this is detrimental to you the buyer.
    • Subject to Clauses. If your purchase is subject to a zoning change or approval, put it in the document.  If you are waiting for financing approval, make the purchase “subject to financing.”  These “subject to clauses” are your exit strategy during your due diligence period.
    • Earnest Money Deposit. The actual deposit should show your interest and ability to close.  Make it a reasonable amount and subject to closing.

 

Key Element #3 – Make the First Move

The ball is now in your court and you are responsible for making the first move.  That move consists of actually making the offer and presenting it to the seller or the listing agent.  It is important that you understand who the other players are and what they are going to do.  You, as the buyer, should not present the offer.  It should be presented by your agent.  Your agent is really like the general on your team.  He or she is going to lead the attack by presenting the offer.  There is a great deal of power inherent in third party negotiating.  When your agent (the general) presents the offer, you eliminate the problems of becoming personally affronted if the offer is rejected in part or in whole.

The seller has different expectations than your objectives.  When the seller receives the offer from your agent, he or she is going to evaluate if the offer is something that can be accepted in whole or in part.  You need to know if you are dealing with one seller or if there are multiple people or entities who are listed on the deed to the property.  You also need to know what timing requirements must be met.  All of this information should have been gathered during the attack phase of the campaign.

When your agent presents the offer, he or she will only present what is written on the offer.  You don’t want your agent to express anything that is not written.  In no case should your agent let the seller know exactly what you will do and what you will pay.  He or she may express the point that something may be possible, but only when you have said that he could do so.  When you selected your agent, you should have chosen a professional person in attire and dress.  The more credible your agent appears, the more credibility you will have.

 

Key Element #4 – Move Out of the Way

Now it’s time to let the negotiation process get going in full steam.  Your role should now be to step back and let your agent do the negotiating.  The value in this is that there is nothing personal and your agent will keep it from being so.  Some buyers have wanted to go with the agent to present the offer.  This is a mistake.  As long as you allow the buyer’s agent to present the offer, you can evaluate and analyze any counter offer.  If you are with the agent, you may be put in the position of making a decision without the time to decide if the decision is in your best interest.

It’s wise to give your agent as much information as you can to show that you are a credible buyer.  If you have a pre-approval for financing, let your agent have the information.  Another thing you can do to build credibility is to allow your agent to give specific personal information about yourself.

 

Key Element #5 – Manage the Battle

Even though your agent is now acting as general and presenting the offer, you are still in charge of the battle and the negotiation campaign.  Any decision as to the actual offer and subsequent counter offer must come from you, the buyer.  When a counter offer is drafted, the seller is now actually writing a new offer to sell you the property according to the new terms in the counter offer.  In general terms, the underlying earnest money to purchase agreement will be altered and subject to the new terms and price in the counter offer.  When you receive the counter offer, you can accept it as written or you can make a new counter offer.  This process goes on until the buyer and seller agree to the final terms of purchase.

This process is totally in your hands.  Be careful that you don’t start negotiating with yourself.  Don’t be drawn into the situation when there are a number of different counter offers and you become confused and offer something you didn’t mean to do.  If this becomes the case, it is better to draft a whole new document and start over.

Once the counter offer battle is underway, it is important that you establish a point when you are willing to just walk away.  Never feel like you are being forced into a purchase.  On the other hand, never become so emotionally attached to a property that you feel you absolutely have to have the property, regardless of the price and terms.

 

Key Element #6 – Sign the Peace Agreement

In reality, the final agreement will be a peace agreement because you have reached the point when the buyer and seller have balanced objectives and expectations.  Once both parties reach a final agreement, the signed document will be used to draft the closing documents as all underlying “subject to clauses” are eliminated.

As you can see, the negotiation process doesn’t mean that there is a winner and a loser.  When negotiations are done properly and professionally, we end up with a true win/win situation.  Proper planning is the key to a prosperous future, and it is key to success when negotiating for the purchase of any real estate property, and if it is done correctly the expectations and objectives of both parties are balanced.  When you understand the six key elements of a good real estate negotiation, you will be well on your way to wise and successful real estate purchase.

8 Key Points Every Real Estate Entrepreneur Must Learn for Writing Killer Real Estate Ads

Eventually every real estate investor will be in the position of selling or renting real property.  At first glance, this process may seem simple and straight forward, and it really should be.  Unfortunately, far too many new, as well as seasoned, entrepreneurs forget the importance of learning how to write an advertisement that will produce immediate and positive results.  We call these highly effective ads – Killer Ads.

Regardless of whether you are selling your first property, renting your first unit, or looking for investors like yourself, you will eventually have to learn how to write ads that generate interest, prompt action, and create a sense of urgency.  Let’s look at 8 key points or principles of effective advertising that have been proven to work in real estate, time and time again.

 

Key Point #1 – Buyers Buy Benefits

There is a guiding rule you must learn and retain if you expect to have success in writing effective real estate ads.  This principle is true whether you are writing copy for a print ad, developing a podcast, or creating a video.  Buyers are the people to whom you are directing your ads, and these same individuals are prompted above all else to the benefits accruing to them.

This means that you should concentrate your ad to highlight and promote the benefits the person will receive if they respond to your ad.  We call this rule the BBB of advertising – Buyers Buy Benefits.  You can list all the features of any particular product, but unless the potential buyer can visualize specific benefits he or she will receive, you are wasting your time.  This does not mean that you should forget about the features of your specific property, but rather you should express those features in terms of benefits to the buyer.

Consider the example of an individual who is renting a three-bedroom house near a nice community park.  Don’t just state in your ad that there is a park nearby.  Instead, use terms that show how important this park might be to the prospective family with three young toddlers. You might state in your ad something like: “A beautiful green and quiet park with new and dependable equipment is only five short minutes from the unit which will allow you total peace of mind while your children are happily playing in a safe and protected area.”  Yes, this might take a few extra words, but the benefits are dramatic.  People don’t care about a park unless they can see that it will benefit them.

This same BBB rule applies to every ad or announcement you might make as a real estate entrepreneur.  When thinking of how to apply the BBB rule you should always put yourself in the place of the potential buyer, renter, or joint investor.  Ask yourself, “If you saw the ad, would you respond?”  If the answer is yes, then you probably have a decent ad.  Write the advertisement in a way that would appeal to you if you were the person listening to or viewing the ad.  The principle works when you advertise in a paper, develop a website, write a blog, or create a video.  Benefits sell!

 

Key Point #2 – Incorporate Action Words into Your Ad

Another way to describe Action Words is to consider them to be non-passive in nature.  The word “is” becomes a passive word.  When you write an effective ad, your goal is to get the listener, reader, or viewer to take a specific action.  Unless you begin by incorporating non-passive words in the ad itself, the final action is very likely not to take place.

Let’s examine a simple phrase and then consider how we might change it.  If you were once again going to place an ad to rent a nice three-bedroom house, you might be tempted to say something like, “Nice three-bedroom, two bath-home for rent in nice area.”  In fact, this might even be your headline for the ad.  It’s true that you have stated some information about the property, but you certainly haven’t prompted the reader to go much further.

How then, do you incorporate action words into the same ad?  Start by using words that connotate action.  You want the reader of the ad to see some action taking place.  You might say something like, “Open the massive front door and walk into a foyer leading to three tastefully decorated bedrooms.  After passing the door to the first large bathroom, you will be amazed at the size of the second sizeable open bathroom.”  You will notice that we used words like, “open,” “walk,” and “pass”.  These are only examples, but they illustrate how we now can visualize actually seeing and experiencing the three-bedroom, two-bath home.

Action words should be used throughout the copy of the entire ad, but they are critical when the reader first starts to read.  Later we’ll talk about the importance of action words in the headline of the ad.  Remember, that you want the reader, listener, or viewer to accept a call to action, and the best way for this to take place is for the reader to experience action in the ad itself.

 

Key Point #3 – Base Your Ad on Emotion

The second element of the copy of your ad is the emotional impact on the reader, listener, or viewer.  Love and hate are certainly words that create emotion.  But we constantly use other words relating to those same emotions.  Anger, fury and rage are all emotional words.  The same is true for words like adore and worship.  Whatever emotion you are attempting to create will give you words to use.

People have been proven to act faster when emotion is involved.  Chances are that your potential buyer or renter is just browsing and is not yet emotionally involved in making any kind of decision.  When this happens, you need to spur the reader, listener, or viewer to action.  An effective way to do this is to use emotional triggers – something that initiates action.  If your reader experiences an emotional reaction of some kind, they will continue reading or viewing your ad.  Common negative emotional triggers are fear, anger, and disgust, while positive emotional triggers are love, compassion, and empathy.

When you write your ad, you need to decide which emotional trigger you want the person to act upon.  Let’s go back to renting out your three-bedroom, two-bath home.  If you want to stand out and appeal to buyers who put a priority on family life and children, you would probably want to appeal to positive emotional triggers.

On the other hand, if you think security and safety are paramount in getting the right renters, then negative emotional triggers might work better.  Let’s imagine that you are advertising an apartment in an urban environment where recent headlines have been centered on neighborhood crime.  You might consider starting or including copy such as, “Leave your security concerns at the front door of our ultra-safe, state-of-the-art luxury two-bedroom apartment.  Moving quickly to the first 2nd floor bedroom, you will be thrilled when you see that the windows protected with high security steel frames…

The emotional words you select should be intertwined throughout your headline and copy of the ad itself.  The more emotion you elicit, the more effective your ad will become.

 

Key Point #4 – Use Easy-to-Understand Language

Your reader, listener, or viewer must be able to understand your ad.  They must not spend time admiring your prose or trying to interpret what you are saying.  The ad must elicit a positive call to action, and this will not be possible if the person is either spending time trying to understand what you are saying or admiring the words you use.

The best way to approach this is to consider how you would talk to your best friend or spouse.  You wouldn’t talk down or be condescending to the other person, and you certainly don’t want to do that when writing an ad.  Be careful to adjust your language and wording to appeal to your potential buyer or recipient of the ad itself.  If you are selling a fix-up property that can potentially be repaired by the buyer, then you want to use words that are commonly understood by such individuals.  The ad might use words that are frequently used by contractors or individuals who buy such properties.  Flowery words probably wouldn’t work in this circumstance.

People read and scan ads quickly.  You will want to grab their attention and keep it centered on what you are saying.  You already know that you will use action and emotional words, but you will also want to use words that aren’t overly long or complicated.  The military uses the acronym “KISS”, which means Keep It Simple Stupid.  The same thing can be applied to writing ads that work.  Simple is better because it is easy to understand.

 

Key Point #5 – Identify a Problem and Then Solve It

Once again, you must understand that you are writing an ad to solve a problem, and that problem should not be to sell or rent your property.  Instead, the problem that must be solved is the problem of your reader, listener, or viewer.  Let’s go back to our example of renting a three-bedroom apartment.  Yes, you have a problem of obtaining a great renter, but that problem is immaterial.  The real problem is that there is a family out there that is looking for a three-bedroom, two-bath home and they haven’t found it yet.  You must put yourself in the position of this family who is searching for your rental.  They don’t know it yet, but that is really the problem.

After you identify the true problem, writing the copy is much easier.  Everything you write, say, or do should be based on presenting the solution to the problem.  If you were the potential renter, what would you be looking for in a property?  Would it be storage, access to schools, large and spacious rooms, or a great neighborhood?

As you create the ad, spend time assessing your property to see how it might provide the solution to problems.  Then when you actually write the ad, present the solutions to the problem in terms of benefits for the new renter.  This same principle of finding solutions for the eventual reader, listener, or viewer is true regardless of the type of ad that you are drafting.  People tend to make decisions based on personal needs, and those needs are based solutions to existing problems.  Once you identify the reason someone needs your property, you are half-way to the finish line of a true “killer ad.”

 

Key Point #6 – Develop a Headline that Includes Action Words and Emotion

The first thing the reader, listener, or viewer will see is the headline to your ad.  Unless the headline does its job, nothing else will probably happen.  An ineffective headline will almost always ensure that nothing else takes place.  The headline must accomplish three main things – Grab their interest, create a need to learn more, and offer a potential solution to that already existing problem.

Emotion and action words should be part of every headline.  If you are creating an ad posted online, the words in your headline are critical.  We call these words – Key Words.  The search engines online use them to feed your ads to viewers online.  Key words are not just unique to the digital and online world.  People pick out key words in print and all advertising, and this being the case, we need to use words that relate to the solution to the problem.

Because the headline is so important, you should choose a headline for your ad that is from 6 to 12 words in length.  This works online as well as in print and visual media.  Two or three words are not enough to set up the purpose of the ad.  Once again, we want to make the headline strong and emotional.  Another purpose of the headline is to present a possible solution to a problem.

The headline is designed to be the first thing the reader, listener, or viewer sees.  When writing real estate ads, your headline must set up a potential call to action.  Everything you are doing when crafting an ad is based upon a final call to action.  You want the reader, listener, or viewer to do a specific item.  If you are selling a property, your ad should probably be to get the person to come and visit and view the property.  Yes, you want to sell the property, but the immediate action you want to take place is seeing the property.  Make sure your headline keeps the person’s interest and leads to your immediate objective.

 

Key Point #7 – Build Your Copy on Fact Not Fiction

Ads vary in size and length, but strong copy is essential in all advertising.  Many new entrepreneurs are tempted to exaggerate the benefits of their property.  It’s great to emphasize the benefits of your particular property, but it’s still essential to create credibility as part of your ad.

Let’s go back to our example of renting out a three-bedroom home.  If our specific property had an unfinished basement with framed in rooms that eventually could be used as bedrooms, you wouldn’t want to say that it had additional bedrooms.  Instead, you might say that the basement is unfinished but is framed in.  It could be used for storage which might provide more space in the existing bedrooms.  If the person who sees your ad, comes to view the property and sees that you have mislead them, then your credibility is destroyed.  When this happens, the chances are good that nothing else will take place with your potential renter or buyer.

Tell the truth and just emphasize the good points.  Don’t forget to write copy with emotion and action words.  The important part of all the copy is to get to the call to action.

 

Key Point #8 – Make the Call to Action

We must make a call to action.  We want the viewer to do something.  If all the viewer does is glance at the ad, you haven’t done your job.  If the viewer reads the headline and then reads the whole ad and moves on, you haven’t done your job.  What you want the viewer to do is to take some kind of action when they finish viewing the ad.

A call to action should contain action verbs and directly ask your reader, listener, or viewer to do a specific thing.  You may want them to act immediately and call you on the phone.  Perhaps you want them to attend an open house.  Regardless of the specific reason you wrote the ad, now is the time when you want the person to take action.

There are several ways to set up the call to action.  Urgency is always a factor to include in your copy that sets up the call to action.  It might be created in the copy of the ad or in the call to action itself.  Let’s consider our rental of a three-bedroom house.  Maybe you might want to say something like, “Applications will be accepted on a first come, first reviewed basis.”  This would indicate that there is a large demand for the property and that urgency in acting is important.  This principle of limited availability works in all advertising.  When I was selling an 11 year-old washer and dryer I wanted to emphasize the point that there was only one.  I remember writing, the first person with cash takes the washer and dryer.  It worked and it worked well.

The word “free” has been proven to be the most important word in advertising, and it certainly works with writing a call to action.  Once again, let’s use our example of renting our three-bedroom house.  How could we use “free” as part of our call to action?  Maybe you could offer a month free rent if the person moves in immediately.  Instead of saying those words, we might be better served by stating, “If you’re application is selected to rent the property, and you’re willing to mow the lawn twice a month, we will give you one free month’s rent and reduce your rent by $25 a month.”  The truth is that we had raised the rent already and could afford to reduce it.  Furthermore, the statement implies scarcity by having to be selected.  And finally, there is a reason for giving the month free – taking care of the lawn.  We haven’t destroyed our credibility but have created urgency and limited availability.

The call to action is the most important part of your ad.  Unless you get the person to actually do something, the ad is wasted.  Make sure you know exactly what you want your reader, listener, or viewer to do and then make a call to action that prompts the action to occur.

These 8 key points will help you create an ad that can work with virtually all advertising and especially in real estate.

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The attendees scored it a perfect score on “would you recommend the event to others” 100%

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This event was focused on stock and options training.

The team did an amazing job with the clients while in Utah.

 

Here are just a few of the comments off the survey forms:

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5 Key Factors that Will Help You Understand the Importance of a Buyer’s Agent

Every new real estate investor soon comes to grip with the realization that the purchase of a property can be a daunting and sometimes complicated process.  Does everything start with the actual offer on the property?  Sadly, the answer really starts much sooner.  Before you ever purchase a property, you need to be able to determine if the property in question is the best property and if the price you are willing to pay is the best price.  Assuming that it is the right property, the price then becomes even more important.

It’s entirely possible that you have heard of a “buyer’s agent” and been a little confused.  Many new real estate investors mistakenly believe that if you automatically call the number on a listing sign, you will have an agent that will work in your behalf.  Nothing could be further from the truth.  That agent has signed a contract to work for the seller and to do everything in his or her power to represent the seller.  Nowhere in such listing contract does it say that the listing agent will work to represent the purchaser of the property.

It’s time to understand just how important a good, well-qualified, and knowledgeable buyer’s agent can be.  The term “agent” comes from the concept of “agency” which generally means an action or intervention to accomplish a certain result.  Thus, a buyer’s agent refers to the action of purchasing a property for the benefit of the buyer.  When you engage a buyer’s agent you are engaging someone who is going to work for you, negotiate for you, and stand in your best interest.

As a real estate investor, you should ask yourself if you really need a buyer’s agent.  In order to answer that question, step back a moment and ask yourself these three questions:

  • Do you want to lower the purchase price of the subject property?
  • Are you confident that you can negotiate the best purchase price possible?
  • Do you know who is representing you in the transaction?

Once you answer those questions, you will probably come to the conclusion that you might need additional help to secure the best deal.  That help can come through a well-qualified buyer’s agent.  If you are ready to become a better real estate professional who secures the best deals, you need to consider the following factors about a real estate buyer’s agent.

 

Key Factor #1 – Understand the Benefits of Using a Buyer’s Agent

There are major benefits a real estate investor can receive when using a knowledgeable and well qualified buyer’s agent.  The only real negatives generally appear when an investor has chosen an agent who is not knowledgeable or qualified.  With that caveat in mind, let’s look at several ways a buyer’s agent can benefit you, the purchaser of the property.

  1. Locating the best property. The first thing you need to do is to decide what type of property or real estate strategy you are going to pursue.  Are you going to search for “fix up property”, “potential rental property”, “raw land”, or some other type of property?  You need to determine exactly what type of property you are searching for.  Once you have done this, you will need to pass on this information in specific detail to your selected buyer’s agent. (Later in this article, we’ll discuss how to find and identify a good buyer’s agent.)

Your buyer’s agent needs to be able to distinguish between your wants and needs.  You should let the agent know exactly what you are trying to accomplish.  When you do this, your buyer’s agent will schedule appointments to view the properties and should be able to provide you with advance information regarding both the properties preliminarily selected along with critical facts about the neighborhoods.

  1. Negotiate the offer. This is a major benefit for you, the purchaser of the property.  The buyer’s agent will act as a third party and eliminate uncomfortable situations between yourself and the seller.  Keep in mind the fact that the listing agent of the property is contractually bound to represent the seller of the property.

The buyer’s agent can suggest appropriate starting offers and terms that might be acceptable to the seller.  In all likelihood, these terms might not be the price and terms that the listing agent is offering.  A good buyer’s agent will have researched other sales in the neighborhood and be prepared to have reasons for the price and terms you are offering.  This negotiation is generally made directly between your buyer’s agent and the listing agent.  Once the offer is accepted, the buyer’s agent can help and assist in drafting up the final closing documents.

  1. Recommend and find other real estate professionals. Depending upon the exact strategy that you will be employing, it is very possible that you might need the help of a well recommended contractor, mortgage broker, real estate attorney, appraiser, property inspector, mover, or other professional.  Your buyer’s agent should be knowledgeable about these individuals and be able to provide resources to help close and finalize the purchase of the property.  Having this information in a timely fashion will help you overcome obstacles that often appear when purchasing property.  It may be something in the home inspector’s report, be an appraisal problem, or some other setback.  When you have knowledgeable experts at hand, you are in a position overcome setbacks or obstacles that derail your investment strategy.

SEE ARTICLE: How to Convert Stumbling Blocks into Stepping Stones.

 

Key Factor #2 – Understand the Difference Between a Buyer’s Agent and a Seller’s Agent

You must not believe that the buyer’s agent and the seller’s agent are one and the same.  They are not. When you use the seller’s agent (the listing agent) to negotiate on your behalf, you are positioning yourself in an untenable situation.  The buyer’s agent is working for the purchaser of the property, while the seller’s agent (the listing agent) is working for the seller.  Yes, you want to buy the property and yes, the seller wants to sell the property.  The difference is that you want to purchase the property at a price and terms that make sense for you, while the seller is trying to maximize the sales price on the same property.  In most cases, these goals are not the same.  The seller’s agent is bound by fiduciary responsibility to represent the seller, and not you.

Who do you want representing you?  Do you want the seller to know the absolute highest price you will pay before you even present the offer?  If you elect to use the seller’s listing agent to negotiate for you, you have already lost the negotiation issue.  Let’s take an example from the real world.  If you owned a rental property and your tenant was injured while repairing his motorcycle in your garage and sued you because your garage didn’t provide enough safety equipment, would you want the tenant’s lawyer representing you as well as your tenant?  I’m sure the answer would be a resounding “no”.  The same thing is true when negotiating with a seller.  You don’t want someone bound to and reporting to the seller to be representing you, the buyer.

 

Key Factor #3 – Determine How to Find a Good, or Even Great, Buyer’s Agent

Before you look for a good buyer’s agent, you must decide if you want to use one.  Once you make this decision, you must become very selective in the process.  What you don’t want to do is to choose someone who is not qualified or knowledgeable.  You want to find someone who understands the role he or she will play in the property purchase.

The first thing we recommend is that you immediately disregard the listing agent as a potential buyer’s agent.  The listing agent is legally bound and responsible to the seller of the property.  With this being the case, how can that individual represent you as a buyer’s agent?  You can be choosy when selecting the buyer’s agent.  You may receive recommendations to use your sister’s uncle or some family relative.  While it is difficult to say no to these type of recommendations, it is usually wise to do so.

What you are looking for is someone who truly understands the role of a buyer’s agent and is prepared to fulfill the responsibilities that come with this opportunity.  You can search online for “buyer’s agents” in your specific locality.  It is also possible to get recommendations from other friends who have purchased property using a buyer’s agent.  We suggest that you get several recommendations and then interview these individuals and find out how knowledgeable they are.  During the interview process, try asking these questions of each individual:

  1. Do you accept listings? If the agent does accept listings, this means that he or she is automatically working for the sellers of those properties.  Great buyer’s agents specialize in working with buyers and don’t accept listings from sellers, thus avoiding conflicts of interest.  If the agent accepts regular real estate listings, the agent is basically saying that he or she is working as a dual agent.  Does this sound like what you want?

A final note about agents who work as “dual agents”.  It is not illegal to have an agent work on your behalf as well as for the seller of the property, but when you do, you are competing against yourself.  When an agent agrees to show you a property where he or she is the listing agent, that is exactly what you are doing.  Many real estate professionals have found it more profitable to contract with a buyer’s agent and have that agent contact the listing agent.

  1. What type of properties do you specialize in? In order to increase your success in real estate, you need to find a buyer’s agent who both understands your specific real estate strategy and has had experience in finding these properties.  When your buyer’s agent has past experience, the learning curve will be shortened.
  2. What neighborhoods do you specialize in? You want to find an agent who is familiar not only with the type of property you are interested in, but, knows the area very well.  Hopefully, you will find an agent who has both the experience as a buyer’s agent, but also has experience on a personal basis.
  3. Are you working part or full-time? You need to understand from the beginning how much time the individual will have to devote to scheduling and showing you properties.  If the agent is working only part-time, ask very specific questions as to the availability he or she will have to working with you on your schedule.
  4. What references can you provide? You would be well-served to have references from other real estate purchasers who have used the agent.  You might also ask for references from other professionals like appraisers, mortgage brokers, or home inspectors.  Once you get a list of references, follow through and talk to each of them and ask their professional opinion of the agent.

 

Key Factor #4 – Understand How the Buyer’s Agent Gets Paid

The first question that often comes to mind is “Who pays the buyer’s agent?”  In most cases the fee paid to the buyer’s agent comes from the actual sale of the property.  When the property owner lists the property, he agrees to pay a real estate commission of 5 to 6 percent of the purchase price of the property.  The fee is paid through the listing broker and is generally split 50/50 between the listing broker and the buyer’s agent broker.

Most people say that the seller is paying for the buyer’s agent because the money for the buyer’s compensation comes from the sale of the property.  When you analyze the situation more closely, you recognize that the actual money comes from the payment made by the purchaser of the property to the seller.  Yes, it comes from the seller, but only after the buyer has actually paid the money to the seller.

Professional buyer’s agents have a contract they sign with you, the purchaser, of the property.  This is done when you engage the professional buyer’s agent and is called and Exclusive Buyer Agency Agreement.  The contract between yourself and the agent specifies what he or she will do on your behalf.  Before you sign such an agreement, make sure that you are satisfied with the agent.  The buyer’s agent will work for you.  You must be satisfied that he or she is just what you want.

The agreement is generally for three to six months and can be cancelled by yourself if you are not satisfied with the agent.  Many of these agreements have a clause that states you will pay a minimum amount (often $2,500) from any purchase arranged and negotiated through the buyer’s agent.  This fee comes from the listing commission paid through the seller of the property.  In the case of properties offered “For Sale By Owner”, the fee could be paid separately, or the buyer’s agent may get the seller of the property to pay the fee.

 

Key Factor #5 – Understand the Role of a Credible Professional Buyer Agent

There is an organization that is known as “The National Association of Exclusive Buyer Agents” and is known as (NAEBA).  This organization is a membership organization of buyer agents.  The organization selects agents who don’t accept listing contracts with sellers as the listing contract makes them responsible to the owner and creates an immediate conflict of interest.

You can search for the best buyer’s agents in your specific area by using a search engine and searching for the terms:

  • Real Estate Buyer’s Agents
  • Buyer’s Agents
  • Professional Buyer’s Agents

Try matching the terms with your specific locality and you will find buyer’s agents in your area.

A final word to the wise.  There are always two parties to a real estate transaction – the buyer and the seller.  As a buyer, you want the best price possible on the best property available, according to the best terms you can negotiate.  Consider strongly searching out a knowledgeable and professional buyer’s agent to accomplish your goals.

4 Factors Every New Real Estate Entrepreneur Must Understand About Positive Body Language

There comes a time in the experience of virtually every new real estate entrepreneur when they learn that what they say may not be nearly as important as to how their actions mirror their true thoughts. Body language is something that is critically important for every new real estate newbie. It will soon be apparent that your success in structuring true win/win deals will depend upon your ability to communicate effectively with the opposite party to the transaction, and your body language will play a major role in this vital communication.

If you search for the meaning of Body language, you will find that it is defined as the non-verbal communication between two individuals or a group of individuals through physical behaviors such as limb movements, facial expressions, eye movements, other bodily gestures and postures. Subtle movements you unconsciously make may determine the outcome of real estate transactions, both large and small.

Yes, body language is critical to your success as a real estate entrepreneur.  Let’s examine 4 factors every new real estate newbie must understand about creating strong and powerful body language.

 

Factor #1 – Power of Positive Body Language

Arthur Ashe, the great tennis pro, is respected around the world for his ability to project self-confidence.  He once said, “One important key to success is self-confidence. An important key to self-confidence is preparation.”  As you learn to project positive body language you will understand that your posture when speaking and listening is paramount.  Correct positive posture creates personal confidence, but this can only take place when you prepare ahead of time.  Imagine your first interaction with the seller of a property that you have identified as a great rental property.  If you fail to stand erect and straight, the seller may decide that you are not a serious investor.  How you stand, walk, and even sit is important as positive posture can provide the self-confidence you need as a successful real estate entrepreneur.

Your goal as an investor and negotiator is to create a positive connection with the opposite party, or in our case the seller.  Your eyes are far more important than you might imagine in establishing this link with the seller.  Correct eye contact instills a common bond.  It is vital that you look directly at the other party.  It is common for a new investor to look away from the other party.  Oftentimes this is done out of fear.  He or she may fear being rejected or they might fear making a mistake in what they say.  The common bond between yourself and the other party will often hinge on the connection made with the eyes.

It has been shown that smiling has many positive health and success factors.  Researchers have found that smiling can relief stress and even lower blood pressure.  There is, however, an even more important value of projecting an honest smile. A smile will improve your personal outlook on life, but it will also improve the mood of those people around you. True Smiling provides trust, and trust is an important key in structuring real estate transactions.

Touch is the first sense we acquire as a newborn and it is also important in creating powerful body language.   Matthew Hertenstein, a researcher from DePauw University, demonstrated in a study in 2009 that we have an innate ability to decode emotions via touch alone.  He found “that participants communicated eight distinct emotions – anger, fear, disgust, love, gratitude, sympathy, happiness, and sadness – with accuracy rates as high as 78 percent.”  The act of touching may be self-touching such as brushing your eyes or it may be a simple act of shaking hands.  A caveat is that we must avoid invasive touching of another person.  Non-invasive touching can open a door of understanding between 2 parties.

 

Factor #2 – Positive Body Language Can Be Learned at Any Age

We learn to project our feelings through body language from birth, and we continue to learn new ways of expressing our true feelings throughout our life’s adventure.  As a new real estate entrepreneur, it’s not too late to learn better and more effective ways of communicating through positive body language.  In order to correct negative body language, we need to realize that it is a step-by-step process. We can break it down into ten easy-to-understand steps:

Step 1 – Understand what you are presently showing. Before you can correct negative body language, you must be aware of what you are already doing.  Awareness should not bring self-criticism, but rather it should make you cognizant of what changes you need to make.

Step 2 – Examine and study others. Pay attention to what people around you are doing and acting.  As you consider their actions, take the time to ask yourself what feelings you are getting.  You will be able to survey both positive and negative body language.  As you review their actions, take note of the personal feelings you are generating from those actions.

Step 3 – Replicate other positive people.  You want to learn from others and the best way to do this is to mirror the actions of others.  Consider a friend who always seems interested in what you have to say.  Is that individual establishing good eye contact and exhibiting a true interest in listening?  If so, then start to do the same thing.  Mirroring success is a great way to achieve personal success in learning positive body language.

Step 4 – Be aware of crossing patterns.  We seem to always cross ourselves.  We cross our arms and our legs.  Crossing arms in front of your body can create the image of rudeness or self-importance.  However, if you cross your arms behind your back, it seems to illustrate a sense of being at ease.

Step 5 – Establish non-threatening eye contact.  If you are alone at night in a strange neighborhood, you have always been told to avoid making eye contact.  This is done out of fear.  In creating a positive body language, you want to establish direct eye contact.  It will draw the other person to you and create a bond.  The key is to always smile and show an interest in the other person.  A frown or passive look of disinterest will derail any negotiation.

Step 6 – Straighten and Relax your posture. Your posture is important and you should avoid slouching at all costs.  If you take the time to stand straight and relax, you will find that you are immediately interested in the other person.

Step 7 – Establish position.  If you are talking to another person, face them directly.  Don’t look away.  You want to communicate one-on-one.

Step 8 – Avoid unstated questions. Speech may not actually be considered as body language, but your intonation can have a profound effect on how you communicate.  If you sound gruff, it will be negative.  Avoid upswings in your intonation as they indicate a lack of self-confidence.

Step 9 – Control your hands.  Everyone wants to know what to do with their hands.  If you put your hands behind your back, you project confidence, while your hands in pocket can show over confidence or boredom.

Step 10 – Relax and sit in engaging position.  Finally, you need to learn to relax in a comfortable position.  It will take time to correct negative body language, but when you do so, you will have greater success in negotiating great real estate transactions.

 

Factor #3 – Understand the Body Language of Others

As you mirror the body language of others, you need to read the feelings of the other party.  It is equally important to understand what your opposite is actually communicating with you.  Your opposite will be more forthcoming if they see you responding to their body language.

Pay attention to the other party and don’t be afraid to take notes.  When you do so, it will demonstrate to your opposite that you are engaged and attentive.

Finally, when you are done talking and interacting with the other party, end with a positive handshake.  Look the person in the eye and smile.  This action will show that you are excited.  Most importantly, it will indicate that something more is to come.

 

Factor #4 – Avoid the Negative Signs Leading to Disaster

Watch for these signs in your personal body language as well as in the body language of your opposite. These are signs that will lead to negative outcomes.  It is important that you avoid these signs at all costs, but it is also important that you are aware when your opposite is demonstrating the signs.  If your opposite is revealing any of these signs, you need to evaluate whether you are negotiating in good faith.

  1. Distracted eye contact. Don’t look around the room. Treat everyone with respect.  When a person exhibits this sign, it indicates that the other party is not important and they are already moving on to someone else.
  2. Negative eye contact. Looking at anything or anyone else shows that the person has no interest in the other party or in what is being said.
  3. Gazing at your phone or ipad. . It emphasizes that you are not interested to what is being said.  You may hear the words, but to the other party, it is like talking to a brick wall.
  4. Failure to listen. Nothing will discourage the other party more than noticing that the other party isn’t engaged in the discussion.
  5. Rapid speaking. This is a sign of distrust or nervousness and nothing is more disruptive.
  6. Invading opposite’s personal space. Never treat the personal space of the other party as belonging to yourself.  When you invade their personal space you are creating a feeling of unrest or even fear.
  7. Non-response. It’s important to give clues that you are listening to the other party.  A nod or an indication that you are listening is vitally important.
  8. Making excuses with the word “but. When you make excuses, you are showing that you aren’t in control, but when you use the word “but”, you are outwardly acknowledging that you aren’t in agreement.
  9. Closed body language and crossed arms. When you fold your arms or cross them, you are showing that you are in a defensive posture and are not readily agreeable.
  10. Frowny face. When you have a frown or a negative expression, it shows that you come across as intimidating or hostile.

Positive body language is the key to successful real estate negotiations and subsequent real estate purchases.  When you learn how to manage your body language, you will be able to demonstrate trust and confidence to others, key factors in all great real estate transactions.  In every real estate deal, you will want to exude credibility and confidence, and the key to achieving these goals is to learn how to use your entire body as a communication tool.

As you learn to apply these positive body language factors, you will demonstrate that you have the interests of the other party paramount in your mind.  This will ensure that you open the door to Win/Win deals.

Workshop Update | Week 11 – Mar 14–15

Workshop Update | Week 11 – Mar 14–15

This week, Response delivered 14 Real Estate and Stock workshops. Our overall customer experience score, for all surveys received, was a 5 out of 5. We saw over 928 students. Here is what some students shared about their experience:

“It was amazing , tons of valuable information . Thank you!!” —Birgit B.

Well done! It was a great workshop.” —Dalvir S.

“Lots of information and instruction. Training was great!”—Darcy S.

Breathing and Counter Trend Lines

Breathing and Counter Trend Lines

Most people, in order to survive, rely on the age old practice of breathing. This breathing process adds oxygen to our lungs and eventually to our blood where it can invigorate and assist our bodies. Breathing involves both breathing in and breathing out. Some people can breathe in and hold their breath for long periods of time.Many stocks follow this same breathing pattern. They move up for a period of time and then move back down, just not as far. This pattern is known as an uptrend. Once an uptrend has been established, traders may want in. Establishing an entry is a key facet to any trading plan, especially traders who want to be consistent and disciplined in their approach. One type of entry that waits for the stock to stop breathing out and tries to catch it just at the switch to breathing in is Counter Trend Lines.

In order to understand counter trend lines, we first need to understand a trend line. A trend line is a line drawn on a chart that connects a series of higher lows or lower highs. This line is important for 2 reasons. The first reason is the line represents the trend. The second is that when the line is broken, that trend is over.

The rising dark trend line in the chart represents the trend. This is also the base line for breathing. It is connecting the previous lows and demonstrates rising support. Remember support is drawn as a general area, so it will not always align perfectly. Also remember, the trend line should include almost all of the price action. It would look something like this:

counter trend lines

Now that we have an established trend, we can begin to notice the counter trend lines. Counter trend lines are drawn when 3 or more points on the chart, usually daily highs, lows or closing prices align. They are connected with a line that is traveling in the opposite direction of the overall trend. In the example listed, the down red lines are the counter trend lines. The consistent and disciplined entries happen when the stock or ETF in question closes above the counter trend line. Thus the dark line is the breath in and the red lines are the breathing out. Not all stocks or ETFs trade this way so make sure it fits as you begin to apply this strategy.

Instance #1 is where is the stock tops and then begins to drop for 3 days and then goes back and forth for a few days until it clearly breaks the line after threatening to break the line the day before.

Instance #2 is the worst of the bunch. As the stock topped and pulled down for a few days it gapped down and then went sideways until it broke back up, without lining up too many highs or lows.

Instance #3 is a little way away from the uptrend line but it is the instance where the price clearly started below the line and clearly closed above it at the end of the day. In the book Technical Analysis of the Financial Markets John J Murphy states “a close beyond the trendline is more significant than just an intraday penetration”. With this being the case, one could have gotten in at the end of the day with limited risk.

Instance #4 took a lot longer time to play out. It did pull back the furthest but it also touched the uptrend line and showed strength, bouncing off of it. It then continued it’s up trend.

As you look to apply this concept remember the keys to drawing trend lines are: 1 Connect multiple points (at least 3, the more the merrier) 2 Draw trend lines that are relevant to current price. Best of luck in your continued breathing and trading!

Response Adds New Advisory Board

Response Adds New Advisory Board

Response’s greatest assets are its customers. Given this, Response created a customer advisory board, giving Response customers a powerful collaborative platform to influence Response’s instruction. Within the advisory board are sub-committees focusing on specific interest areas. Through this collaboration, Response can pro-actively align and effectively build the products, tools, and curriculum needed to help our customers succeed. For example, Response is in the process of rolling out a new Real Estate curriculum. To ensure curriculum alignment with customer needs and industry trends, Response’s instructional designer and management team is working closely with an advisory board sub-committee to explore and test the new curriculum’s learning effectiveness. Through this process, Response will get direct customer feedback, prior to releasing the new curriculum to a wider customer base. There are currently 1500 Real Estate and Stock advisory board members. If you are interested in being an advisory board member, would like to know what the respective requirements are, and/or want to apply for an annual speaker opportunity, please visit https://response.com/advisory-board/.

Costs to Plan for When Buying a Home

Costs to Plan for When Buying a Home

When buying a home, your focus may purely be on the down payment, but there are other costs associated with buying your home. Learn more about what costs to plan for, what can be avoided and what is not optional.

#1 Closing Costs

According to Zillow.com “home buyers will pay between about 2 to 5 percent of the purchase price of their home in closing fees. So, if your home cost $150,000, you might pay between $3,000 and $7,500 in closing costs.”[1] Closing costs vary from transaction to transaction but include a fee from the mortgage broker and lender, fess from any local and state taxes, and fees for a lawyer to oversee the transaction.

 

#2 Moving Costs

Moving can get expensive! It’s not just your stuff you have to worry about. If you are currently renting, are there any repairs you need to make to get your security deposit back? If you are selling your current home, do you need to make any repairs to get it in sellable condition?

#3 Home Repairs + Personalization

Even if you are buying a brand new, move-in-ready home, there will most likely be some repairs and personalization you will want to do. Picking the perfect paint colors and furnishings is one of the best parts of owning your own home. Make sure to leave some room in the budget to make your new house your perfect home.

#4 HOA fees

The worst thing about HOA fees is they aren’t a one-time fee. While some HOAs will have move-in fees and other upfront deposits, most are a flat monthly payment. When calculating what homes you can afford, make sure you include the HOA fee in your monthly expenses.

#5 Home Inspection + Survey Costs

No matter how expensive a home inspection and survey may feel, they are 100% worth it. Knowing where your property lines are and if there are any costly potential issues with your home will pay off in the long run. Even if a home appears to be in perfect condition, home inspectors are trained to look for underlying issues.

Though buying a home can be costly, most homeowners feel that the pride of ownership is worth every penny. As long as you carefully plan for costs and stay within your budget, purchasing a home will be a fulfilling and pleasant experience.

[1] https://www.zillow.com/mortgage-learning/closing-costs/

How to Fix Your Credit Score

How to Fix Your Credit Score

Having good credit is an important part of investing in real estate. With good credit you can get financing easier and you can also get better interest rates. Now, if you have a poor credit score here are some steps you can take to improve your credit.

  • Pay all your bills on time. This is a no-brainer, but make sure all your bills are paid on time, even if it is the minimum payments.
  • Don’t open too many new accounts at once. One thing that credit agencies look at is the age of your accounts. By opening several new accounts at once, the average age of your accounts will be reduced.
  • Do not cancel any unused cards. Another aspect of credit is the amount of credit you have used compared to the amount of credit you have available. The lower the percentage used, the better. Ideally you want to keep the ratio of credit used to credit available below 30%.
  • Keep your credit balances low. This ties in with number 3 in that you should not max out your credit. Keeping your credit balances low will help keep your credit score high.
  • Have a variety of different credit types. Paying on a car loan, a credit card, and a mortgage will show you are able to juggle and maintain payments on different credit types.
  • Debts in collections needs to be paid off. If you have any accounts in collections they will need to be paid off. Until they are paid off, your credit will suffer.
  • Get a personal loan to pay off credit cards. This can be a very effective way to lower your interest rates and pay off your debt faster.

In real estate investing having good credit will increase your opportunities to invest. As mentioned, it will save you money, give you better interest rates and help you qualify for better loans. Keep these 7 tips in mind, as they are great ways to maintain and improve your credit score.

Bear Market Looming

Bear Market Looming

Growing up as a kid, no matter how bad it got, there was always the giddy feeling in the back of my mind around Christmas. Christmas endears presents, family, and time off from work or school and all that entails. I feel the same way about bear markets. Once the trend reverses, stocks and markets move fast. As an option trader, I see potential, opportunities, and lots of volatility. Put contracts are the method of operation and best choice for bearish markets. The put contract has a natural advantage over its call cousin, and that is in addition to deltas and gammas working for you. Puts also have Vega’s working alongside the other two. That is because as markets fall, volatility rises, and Vega is the measurement of how the option price increases as volatility rises. Options generally prefer faster movement of the underlying due to time decay. Since markets tend to fall faster than markets rise, this provides ideal conditions for put. Fast moves, increasing option prices, and leverage all point to the put contract.

Dow Theory suggested markets move in cycles. Cycles last 4 to 7 years on average. With 2016 being at the markets 7 year high, the Bear market is overdue. Now I don’t suggest we run around like Chicken Little saying the “sky is falling.” However, if we are prepared, we shall not fear, and maybe even profit from it. Draw your lower trend lines, your support levels, check your moving average cross overs, and then when the market changes, change with it and buy some puts.

Confidence Gains Gains

Confidence Gains Gains

The year was 1984, and I was living in Southern California. I loved to ride my skateboard everywhere I went. That summer I spent most of my time at the bottom of pools and half-pipes, riding what I could, not daring venturing to the top, for it was too high and I had too much fear.

In skateboarding, dropping-in is the method of standing on the tail of the skateboard, hanging over the edge of the empty pool or half-pipe and then stepping on the front of the board so you drop yourself over the edge. I remember spending most of that summer staring over the edge, never actually dropping-in and never realizing the benefits that come from dropping-in because I was too afraid to do it. I always walked down into the bottom of the pool and had to pump myself up, requiring more work and less reward. I finally did drop in at the end of that summer, with an uneventful fall. But I got up and did it again. I could probably do it even to this day because the fear is gone and the confidence remains.

As a new trader, I learned the rules of proper trading. As I became better and gained experience, my trades did too. However, what I learned did not always translate into trading profits.  Knowing and doing are two separate things. Confidence in your trades can really translate into more profits. Act on your beliefs! Trying and failing is far less painful than not acting and missing the trades due to fear and lack of action. Confidence is said to breed more confidence. Have faith, trade your rules, and drop-in when the trades present themselves. Life is better when you take a chance, a well-planned and practiced chance, where odds are calculated. Never-the-less, “act or not to act” is the question and the answer.

Planning your Trade

Planning Your Trade

Summers are full of family vacations. Picture a large family cruising down the highway traveling to a distant destination. This doesn’t just happen; meaning, we don’t just leave the house, pile into the van and take off. My wife and I make a plan. We plan for us and for our kids. We plan what we will eat, drink, and even what clothes we will bring, depending on weather conditions. Even after all the planning, things come up that we don’t account for. Like family trips, our trades should have a plan.

In trading, there will always be some unknowns. Will the underlying stock go up, go down, or remain the same? Depending on our bias, we place trades that should pay-off, if our assumptions hold true. But what if the stock only goes up half of our intended move, or not at all? What if it goes opposite of our intended direction? Planning ahead allows us to prepare for these outcomes and prepare for the decisions we will face because of them. Making decisions when powerful emotions like fear and greed are involved are often not based on sound thinking. But, if we have a plan for each outcome, we can decide in advance what we should do. We can account for such possibilities when we are calm and execute the proper orders when we see them, rather than in the spur of the moment when we may not be thinking clearly. Trading can be an adventure, but it doesn’t have to be a stressful one. We can reduce anxiety if we will plan ahead of time and make decisions in advance, helping us be in control no matter the outcome.

Suggestions for First Time Flippers

Suggestions for First Time Flippers

Buying real estate properties for a bargain, fixing them up and then reselling them for a profit is a great way to make money as a real estate investor. This is often referred to as “house-flipping” or doing a fix-and-flip.  You look for a home, buy it cheap, fix the home up, then sell it for more than what it cost you to buy and fix it up.  You can make a huge profit doing this, and there are a few ways to improve the experience or ensure you do not lose money.

Plenty of real estate savvy investors are making money with fix-and-flips but while it looks and sounds easy to do, house flipping has some risks involved. If there are more repairs than estimated, the flipped property does not sell immediately and/or you encounter other unexpected issues, an investor might not break-even.

Here are several suggestions to help you be successful:

  • Get a Mentor:

Successful “flippers” educate themselves and know the ins-and-outs of the real estate market. If you are just getting started, one helpful thing to do is to find a successful house flipper to mentor you. The things these seasoned investors have experienced or learned along the way are invaluable. Offer a percentage of your profit for advice if you need to. Then do your research on properties in your local area and find a house you would like make an offer on. 

  • Save Money On Materials:

Buy the materials to fix up your house yourself.  Contractors do supply materials but they will mark up the price of the material. If you buy the materials yourself, you will save money and pay them for labor only. 

Although costs for materials vary, it’s best to get to know your local stores. Some stores who offer discounts to contractors will give you the same deal if they know you are an investor and plan to do more than one house. Don’t be afraid to ask for a discount. Home Depot, Lowe’s and Costco offer great deals. Also, watch for any clearance sales on materials. You can also go to second hand stores to find great deals at a lesser price than buying new materials.

  • Save Money On Labor

Some investors buy a house during off-season. This way they can complete the job on time since their contractors have less of a workload on their hands and can focus more on the job. Contractors are sometimes cheaper in the off-seasons as well.

Hire reputable subcontractors, instead of a contractor, and run the job yourself. This can save you money because a contractor also marks up the price of the subcontractor.  Doing some of the work yourself will also cut labor costs.

  • Save Money and Time by Using a Realtor

Once the home is fixed-up, and if you plan to sell the house (vs. keeping it as a buy-and-hold property), studies show if you use a reputable real estate agent, your property will sell quicker than selling without one. The longer you hold on to the property, the more holding cost you incur. Realtors know plenty of possible buyers and having them list your house on the MLS helps sell your property more quickly. While they are selling your house, you can spend your time looking for your next deal.

Overall, utilizing these few basic tips will help you in the process of doing a fix-and-flip. All it takes to be success is having the right attitude and information. And getting out there and doing it.

Knowledge + Action = Results