Over the years as a foreclosure investor, I too have made many mistakes. Mistakes are just another form of learning, aren’t they? The only problem is, they can be very costly!
In working with my Coaching students I do my best to help them avoid these pitfalls. So here’s your chance to learn from my mistakes! Pay attention here — if you cut these commonly made foibles out of your life, your investing business will absolutely soar!
1. Submitting an offer without verifying you are close on price.
Gang, I am not in the offer writing business. Many times an owner will call you and proclaim that they want to sell. They’ll say all the right things. “I just want to get out. Please come over and make me an offer.” Ninety percent of you would immediately jump into full research mode (check for comparable sales, drive them, fire up their excel spread sheet) for the next few hours feeling very productive. Only to have your offer shot down.
Why? Because you forgot to ask the owner what they expected out of this deal first. How else will you know if they are realistic or not? I know you don’t’ want to waste your time. Nor do you want to get branded the cheap guy who low balls and offends owners. If the owners’ price is way out of your range, find out FIRST. Then you get to say “no thank you” without naming your price. You can then stay in good with your owner and if they become more motivated and truly do need your help then you can help them out at a later date.
2. Not working Alexis’ system the way she taught you.
I always joke and say we need to have an “Alexis is right” website. It’s just the truth and we all need to stop fighting it. I know many of you, myself included, at one point or another thought we could do it better, change it, modify it, we know what works best for us, so on and so forth. You try to take parts of her system and piece meal the things you are comfortable with, and only if you can do it “your way”.
The truth is what Alexis teaches is a complete system the way it is. When you work all the components together, the exact way she teaches you (which means challenging yourself to push past your own comfort levels), that is when your business will take off!
3. Failing to recognized — this business is not about anybody else but you.
So many people of you get caught up in trying to figure out the owner’s mindset. You think if you just understood the owner’s way of thinking, or why they act the way they do, you would be a better investor. Or you wish the owner would think more like you and just be logical.
The bottom line is if the owner thought more like you then they would not need your help and you would not have a job! You have to focus on your own personal development and how you can be better.
We all know from personal experience, what to expect from owners who are upset, angry, frustrated, and don’t want to face the situation they are in. That is the consistent. Now you need to develop into the kind of investor that handles these perceived obstacles with ease. Pretty soon these are no longer obstacles or challenges for you and you are very comfortable dealing with owners, neighbors and relatives because that is what you do.
Work on yourself first, and all of this will become second nature. This is why Alexis has her “recommended reading” list. Make sure you get through all these great personal development books NOW!
4. Analysis Paralysis.
Have you ever heard the saying “the devil is in the details”? Well, that statement has a whole new meaning if you’ve ever been addicted to the county recorders website or sitexdata.com (like your favorite soap opera). You need to stop this early research and go cold turkey NOW!
All this research does is keeping you from focusing on the stuff that really puts dollars in your pocket — contacting owners! You do not need to know everything about a person before you call them. You do not want to become a professional, unpaid researcher, right?
After many years of investing I don’t care to know what every piece of data or all those county abbreviations stand for. And guess what? It hasn’t slowed me down a bit! So you are safe! The only time I care to check the county recorders “grantor grantee index” before I make a call, is to simply check to see if my owner is in default or not (cancelled, sold or got a new loan). That’s it!
Don’t let this tool become your crutch to not calling owners!
5. Not making enough calls.
Phone calls are the life blood of the foreclosure investing business. They are the fuel that runs the engine. If you are dialing less than 200 calls a week, you are not doing enough, and you can stop wondering why your business is not booming.
You must always be working outbound phones and keeping your momentum going. If you think you can work this business without working outbound phones go back and reread #3. I know staying consistent, especially in the beginning, can be hard but it does pay off. It is especially important to keep working the phones when you get your first deal.
You want to keep your momentum going so you don’t become, as one of my coaching students put it, a one hit wonder!
6. Time mismanagement.
If you have not written out your goals stop reading and write them down NOW!!
How do you know what you are trying to accomplish, if you have not written it down? Think of yourself as a missile. You may have “lift off” but you don’t know where you are going! Missiles go off course, but they continue to correct themselves until they hit their target!
Plan your goals, write them down, do them and then review them! You will need to measure where you are on a regular basis, so you can make corrections when you do get off course. Once you know where you are going lay out a plan to get there. That means scheduling! I would be a terrible time waster if I didn’t schedule my time. Schedule your phone calls, schedule your door knocking and schedule your time to research, the same way you would any appointment.
Block out time and put it on your daily schedule so things get done!!
7. Not making the most of your owner contact.
We all know how much work it takes to actually get an owner on the phone or catch them at their door. You owe it to yourself to make the most of that moment!
As Alexis taught me, your first goal with the owner should be to find out “HOW did this happen?” We know from your lists where they are right now (in default). The trick is to get the owner to roll back the clock and fill in the blanks for us.
Once we get to the beginning, now we can truly offer solid solutions. You need to first understand what caused their default, so you can offer the best solution based on their personally situation. Once you have the big picture figured out, it will be easy to move forward onto solutions. You will set yourself apart from all the “other investors” by showing you care, and you listen to what the owner has to say.
The worst thing you can do is just read off all the owner options without knowing their situation clearly. It would be like going to the doctor with a head ache and the doctor saying we can fix that with surgery right now, and he doesn’t even exam you.
Avoid investor malpractice! There needs to be a lot of diagnosis FIRST before you ever offer a solution!
8. Loosing control of the conversation.
If you are answering the sellers’ questions; or asking “yes or no” questions; or you are unable to overcome the sellers’ common objections; you are going to be verbally beat up A LOT!
We’ve all had an owner fire questions at us that we answered. Why did we answer them? — Because we don’t want to be thought of as rude.
Now you need to learn how to take control, by asking the questions!
How do you do this? First you must realize that people have a natural desire to want to be compliant. Either the owner is going to figure that out with you; or you are going to figure it out with them.
Gaining control starts by asking open ended questions (they start with who, what, when, where, why, how). Even if you get an objection, you serve the ball right back to them and ask another question; open ended of course. If you get asked a question back, you may answer it briefly (or not all) but quickly move on to asking the very next question.
Are you seeing the pattern? The person asking the questions is in control!
9. Poor follow up.
Deals are rarely done in the first, second or third contact. In fact, it takes many contacts, sometimes even months (especially if you are in a long foreclosure timeline state). Therefore it is very important to follow up consistently over time.
Have you ever heard the saying “the fortunes in the follow up”?
Well in this business it is true. Very few deals will be done in the first few contacts. You need to build the relationship and be consistent over time. Many people give up too soon. I am always asked “when do I stop trying to contact an owner”?
My answer is “I stop when I see on the county recorders “grantor grantee index” a cancelled default, a deed showing it sold to a third party, or a new mortgage/deed of trust. Otherwise, this owner still needs my help and I will continue to contact them!”
Follow up, follow up, and follow up!
10. Not finding out if there is a prepayment penalty.
This mistake can be very expensive, and will ruin your profit margin. Always find out if there is a prepayment penalty on the owners’ mortgages, from your owner. Sometimes they do not know, so you will need to get on the phone with them and call their lender together. You want to hear with your own ears if one does or does not exist. Sometimes lenders will waive a prepay penalty while the owner is in default, and then enact it again once you have reinstated the loan and it is performing. FYI, if a loan is less than two years old, you should just plan on it having a prepayment penalty. If you can not get a response from the lender plan on 6 months worth of interest payments and budget that into your offer price.
Do you see any of these pitfalls rooted in your investing business?
If so, change them now. All my Coaching clients have done these, one time or another, but when they stopped, they increase their success ten fold!
You can do the same too.
If you have not already done so, you really need to get to Alexis’ 3 day Lab, where we teach, roll play and practice with you, every single one of these pitfalls side by side with Alexis and two of us Coaches. You won’t want to miss this critical learning experience!
Happy investing!
Sarah
Lab Graduate, Investor and Coach
