EarlToms Podcast - Wholesaling Real Estate

Relationships Matter - Here's Proof

October 27, 2020 EarlToms Episode 22
Relationships Matter - Here's Proof
EarlToms Podcast - Wholesaling Real Estate
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EarlToms Podcast - Wholesaling Real Estate
Relationships Matter - Here's Proof
Oct 27, 2020 Episode 22

In this episode EarlToms discusses what happens when you take the time to build relationships with your buyers. If you wholesale houses you need to listen to this episode. It will show you what happens when your buyers have a sense of loyalty to you. It might surprise you. 

For more information to help build your business visit https://EarlToms.com


Show Notes Transcript

In this episode EarlToms discusses what happens when you take the time to build relationships with your buyers. If you wholesale houses you need to listen to this episode. It will show you what happens when your buyers have a sense of loyalty to you. It might surprise you. 

For more information to help build your business visit https://EarlToms.com


Welcome to EarlToms podcast, today we're going to re emphasize why relationships matter. Some will argue seller relationships, buyer relationships, which are more important, that's gonna be a subjective answer. Because you need good relationships with the sellers in order, you know, for them to trust you to be able to, to get a house under contract. And believe in you that you know, that you'll follow up with and do what you say in the contract and buy their house from them. But I would argue, relationships with your buyers are more important. So with this episode, I'm going to go over a recent deal that I did, and give you some insight of why these relationships actually matter for your business, because it's you can have all of the seller relationships that you want, the majority of your relationships with your sellers are going to be single in nature, they're not going to be repetitive, you might have a local investor that is, you know, they have multiple properties and you become their their exit strategy, when they get a property renovated. Or they buy it at auction or, you know, something like that you can JV with wholesalers or investors that are, you know, local to your market, or that you have relationships in other markets with. But the, the relationship with the buyer is what determines whether you really make money now you make money with how you buy and originally once you get it under contract for, but your buyer relationship is often repetitive. So the better relationship you have with your buyer, the better your ability becomes to actually make money. And you know, kind of call in favors from time to time when you need them. Now, one example that I'm going to give you is this recent deal that I was a part of, and it's actually still ongoing. But I'm gonna, I'm gonna give you the example the background of the deal, what happened and where it stands right now. So to get started with the background of the deal, there was a local wholesaler to my market that to be honest with you, they don't have the best reputation in the local market, they they have this almost bipolar reputation, if they don't get what they want, they cry, they pitch a fit, they curse you. It's just not productive to be to do business that way. But they they're able to survive, they've got certain people. So what we typically say about this wholesaler here is they'll guilt you into doing, you know, whatever, whatever they need you to do in order to, to get this deal. So this and they did this to this investor, that's local here, they got a house under contract. They couldn't get it sold. So they reached out to this investor. And he wound up buying it sight unseen. instead of actually doing what he should have done and go look at the property. So once he purchased the property, now that he gave it back to this wholesaler to try to sell it to him again because the wholesaler said I can get this old, you know, blah, blah. But after about six months of not getting this house sold. This wholesaler he sells to certain investors here, but his mentality is as he puts it up for sale for entirely too much money. He asked too much and he never gets sold until he finally breaks. And basically says Just give me $1,000 over what, you know, I've got, I've got to have for it to get this closed. So all the local investors just basically wiped him out and let him pitch a fit, do whatever it is that he's going to do for every deal before he breaks and says you know, just give me $1,000 over what I've got it under contract for. So what winds up happening with this deal is the same thing. This wholesaler reaches out to a local investor here and says hey, I can't get this house sold. This investor is ready to kill me because I told him I be able to get it sold. I can't get it sold.

So this investor that's this local here. He actually knows the person that that bought the house. So he reached out to him kind of behind his back because he knows how this wholesaler is. So this other the guy that owns It basically says, I don't care who sells it, but I want it sold. Because my wife has given me down the road. Because I can't get this sold, it's tired of the money. If I renovate it, I'm gonna be all in on it. I'm not gonna make any money. So either way, I'm basically at a point right now where I'm gonna lose money. So I'm not going to spend any more money on it. Well, this local investor tries to help him out, he sends it to a couple people that he knows that buys his his houses, none of them want it. So he reaches out to me and says, Hey, do you think you're one of your buyers that, you know, we've closed a couple deals with? would be interested in it? So I say, I don't know. Let me check. And what winds up happening is is my buyer winds up making an offer on? Well, time goes by, because the rehab was so expensive. It was like a, they came back with a rehab number of $63,500, I believe. But their renovation budget cap is $60,000 on every property, if it goes over $60,000 then they can't buy it. So what winds up happening is in this week, week and a half that they're trying to find that 3500 to get this deal. You know, done. This wholesaler what actually happened behind the scenes, I don't know when I don't honestly, I don't care. But this wholesaler ones up ones are reaching reaching out to my buyer, and presented to them for a lower for a lower price than what they had already offered me for it. So what winds up happening is, is my my buyer says, Hey, I just got this house, from this other guy that I don't know that I don't know. And he's offering it to me for $3,500 less than what I told you, I would give you for it. So get in touch with him JV with the with this other guy that's in your market. And telling I'm gonna buy it. And you make the $3,500? Well, I said I'm not gonna call him. I don't care if I'm if I bought or not. Because this the owner is ready to kill him anyway. So just let him go ahead and do it. My buyer actually just comes back to me after I said that and said, you know, what, if you're not involved in it, I'm not gonna buy it, because he had already been out there and done the inspection, worked all the all the numbers did everything for the week and a half trying to find the renovation budget, get it under $60,000, selected, bought. So he had a vested interest in it, because the work that that I had done, to present it to him the work they had done. He didn't think that this other guy should basically just be able to step in and say, hey, I've got this house, when it was me that initially presented it to him. And he got the he got the he wanted the house because of me. So right now, where we are, is basically this wholesaler started sending the contract. So instead of him sending a contract for the terms that were that were stated, because the there's some debris and some pallets and things like that stacked up on the road, right before you get to the house, that the buyer said I need, I need those removed before, I'll close on the house. I don't care who moves them, but they've got they need to be gone before I close. So this wholesaler sends the typical one page contract for the overall price and then thinks I'm gonna assign it $3,500 above what was the overall price that this buyer had said they would pay for. So we both respond back to him and say, that's, that's not what you were told $3,500 is within the overall price, not in addition, and you need to have the contingency in there that the pallets and the debris are removed before they buy the house. Well, this wholesaler starts pitching a fit as typical with him.

And since the buyer actually asked me to go ahead and send a contract to him with the correct terms, price, contingencies, things like that. So I wind up sending it to him and I say, look, this is this is what the buyer wants. They asked me to send you the contract. Go ahead and sign we'll get it closed. That was on Thursday of last week. This is Tuesday. We still have not received the contract back from this home seller, because all he is concerned with is basically saying there is no misunderstanding on his part that he has done what the buyer asked.

But the buyer and myself are sitting there, in some ways laughing. Because if myself and the buyer agree, that would put the misunderstanding on the wholesaler. So, right now we're waiting on this because instead of a wholesaler, saying, Hey, I don't, you know, I'm gonna sign this contract because it's at least the deal getting closed, we're four or five days in the weight right now. Because this wholesaler is acting pretty much like a child pitching a temper tantrum with at the moment. And whatever he is thinking, whether maybe he waits it out, cuts me out, whatever it may be. And I've already told the buyer, I don't care if I'm involved in the deal or not. Because in all honesty, right now, it's just a headache for me for $3,500. So the buyer is not even responding to him asking him where the contract is, things like that. I'm not doing it either. So it's just one of those one of those scenarios to where the buyer and myself are like, we don't care, we can go straight to the owner and bought from the owner, he completely cuts you out of this deal, if it gets to that point. Because if you're not going to act professionally and get this deal done, you know, you can either make this amount of money, and I have no idea what he's got it under contract for. But you can either make whatever money you have it on the contract for plus what you're selling it to me before I sign it, or you can make nothing. Because a lot of times karma will catch up to you eventually. And you can call to have that mentality of I'm always the victim, things like that. But a lot of people that a lot of times these people don't understand that they actually do it to themselves. We're all sitting here ready to close. We're waiting on the wholesaler to basically stop pitching his temper tantrum. sign the contract and close it and you know, a day or two because titles already ready, everybody's waiting on this got us in the contract back. That's the only thing that we're missing, and prove that the pallets and and the debris have been removed. So it it's one of those scenarios to where you kind of look at it in a way of is your seller relationship more important? Or is your buyer relationship more important? Now, like I've said, I don't care one way or the other, if this deal closed $3,500 in a bank account is more than you had the day before. So it would be nice, but I'm not going to give up my peace of mind to chase this. Because it takes me away from other deals that are not going to be this difficult. And I'm not going to have to deal with a child pitching a temper tantrum. So when you're when your buyer relationship, when you initiate it, because this is his first deal that he's attempting with this with this buyer, when you're when you're attempting your first deal, or even any deal to be honest with you. And you act this way, you turn off your buyers. And if you look at it in a rational way, he left $3,500 on the table from his asking price versus what they offered me. I didn't give them an asking price. I said what do you want this? And if so what can you pay for it? Instead of leaving them and saying, Hey, take this house for this price. This is my asking price. Because a lot of times you pigeonhole yourself because you leave money on the table when you do it that way. So every bit of this start to finish getting the now the investor that bought it sight unseen. Now he's at fault too, because you should always look at a property. But as of right now, the reason that this investor this, this owner hasn't gotten paid and closed on this property to sell it is 100% because of this wholesaler and you ask yourself, why in the world would you do that because you have money sitting on the table, within arm's reach, to be able to grab and go deposit into your bank and move on to another deal. There's no rational logic behind why this guy is doing this. But there are countless wholesalers all over this country that act the same way in their business. So you wonder why my buyer said hey, I just got this house from another from another person JV with it. You make this you make the difference of what they're asking versus what I was going to wind up paying a lot of buyers, they're not going to do that. But when you establish relationships with buyers, you get that opportunity. Where is it this guy, this got it under contract this, dragging his feet and pitching a temper tantrum, this buyer will never in their life, do the exact same thing for this buyer because you get what you receive. So when I treat this buyer a certain way, don't waste their time, I'm going to get the benefit of the doubt. And I'm going to get a sense of loyalty from them that this wholesaler is never going to get because of the way they act, the way they do business. It's important with your relationships. As I've said before, that you always want to try to make friends first. Now this is this bar. It's not a, you know, let's go hang out, let's go play golf. On Saturday, I mean, you're in a different state. But at the same time, every time I pick up the phone, or every time they call me, we have a friendly relationship. Now it's a business friend instead of a personal friend. Because there there is a business relationship, you know, involved in it. But you can bridge that gap with these buyers to where you get a sense of loyalty because you give them a sense of loyalty. And just like what happened with this deal, I told him, I don't care. I mean, this guy is ready to to hurt this wholesaler because of the way he bought it. The way he got him to buy it, things like that. But at the same time, the home the the actual owner is at fault as well, because they didn't go and look at the house to see if they even wanted it. What the surroundings look like they would have seen this debris, the pallets, all those things laying on the side of the road right next to this house. And it might have changed the the thinking of whether or not I want to buy, they would have seen that a house cost $60,000 to renovate. When before the wholesaler was telling them It takes about $35,000 to $40,000 to renovate. I mean, the wholesaler, if you look at it across the board right now, the wholesaler has, in all honesty, no business whatsoever being in this business, because they're making false representations, the way they treat their sellers, and the other underbars is not sustainable over the long term. Now, to this wholesalers credit, they are very good at getting houses under contract. They are very good at that. But they hold these contracts every single time for three to six months, continually saying I'm still working on it, this and that. Now how they manage that I have no idea. But I can only imagine it stresses them out to know in trying to get people to buy it. So they're constantly looking for new buyers. Because the stable buyers, if they just formed a relationship and did business in a common sense fashion without pitch pitching a temper tantrum, they wouldn't have to do that. But like with this, they burn bridges. So they constantly have to look for new buyers, or they have to get somebody else involved in it. Because they can't go to a buyer and say, Hey, will you buy this from me because I've already burned a bridge. So they put a new face in front of the buyer. And the buyer is unaware of it enough temporarily. But eventually they find out. And then all of a sudden the buyer goes, you know, if you're going to work with that person, I'm not I'm not gonna do it, because it's a hassle every single time I wind up trying to try to do something with them. Because you take this example, just because you put a new face in front of someone doesn't mean you're going you're not going to be pulling the same antics behind the scenes. So now, the your face if you're JV and with this person for $1. Now you become part of that, you know how, as our parents always said guilty by association. So now you look bad because you've got you're trying to help somebody out make $1 instead of just going A to B and putting C in the bank account. It's not a difficult concept. So every single time you you approach a new buyer or you get on the phone with a new buyer, you give them a respect you you become business friends with them, you don't look at it in a Hey, this is gonna be a personal friend of mine, that you know, I can call I can do this I can do this outside of work, someone Don't be in that way. Most of them don't though, because in the business part of it. Really the only thing that matters is the bottom line and and the more you can increase the bottom line for them, the better your relationship is with them. So when you give them like this wholesaler is a lot hassle for no reason whatsoever, it's not going to help your calls. So this buyer says, You know, I, he said last week, he's gonna be sending me some more houses and I still don't have them. So this, this whole seller is not making a good impression with this buyer. And all this happening is is the buyer behind the scenes, is sitting there telling me everything that's going on in his relationship with this guy because it's frustrating him. And that's another part of it. We've heard it, I don't know how much it's still talked about in in society now. But if you do right by somebody, they tell one person, if you do wrong by someone, they tell five. So imagine how many people, this buyer is sitting there talking to about this guy and how he's acting things like that. So now, every time this, this guy approaches somebody, they know this story. So whatever this guy sits there and tries to tell you, you already have a suspect opinion of this person. Because you take it for example, in this guy's email to us when he's saying there is no misunderstanding. I've done exactly, you know what I was told to do, which is not true. He says, I've done hundreds of houses this and that, blah, blah, blah. But at the same time, right now, he's actually having to get people to take him around to give him rides to certain places, because he can't afford to get his car fixed.

That a buyer has told me that a local investor has told me that. So it's, it's one cuz he actually gave him a ride, because he couldn't get his car fixed to go look at a house, instead of being able to call Uber or get your car fixed. You've done hundreds of houses, yet, you can't afford to get your car fixed. If you look at that, in a rational way, if you've done hundreds of houses, you should have enough money in your bank account, to be able to get your car fix, I don't care if it's fix a headlight, or put a brand new transmission in it, if you've done hundreds of houses, you should be able to afford that. Except in his case, he puts him out there too much for too much. After a certain amount of time, he breaks and says give me $1,000. And we'll close on the deal. And he burns bridges. Instead of being able to get deals closed on a monthly basis. He's closing a couple of deals here and there every three, six months. And that's not putting money in his bank account to be able to do get his car fixed. So pay attention to how you treat your buyers. Because they're paying attention to how you do business and how you treat them. So when you get in a position like I'm in right now, by no fault of my own, it was brought to me wasn't even involved in wholesale originally don't want to be involved with him originally. That's why when his name was mentioned, I was like I don't want any part of it. Y'all just get it closed. Because I've dealt with this guy before. And this is what's coming. And lo and behold, what I said was common, has arrived. So anytime you function in your business, make 100% sure that you're doing it with an honest honesty about you and with integrity about you. And instead of sitting there telling the buyer that they're wrong, say, you know what, I'm not even going to argue with you at this point. Because if you're ready to close on this deal, let me Shut up for a second. Let me sign this contract. So I can get paid. Because when you're sitting there arguing, you're not getting paid, the buyer has the money that you want that you need to be able to do your job.

sellers have the houses for you to be able to do your job. But you need the the other side of it too. And because the buyers are more than they're, they're repetitive for you. You have to treat those with a very delicate hand. Yes, you're not manipulating anybody. You're not being fake. You're being who you are. But you're you have to look at it in a way of I need to maintain this relationship. They need to always be right because they have the money. I'm providing a service to them. So in essence, they are the customer. The customer is always right. Not every property is a deal for every investor. That's why every investor has their own criteria. So if you meet their criteria, you get paid if you act any professional manner and develop that relationship the way you should.

I think in this episode I have pointed to how not to do business, but also how to do business. So what I hope out of this episode is people emulate the way that I do business versus the way that this wholesaler does business. And that way you can get paid, you can develop those relationships. So if anybody ever tries to go behind your back, cut you out of a deal, things like that, more times than not, you might not get paid on the deal, but that that investor, that buyer is going to tell you, Hey, I got this house from somebody else. Because we know in this industry right now, everybody was trying to JV and get in where they fit in, and all these other things. So all these actual buyers wound up seeing houses three, four or five times from different people. And I have no way of knowing who actually has control of it. But if you have the best relationship with that buyer than any of your competitors, any other wholesalers, they're always going to bring it to you and say, Hey, I got this deal from somebody else at this price. And that way, you can sit there and say, Well, I have it under contract or no such and such as it under contract, they sent it to me to try to sell it. So your buyers will protect you if you take the time to build that relationship with them, to cultivate it to where it becomes a business friend. When you become business friends, it's a different type of loyalty. But it's still loyalty because they know when they work with you that you're not going to give them a hassle, you're going to go direct, you're going to be able to solve problems for them, you're going to help them you have their best interest in mind, you're not sending them every single house that you get under contract that doesn't meet their criteria, you were you are maximizing their time, and you are maximizing their profit. And doing business with you is pleasant. It's not bipolar, it's not your own. Who wants to work with someone like that. There's not many people in the world that want to work with someone like that. So always pay attention to how you address your buyers. Because that is going to be the biggest factor in whether or not you can close deals quickly. on time, keep your word, build your reputation as a problem solver. And in that way, you look at your bank account. And it reflects your effort. You keep your word, your bank account is there for you to help you out. That helps you grow your business, expand your business, make more money, be happy, be able to call your buyers and just talk football, if you want to talk basketball talk politics, I mean, I wouldn't suggest that in this climate, but you're able to have conversations with your buyers that others are not going to have. And all that does is build that loyalty that closeness to you between you in the room that helps you in the long run. So like I said with this episode, make sure you focus on your relationship with your buyer. Be friendly. no hassle, no frill. Let's do business. When we have time. Let's laugh let's cut up. Let's enjoy each other's conversation company, whatever may be, but keep the business first, friendly. Second, you have a job, they have a job. Everybody does their job. Everybody's happy. When you get off on this bipolar tangent like this wholesaler is. The next time you pick the phone up or send an email and you don't get a response. Don't tell anybody It's not your fault. Because it'll be 100% your fault. This is those scenarios where you have to take accountability for your own actions. Because your grown mom and dad are not there to hold your hand anymore and make everything better and put a bandaid on your boo boo. This is business this time act like your grown function as a professional and you'll be successful because that's what buyers are looking for. buyers are not looking for people to waste their time. One of the first things I do when a wholesaler calls me and says hey, I noticed you own properties. I do this is my criteria. Please don't put me on a buyers list because I'm going to unsubscribe from it on the first one that I get. So if you have something that meets my criteria, please send it to me, but don't send me every single thing that you blast out because I'm going to answer Grabbing the very first one that doesn't meet my criteria.

And when you when you approach it that way, you're telling the wholesaler, I'm serious I will buy, but don't waste my time. And when you actually acknowledge your buyers needs, and do what they've asked, that helps build that relationship that much faster. Well, I think we've, we've covered enough on this episode. Make sure that that you become business friends, it may take one phone call, it may take 20. But work on it, just like treat it just like you're in a brand new relationship, you're trying to make a good impression. first phone call, first deal is like your first date you got you have to build from it from there. So slow walk it, don't rush into it. Because we all know those relationships and rushing to one a bone up in your face, they get so intense up front, and then all of a sudden, all you're doing is fighting. Don't do that. slow walk it, let it build naturally. And you should have a long term relationship, because your buyer is going to take care of you because they they know they recognize you took a minute to build the relationship to address their needs, not waste their time, and they make money when they talk to you. And that's all this important to a buyer at the end of the day. They're making money when they talk to you is all that matters. There'll be friendly with you, you can be business friends, but don't ever think that you were not replaceable, because there are hundreds of investors, thousands of wholesalers, you are replaceable, so you have to stand out from the rest of them. And the only way to do that is to be professional, not waste their time. And when they talk to you they make money. If you if you can accomplish that, you will have buyers that are ready, willing and able to buy from you on a regular basis. That's the secret behind all of this. There's not somebody going out there and being the best at this and that is relationships. Now you need your information. Because like this guy telling his his buyer that it only needs $35,000 to $40,000 work, when it really needed $60,000 or more. Don't do that. Because you're going to waste a buyer's time they sent their inspector to a property that they could have been in another property. Because honestly, when I sent when I told him how much I thought it was gonna take to renovate it.

I actually told him $70,000 because if I was doing it, it would take $70,000 I know that because I've done this type of renovation, the house is just so big. There's things that I would do that maybe they won't do. And maybe that's the difference of the $10,000. But for me to do $70,000 renovation, and I told him that up front. So what he did is he told his Inspector, you have a $50,000 budget. So his inspector would wind up at the $60,000 threshold where he needed it needed it to be in order to do the deal. build that relationship, it will benefit you don't be the bipolar causing trouble wholesaler, because nobody's going to want to work with you. You're just going to constantly be in a downward spiral of blame everybody else be miserable. instead of actually being happy and having your phone ring. I've already had my phone ring three times since I've been doing this podcast on my wholesaler loan. And to me, that means somebody's ready to sell their house or because I've got two contracts outstanding right now waiting on the to be sent back. Maybe that's somebody calling with a question about something in the contract before they sign it.

So when my phone rings like that, that's money on the other line and I'm ready to go get it. You need to be able to do the same thing but keep it simple, stupid. Use it always. Don't complicate it. If you do, you're hurting yourself and you have no one to blame but yourself at the end. With that I'm gonna bring this rant to a to a close. If you have any questions, feel free to get on the website, shoot us an email. There's also more information on EarlToms.com and ways that you can help build your build your business if if I was you right now what I would do is I would actually go and look at

an article that we've got on the website about yellow letters, sending the postcards. See what we've got to say about it because I sent out a mailer last last month and I got a ton returned to me and I reached out to them and told them refunded my entire order. So now I have I have money sitting in there as a credit with the service, that type of thing is what gets you business. It's not always remember your buyers or your customers, the service providers that you use, whether it's prop stream, whoever it may be, if you have a difficult time with them, that's not good business. You always let your customers be right. Even though you may lose money today, it will come back and find you. So it doesn't matter if it's a service you use or a buyer. Always let them be right. You on the other hand, when you're putting the house under contract, you are the customer so you have to be right. This is when you're putting it on the contract. The seller is not right. The seller is never right. When you're putting it under contract. You are the customer putting it under contract. When you're trying to sell it. The buyer is the customer they have to be right so you have to have a couple of rights in there in order to get a deal closed. But with that, like I said go visit EarlToms.com if you want some more information to help you grow your business, and we are going to bring it to a close. 

See you again in a couple of weeks. Thanks for listening