Posted by Nate(DC) on November 08, 2002 at 10:15:05:
Understood. Please don’t take my comment as an attack, as it was not meant as one. I know you realize where you need to be mentally/emotionally to do this type of work. I was just concerned that maybe you weren’t there yet.
Good luck,
NT
Blowing my first L/O contact-Help! - Posted by Bryan-SactoCA
Posted by Bryan-SactoCA on November 07, 2002 at 13:22:55:
I got a call from one of my mailers today, so I called him up and tried to explain lease optioning to him. I told him about taking over the mortgage and then selling it for market price, and he got extremely angry and accused me of taking advantage of people and being an all around scumbag. I never thought about how to explain lease optioning over the phone to somebody. I never thought that the business model might be offensive. What do I do for the next phone call? How do I explain that I’m not offering them market price? Who would want to do business with a “swindler”? Is this lease option thing even worth it? I never thought that it might be offensive and exploitational. Help!
Consider it a good investment… - Posted by JT-IN
Posted by JT-IN on November 07, 2002 at 20:12:43:
Brian:
Whatever the cost to deliver the solicitation, (be it 37 cents for a letter or mailer, plus printing), consider it a good investment. Why…? Even though you are considering this a failure, and feeling lower than whale dung, I view it as a success for you today. This event has moved you to the point of “knowing” that you need more info in order to intelligently talk to folks, who potentially could be a converted seller. All you need to do is figure out what to say… in advance, and this game will become easy for you.
This little exercise is just the beginning. You will have lots more of these days… and if you are motivated to do something about it, each time you arrive at this point of rejection, you will be a master.
Don’t give up, just learn, learn, learn. And why not, you have some of the best teaching pros at your fingertips… (Kaiser, Starr, Hyre, Krulac, J. Kennedy, Jim-FL, Nate DC, et al).
Enjoy the journey…
JT-IN
How NOT to handle a telephone call . . . - Posted by JoeKaiser
Posted by JoeKaiser on November 07, 2002 at 19:40:56:
Bryan,
Here’s the problem: “blowing my first LEASE OPTION contact.”
I have been in the business a lot of years and have signed up my share of lease option deals, but I’ve never had a “lease option contact.” What the heck is that?
People with problems call, and it’s my job to match their particular problem with a solution I am able to offer. Lease option is just one possible solution out of many. To be predisposed to shoehorn them into your lease option deal before you even know if it makes senses to do so is bassackwards.
Now, the telephone is not normally the place to pitch your deal. Sometimes you have no choice when they’re out of the area, but the phone should be limited to introductions and making appointments. Asking people to do what we need them to do requires they first meet you, get to know you, and then trust you. That rarely happens via a phone line.
You do that stuff in person.
And when they are indicating that they have at least some interest in hearing your solution to their vexing problem, and you want to do a lease option, you never use the actual words, “lease” and “option.” I just talk about a long term rental situation where, hopefully, I can buy the house from them at some point in the future . . . and then we write it up as a lease option.
It goes like this . . . “Let me ask you this. I’d be interested in a long term lease, years even if that makes sense to you, and I’d like to have the right to be able to buy it from you down the road. How does that sound to you?”
Trust me, they won’t say that sounds like a scam.
Three things . . .
Get the heck off the phone
Go talk to them in person to first establish credibilty
Speak to them in words we all understand.
You do those three things, (actually, just very minor changes in your approach) and your success will increase ten fold.
Joe
Re: Blowing my first L/O contact-Help! - Posted by Kristine-CA
Posted by Kristine-CA on November 07, 2002 at 17:53:14:
Bryan: you’ve gotton lots of good feedback and perspectives. One thing that concerns me is that you see the contributers to this board as convincing you that creative rei is ok when you now see it’s a scam. There are hundreds of ways to make money in rei. And let me tell you, no matter which methods you choose you will ALWAYS have callers/sellers that you call you a scam artist or worse. Regardless of the legitimacy of your investing activities. Regardless of your honesty.
Remember in some instances you will be making money and the sellers will be losing money. Not everyone is emotionally and financially mature enough to take responsibility for their situation and people lash out. Not to mention differences of opinions. Virtually all capitalist real estate activity is considered unethical by those of socialist leanings. It doesn’t matter what the caller thinks, it matters what you think.
Regarding letting sellers talk: At some point in every conversation now I say a little bit about what I do (I do mostly wholesale deals). I say that I am an investor and that I make money doing this and that I won’t be able to pay fair market value. And then we figure out how I can help. The service/product I offer is taking the property totally as-is and can usually close quickly. And there are sellers who are so grateful and happy not to market the property or make repairs. But when I get calls from people who won’t even tell me what they are looking to get out of it, I figure they aren’t terribly motivated and tell them to keep my name and number and call if my services or offer are of interest in the future.
Get off the phone with anyone who doesn’t want to tell you what they need. When someone who needs a solution like a lease/option or subject-2, the script won’t be so important. You will have the right solution at the right time.
Make sure you are getting a lot of calls, so that one like this does not matter.
Sincerely, Kristine
Re: Blowing my first L/O contact-Help! - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on November 07, 2002 at 15:54:06:
Bryan–(CA)----------
Gee, I thought you read a lot of the posts here. John $Cash$ Locke has said that you do not talk on the phone about what you are doing. You use that to qualify the prospect and set up an appointment for meeting the prospect. Once at the house, you talk about what you are doing, but in terms that the prospect can understand. What you are doing for that person. And why would you be talking about market value anyway?
You may want to study some books on sales skills. And the postings on the lease-option and subject to techniques.
Good InvestingRon Starr***
Re: Blowing my first L/O contact-Help! - Posted by pi-fl
Posted by pi-fl on November 07, 2002 at 15:15:11:
Bryan,
Versus seeing this as a scam, you should be looking more as helping people. If the seller is not motivated, move on! If you are that thin skinned, move on!! This is not the business for you!!
Two years ago, I moved from Atlanta to FL. I lost $10K selling my house, because I did not know how to get out from under the debt load. I have since been educating myself, investing to help others, so they do not have to learn the hard way. I am in it for profit, so if the deal is not profitable… I move on!!
Re: Blowing my first L/O contact-Help! - Posted by Ray_Tx
Posted by Ray_Tx on November 07, 2002 at 14:21:32:
Hey Bryan, I can tell you that it is not a scam. Let me explain. Several years ago, I owned a home. My job was going great and I received a HUGE raise. I was earning over $125K. I went ahead and made the biggest mistake of my life. I bought a bigger house and rented the first house. 8 months later the bottom fell out. The company I worked for sold and I was left unemployed and with very little savings (again my fault.) My renter’s lease was up and they left, trashed the place by the way. To make matters worse my wife and I filed for divorce and I spent even more money fighting for custody of my children. I could only afford one mortgage.
Do you think I would have kissed the ground you walked on if you came to me and offered to lighten my financial load. YOU BET. I was motivated to sell or to do anything to avoid foreclosures and a huge loss. There was no help for me then. And I paid the price. Bankruptcy was the only way I knew out.
Now I am a newbie investor, slowing getting back to where I want to be. I am doing it pursuing " wholesale flipping and L/O. Why L/O? Because I can relate. I know what it’s like to be out of options and I believe the service I offer can help others, because it would have helped me.
I Hope this helps you.
Good Luck
Believe in What You Do and Others Will Also!
Lease-Option - Posted by Sean
Posted by Sean on November 07, 2002 at 14:18:03:
Is that the word you used to the guy – lease-option? These are words not easily understood by most people. If you took a hundred people by random off the street and asked them what an ‘option’ was who do you think would come up with the answer you’re looking for?
Use the words ‘Rent To Own’ because they are more easily understood.
Why would anyone sell a house for less than it’s worth or pay more for a house than it’s worth? If you think a house is worth $100,000 and you offer $90,000 for it, are you just trying to rip someone off of $10,000?
There is no absolute definition of worth. What is worth something to one person may be worth a lot less to another person. To an accountant a financial calculator may be worth its weight in gold, but to a farmer it’s a useless piece of junk. Offer a tractor to an accountant and he will not want it, but a farmer very well might.
The very basis of our society is the flow of money and property from places and uses where they are less valuable to places where they are more valuable. That’s the essence of buying/selling/trading anything. Every day at our job we sell our time for a certain amount and an employer buys it because, to him, it’s worth more.
If a farmer grows food and a doctor provides medical care in exchange for that food no one is ripping the other person off. It’s a mutually beneficial trade. If the trade wasn’t beneficial, then people wouldn’t make it.
There are ways to make money in real estate, but most people on this board make the money in one of two ways:
A) Investing; or, B) Speculating.
If you invest in real estate then you buy that real estate so that you can enjoy the revenue that the real property creates (such as rent). Few people on here invest in vacant land because raw land doesn’t produce income. Investors are going to typically want a duplex or an apartment building.
Speculating, on the other hand, is providing a risk-management service to a seller. A realtor approaches the seller and tells him that, if he gives the property three month’s worth of exposure, that he is likely to get $100,000 for it. You, however, can show up and offer him $85,000 cash right now, no contingencies and a 1 week close.
At this point the seller needs to decide if the risk-premium you are charging is worth it to him or not. This depends on every person’s unique circumstance, but mostly we find that Motivated Sellers are more likely to accept fast cash now as opposed to the possibility of larger cash later.
What could make a seller motivated? Having the IRS at the door demanding money for back taxes can make sellers very anxious to raise fast cash now. Let’s face it, IRS interest and penalties are NOT cheap. He may be saving money by taking the fast cash now.
Or he may have been transferred by now job and be living in another state. He may be needing to pay rent or a mortgage on a new place while paying on the old place. People like this NEED to sell their places quickly and get to a stable cash flow.
A lease-option agreement may be perfect for this person. It mitigates his negative cash flow problem immediately and usually offers him greater value down the road. You should not be ashamed of the idea that you have a tool in your toolbox that can instantly solve a seller’s problem while bringing you increased value. You should be happy that you can benefit others while profiting.
What you need to do is clearly understand what type of PRODUCT or SERVICE you are providing to people, then determine the type of people who MOST NEED what you are offering. Then get out there and offer it to them.
Re: Blowing my first L/O contact-Help! - Posted by Crickett (Seattle)
Posted by Crickett (Seattle) on November 07, 2002 at 13:52:20:
Bryan,
Remember that you are looking for MOTIVATED sellers. Not every person who calls you off your advertising will be motivated.
How did the conversation go? Did he call and ask what you do and you launched into the L/O explaination? Or did you draw out his situation first, to determine if there was anything you could do to help him, letting him talk about all his problems and reasons why he can’t sell conventionally, let along for retail market price, BEFORE you offered the L/O as a solution to his problems?
Even if you spent 3 hours drawing out his problems and letting him paint his own picture as to why you were his only solution and there was really no other way for him to get rid of this problem house, if he blows up, remember: SW, SW, SW, NEXT!!!
Crickett
Re: Blowing my first L/O contact-Help! - Posted by Bryan-SactoCA
Posted by Bryan-SactoCA on November 07, 2002 at 13:27:40:
I’m starting to wonder if all of creative RE is a scam. The whole buy low sell high thing could indeed be seen as a scam. Look at flipping-why would anybody buy a house for more than it’s worth?
Re: How NOT to handle a telephone call . . . - Posted by Bryan-SactoCA
Posted by Bryan-SactoCA on November 07, 2002 at 19:47:21:
Actually, I was caught totally off guard by his insistent demands to know what I was up to. So I told him that I buy at mortgage value and sell at market value, because that was the only thing I could think of. No wonder he got mad. I need to reread your course, I see.
Re: Blowing my first L/O contact-Help! - Posted by Bryan-SactoCA
Posted by Bryan-SactoCA on November 07, 2002 at 18:19:15:
Actually, this was the first call I’ve ever recieved, which explains why I was so poorly prepared. I’ll spend the next couple days reviewing sales books and finding out how to make a good phone pitch.
Re: Blowing my first L/O contact-Help! - Posted by Bryan-SactoCA
Posted by Bryan-SactoCA on November 07, 2002 at 16:30:35:
I don’t actually read that many posts here. There’s so much stuff on any given day that I let most of it slide. The guy refused to tell me anything until I spilled the beans to him, which should have been a big red flag. I haven’t read that much sales stuff, just Tom Hopkins’s book.
The essence of REI - Posted by Karen Mi newbie
Posted by Karen Mi newbie on November 07, 2002 at 16:34:22:
Your post was the reason I pursue rei. Helping people. You answered his problem/venting in the very best way possible-real life experience that most people can relate to. Thanks
Re: Blowing my first L/O contact-Help! - Posted by Bryan-SactoCA
Posted by Bryan-SactoCA on November 07, 2002 at 14:35:25:
What should have tipped me off is that the guy couldn’t even remember who I was; he said that he calls “all sorts of flyers”.
Re: Blowing my first L/O contact-Help! - Posted by Bryan-SactoCA
Posted by Bryan-SactoCA on November 07, 2002 at 14:18:02:
Yes, he called and asked me to explain so I did. He wouldn’t tell me anything about his own property until I told him how it worked, and when I did he called me a swindler. I really don’t have much sales experience, so when he asked me how it worked I just told him.
What ticks me off is that I KNEW that creative RE was all a scam, but I let the people on this board convince me otherwise. I set all this up only to have people get mad at me for being a scam artist. I’m crying now-I was so fooled. Is that what you guys do for a living, lie to people?
Re: Blowing my first L/O contact-Help! - Posted by michaela-ATL
Posted by michaela-ATL on November 07, 2002 at 14:16:38:
bryan,
now you start believing exactly what some of the media is trying to convey. just because there are some people out there, that are unethical and take advantage of people and try to sell properties for more than they’re work, that doesn’t mean, that we’re all crooks. some people give all of us a bad rap. this is all twisted backwards. flipping is not about selling the house for more than it’s worth, but to buy it from a motivated seller for less than it’s worth. you make your profit when you buy.
michaela
Re: Blowing my first L/O contact-Help! - Posted by Crickett (Seattle)
Posted by Crickett (Seattle) on November 10, 2002 at 16:50:20:
Bryan,
You don’t need to “make a pitch.” When the seller on the phone starts demanding to know what you do or can offer, without giving any info about what they want, tell them “Well, I am an investor, and I buy and sell properties. Now I can do that a number of different ways, but it will depend on YOUR situation and what YOU are looking to do. Tell me a little bit about your situation, and I’ll see what I can do to help you.” The ball is now in his court.
But overall, in reading this thread, I can see that you still need to do a few things:
If you don’t change your attitude on this point, you should find another field.
Crickett (Seattle)
Re: Blowing my first L/O contact-Help! - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on November 07, 2002 at 21:09:01:
Bryan–(CA)------------
Yeah, I read your other post about this conversation. It sounds like this was not a serious seller anyway. Just somebody trying to pump a fellow investor to see if there is another way to operate.
You have to pick up a lot of ugly stones to find a few golden nuggets. And this particular rock had sharp edges and a sticky goo on it. Not nice.
But, you?re doing ok. At least you?re getting calls. You?ll probably have to talk to about 20 people before you get a deal. Your persistence will pay off, eventually.
Good InvestingRon Starr******