Why I Flopped on a Major Deal (And How You Can Avoid It!)
Yo, what’s up, fam? So, let’s dive into a juicy tale about how I totally flopped on a deal worth fifteen to twenty grand. Yup, you heard that right! I was all set to snag a sweet cash offer from a seller who was looking to retire and sell fast, but I messed up big time by not getting her to sign the paperwork. I mean, we all know timing is everything, right? I’ll break down the whole saga, share my numbers game, and spill the tea on how you can dodge my mistakes and come out on top in your own real estate hustle. Stick around, 'cause I’m dropping some real gems on how to keep your deals locked down!
How I Lost $20K by Skipping This Step 😱
Visit https://www.paynelessflipping.com to learn how to do real estate deals the payneless way!
Ever found yourself at the Salt Lake City Airport, just chillin’ and thinking about the deals you missed out on? Well, Nathan Payne spills his tea on a $15,000-$20,000 deal he totally dropped the ball on. Picture this: he’s on the phone with a seller who’s ready to retire and wants to sell her house quick. Sounds like a slam dunk, right? But, as Nathan dives into the numbers, he realizes she’s asking for way more than what makes sense. After all, if your house is worth $350k and you want $300k, but it needs repairs, you’re in tricky waters. Nathan explains how he usually runs the numbers with this nifty tool called Batch Leads, but this time, he got lazy and missed the paperwork. And guess what? The seller ended up going with another buyer, and Nathan’s left shaking his head. So, what’s the moral of the story? Don’t be like Nathan! Always get that paperwork signed, folks. You never know when a good deal might slip through your fingers!
Takeaways:
- When hustling for deals, always get sellers to sign paperwork, or you might lose out.
- Understanding your local market can help you flip or wholesale a property successfully.
- Don't be lazy! Get the right contracts signed to secure your deals and avoid losing them.
- Running the numbers is crucial; make sure your offers align with what the property can yield.
- Communication with sellers is key, but also ensure you have the legal backing to protect your interests.
- Mistakes happen, but learn from them and tighten your processes for future success.
Companies mentioned in this episode:
- Batch Leads
Links referenced in this episode:
Transcript
What's going on, everybody?
Speaker A:It's Nathan Payne, and I am at the Salt Lake City Airport right now.
Speaker A:And I have to tell you something.
Speaker A:I got to tell you guys why I lost out on a deal.
Speaker A:It's about a fifteen, twenty thousand dollar deal that I lost out on.
Speaker A:I'm making this video so you guys don't make the same mistake that I did, all right?
Speaker A:And just so you know that you can use batch leads anywhere in the world, at the airport, at your house, in your office, in the safari, if you got Internet in the jungles.
Speaker A:Let me explain to you guys why I lost out on this deal and how you can avoid that from happening to.
Speaker A:So let me tell you this story.
Speaker A:So I'm working with the seller, and I get this lead and I call the seller and I say, hey, you know, are you interested in selling?
Speaker A:What you got?
Speaker A:You interested in selling?
Speaker A:Took her through the normal sales process, all right?
Speaker A:And she was interested in selling.
Speaker A:She need to sell quick.
Speaker A:She was wanting to retire.
Speaker A:So I went through my process of asking her, you know, what options she's explaining, and she's like, I don't really want to list it.
Speaker A:I said, do you want to list it?
Speaker A:She said, no, I don't really want to.
Speaker A:I want to sell quickly.
Speaker A:So after taking her through, do you want to keep it?
Speaker A:She's like, no, I need to sell it in order to retire and buy something else.
Speaker A:We finally found out that she wants cash offer.
Speaker A:Okay, so then I run my numbers, and let me show you guys how I get the process of running the numbers.
Speaker A:So this is how it's done.
Speaker A:I go to batch leads, I type in the information of the address, look up the property, See, See the details?
Speaker A:And then I kind of have a good idea.
Speaker A:After that, I talked to her, and I'm like, okay, so let's establish what the ARV of your house is worth.
Speaker A:What is your house worth?
Speaker A:Fixed up, and her house was worth about.
Speaker A:We saw it was about worth 350.
Speaker A:Okay.
Speaker A:And her house wasn't too bad.
Speaker A:But, you know, I started putting in the numbers, and I was like, okay, so if your house is worth 350, it might take me a couple months to flip.
Speaker A:I'm gonna have to get hard money.
Speaker A:And if I flip it, I'm gonna make a certain amount.
Speaker A:If I wholesale it, I need to make a certain amount.
Speaker A:So I started putting the numbers in there, and she said she wanted 300,000, right?
Speaker A:So I was like, okay, at 300,000.
Speaker A:Ma', am, if I bought your house.
Speaker A:And if I was just a flipper, I would lose out on $70,000.
Speaker A:And there's a 20% negative net profit to flipper.
Speaker A:No flipper is going to take that.
Speaker A:I can't make any money as a wholesaler.
Speaker A:Even if I zero this out, I'm not making any money, okay?
Speaker A:So I said, look, now, the best I think I can do if your house needs a medium rehab, even at 240, as you can see here, it still didn't really even make sense as a flip.
Speaker A:So I needed to be even lower.
Speaker A:Right?
Speaker A:And this is a flip.
Speaker A:This is how you determine a flipper.
Speaker A:If this is a good deal for a flipper, her house actually wasn't in that bad of shape, so it might not have taken that long, like, let's just say four months.
Speaker A:So you've got to see if the net profit falls between a certain percentage.
Speaker A:You want to get it in the green, you want it in between 15 to 20%.
Speaker A:So again, after running the numbers, you know, I was needed to get it at a really low price for it to make sense.
Speaker A:So I think I ended up offering her like 220 because I was trying to make about 15.
Speaker A:And she denied it.
Speaker A:She's like, nah, nah, it doesn't work for me.
Speaker A:Somebody already offered me 275.
Speaker A:So I was like, wow, 275 and your house needs about 26k repairs.
Speaker A:To myself, I thought, how's that even possible that they're going to make that much money?
Speaker A:Like, they're not going to make any money as a flip.
Speaker A:So I thought to myself, I was like, hmm, maybe this is a different kind of buyer.
Speaker A:So I was like, maybe I should do a novation, right?
Speaker A:So I took my calculator and I threw in the numbers for novation, right?
Speaker A:So I went over here and I said, okay, the market value 350 is what the house is probably worth.
Speaker A:Flip.
Speaker A:So if I do a novation, 330, let's say the market value of the house currently is 330.
Speaker A:Actually, I thought it was like 320.
Speaker A:Okay.
Speaker A:After running these numbers, the way that novations work is you're trying to list the house for the seller and then you're saying, hey, I can put in some repairs so you don't have to, and you list it for them on the market and then you can make a fee.
Speaker A:So I said, okay, if I take this house if it's market value, and I put it on the MLS after repairs and fees, everything, the market value is 320.
Speaker A:I'd have to put it 95%.
Speaker A:304.
Speaker A:After commissions, fees, everything in here.
Speaker A:267 is what my max allowable offer to her would be if I'm trying to make 10,000.
Speaker A:So again, she got an offer.
Speaker A:275.
Speaker A:And I'm like, there's no way.
Speaker A:This must be a noob wholesaler.
Speaker A:This might be someone that doesn't know what they're doing.
Speaker A:Because if my cash offer has to be down this low, then I can do a novation.
Speaker A:And then I asked her, what about, you know, creative financing?
Speaker A:And she's like, nah, I want the money now.
Speaker A:So I was running through these numbers, and if you're all like, well, Nate, are you running through these numbers in your head?
Speaker A:Actually, just so you guys can see, I actually did a zoom call with the seller, and she was walking me through her house.
Speaker A:This is me on the call with her.
Speaker A:She's actually giving me a walkthrough of the property, as you can see.
Speaker A:So I'm establishing the seller.
Speaker A:At the end, after she walks me to her house, I show her some comps in the area, what they're worth.
Speaker A:Also, I ran the numbers with her, and I said, hey, look, this is if we flip it.
Speaker A:This is if I list it with you.
Speaker A:These are all my options.
Speaker A:And at the end, I really couldn't find a way to beat that other offer that other buyer was giving her.
Speaker A:So I was like, maybe I'm missing something.
Speaker A:Okay, I'm in Utah.
Speaker A:This is my market.
Speaker A:But maybe I'm missing something.
Speaker A:So this is what I said to her.
Speaker A:I said, look, maybe I'm missing something.
Speaker A:The numbers don't make sense for me to go up that high to flip it.
Speaker A:If we were to partner on it, maybe I could get you that much.
Speaker A:But let me run this by a couple of my business partners.
Speaker A:I basically told her, hey, I'm gonna wholesale it.
Speaker A:I said, hey, let me run this by a couple of my business partners.
Speaker A:But in order for me to do this and see if anyone can pay more than me, I need you to give me a certain amount of time before you go sign with someone else, okay?
Speaker A:And she's like, sure, I'll give you a week.
Speaker A:I'm not in any hurry.
Speaker A:That's what she said to me.
Speaker A:And me being gullible and kind of lazy because I didn't want to fill out the paperwork that I'm about to show you.
Speaker A:I just said, okay, just give me a week.
Speaker A:So I filled out, like, a landing page with her Information.
Speaker A:She sent me a bunch of pictures and I sent it out to my buyers.
Speaker A:You won't believe this.
Speaker A:So I sent it out to one of my buyers.
Speaker A:One of my buyers is like, yeah, I'll take it for two.
Speaker A:I think he said 280, right?
Speaker A:So I have it.
Speaker A:275 is the office you wanted.
Speaker A:If I have to beat that or can match it.
Speaker A:So it's 5K, right?
Speaker A:On a deal that doesn't really make sense.
Speaker A:And I said, why do you want this?
Speaker A:He's like, I want it as a rental, okay?
Speaker A:So the rental numbers don't really make sense, but in this area, because you have to understand your market, this is probably like the one of the cheapest properties in this area at 275.
Speaker A:There's not very many properties under 300,000 in this area.
Speaker A:So people will buy even though it doesn't make sense because they're basing off appreciation.
Speaker A:So that's probably what the other buyer saw.
Speaker A:He was like, well, let me buy it.
Speaker A:Still the cheapest home in the area, and I'll just rent it out and sell it for more later and let it appreciate.
Speaker A:So my guy offered me 280 and he's like, hey.
Speaker A:I called one of my student, his wife is an agent, and I said, hey, maybe she has some families that would want to move in.
Speaker A:So she said she sent it out to a couple people and they're willing to pay 295.
Speaker A:So there you go, 275.
Speaker A:295.
Speaker A:That's 20K.
Speaker A:So I'm like, right here.
Speaker A:I'm like, dang, I got this deal done.
Speaker A:So as I'm doing this, the lady said she would give me a whole week, right?
Speaker A:This is three days and I already find people.
Speaker A:What do you think happened?
Speaker A:She hits me up three days into it and she's like, hey, sorry.
Speaker A:The other buyer's really pressing on me.
Speaker A:I need to go with them.
Speaker A:I thought I had more time and I'm like, whoa, whoa, whoa, hold on here.
Speaker A:I have somebody.
Speaker A:We just need to let them see the house.
Speaker A:And because the other buyer was quicker and because I didn't get her to sign anything, she just moved on.
Speaker A:You know, after I built that amazing rapport, all that stuff, she still said she's going with them.
Speaker A:Now, look, this doesn't mean the deal's over.
Speaker A:The other buyer could bounce, a lot of things could happen.
Speaker A:But I'm just letting you know, if you're going to do what I did with the option to purchase agreement, where you're just saying, hey, let me run this by people, get them to sign something, okay?
Speaker A:Because if you don't get them to sign something, they could say they have a week, they can give you a month, they can change their mind at the split second.
Speaker A:Buyers and sellers can change their mind anytime they want.
Speaker A:So just get them to sign the right paperwork.
Speaker A:Taking a deal that I didn't think was a deal, found out because I reached out to my buyers, because I know my buyers within two or three days I was able to find out that I had a 5 to $20,000 deal and the numbers didn't make sense.
Speaker A:Now this is going to happen sometimes because some people might really like the area, you might have the right relationships to get it done.
Speaker A:But all I'm trying to tell you, trying to beg of you, just like this just happened to me.
Speaker A:Go and get the sellers assigned the paperwork.
Speaker A:Let me show you what I should add or sign.
Speaker A:So this is called an option to purchase agreement.
Speaker A:What the option to purchase agreement is, it basically lets you wholesale their deal.
Speaker A:You agree on a specific price with the seller.
Speaker A:So I would have just said, hey, buyer has the option of buy or lease option.
Speaker A:The property at blank at 275,000.
Speaker A:I would have had her sign this, I would have had her give me 7 days, 7 day option period address she would assign.
Speaker A:And this says right here, seller may cancel this agreement at any time if they find their own buyer, but must provide 72 hours first right refusal to buyer to match or beat the new offer in writing.
Speaker A:So again, this could have been something that I did, but again, I was lazy.
Speaker A:I didn't want to put this into my docusign.
Speaker A:I didn't want to put it into and doc, that's actually what I use to send this out to her.
Speaker A:And when I thought, you know, she would just go with me because we had a good relationship, she just went with the other buyer because they were serious, they made the offer and they were going to say they were going to buy it.
Speaker A:So you know, these are all hypotheticals, but I'm just trying to let everyone know that's watching this.
Speaker A:Don't lose out on the deal like me just because you're too lazy to just ask the seller like, hey, I actually have some great buyers in this area.
Speaker A:I think they might be interested in it for me to legally reach out to them.
Speaker A:I need you to sign this option of purchase agreement just for me to run this by them also when they sign this.
Speaker A:And you have the right to look for an end buyer through yard advertising the property for sale by owner means of the Internet, social media on the mls, you can list it or other marketing methods.
Speaker A:So you can do pretty much market this out any way you want with this contract.
Speaker A:You're just being transparent to them and you're saying, hey look, let me run this by some of my buyers.
Speaker A:It's like wholesaling, but you're just telling them you're wholesaling it instead of just saying I'm going to buy it.
Speaker A:Okay, so that's pretty much all I got to tell you guys.
Speaker A:Now I'm not too upset or worried because I just learn I've been doing this for four years, five years, and sometimes being too lazy and not getting it done, not having people sell or sign and getting the tank.
Speaker A:The proper steps will bite you in the butt.
Speaker A:But sometimes you got to have some of this stuff happen to you so you can bounce back and not waste your time, not, not do it again.
Speaker A:So that is how I lost out on deal.
Speaker A:At the moment it's very possible, very, very possible that she'll call me back.
Speaker A:That's what you gotta do.
Speaker A:You got to, got to, got to get sellers assigned thanks to batch leads.
Speaker A:I never give up thanks to batch leads.
Speaker A:I got the right info, but just need to sign the right paperwork.
Speaker A:So don't lose out on deals.
Speaker A:Take action.
Speaker A:Run through the numbers with the seller.
Speaker A:Run through the numbers yourself so you know exactly what to offer.
Speaker A:This one did not meet the numbers, but there was something funky about it.
Speaker A:Found out because I had buyers in the area real quick.
Speaker A:What it was find buyers, do the pay in this wholesaling method.
Speaker A:That way I was able to find a buyer like that.
Speaker A:But again, I should just locked it up.
Speaker A:There's a lot of things I should have done.
Speaker A:But you live and you learn.
Speaker A:So bachelor for life.
Speaker A:Peace out everybody.
Speaker A:Have a great weekend.
