Investing in Real Estate is almost never easy and many times you learn your most valuable lessons by deals that have fallen apart. The only real hope is that these lessons are not expensive ones, but many times they are. You can have all the mentors you want or have packed your brain with as much knowledge as possible and that still doesn’t mean you will escape the school have hard knocks.
My Lesson
Deal #2 is officially dead! After 2 weeks of calling the sellers trying to figure out why we haven’t heard from them after only getting the addendum signed (not the contract) we finally decided to call the attorney and got our answer. The sellers backed out because we lowered our price ($2000) from our original agreement (the one that they backed out on). They really needed 40k but we just couldn’t offer that to them.
The consequences for us are not huge…
- Lost $75 for the title search that was performed
- Lost a potential $5k wholesale fee
- Had to inform our buyer the deal fell through (potentially lowering our credibility slightly)
The lessons learned though are valuable…
- We learned we need to be a bit more forceful when it comes to getting the contracts signed. As the saying goes “Strike When The Iron Is Hot” applies here. What happened is that we gave the sellers to much time to think about the deal and our offer. They got cold feet.
- We learned a little about human behavior. When sellers stop returning phone calls all of a sudden, it means they are getting nervous about the deal. Motivated people will be sure to stay in contact and not give you excuses for “taking so long to call back”.
- Build up good rapport with the seller. The deal will go much smoother if the seller trusts you and feels comfortable talking about what they are thinking. I believed we did this, but I guess we didn’t or in some cases this just isn’t possible depending on the seller.
Even if Deal #2 is officially dead, we plan on following up with them next month to see how things are going. Our buyer is still interested if we can rekindle the fire.
What is your experience with sellers who suddenly stop communicating with you? How do keep the lines of communication open?
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Comments 10
Good post, Scott!
We definitely learn a lot through experience in this business. And, it’s always good to reflect on past deals to see what could have been improved on. Seems like you learned some valuable lessons on this one which is definitely a plus!
I would say #3 is probably one of the most important things to master and learn – it definitely gets better with time and experience. Building trust and creating long lasting relationships which benefit both sides is more of an art than an exact science. Though, it’s definitely worth it to try to master this skill.
Looking forward to hearing more of your updates, thanks for sharing! 🙂
Author
No problem Rachel! Hope you are doing well with your mobile homes, I haven’t had much chance to check on anyone’s blogs over the past 6 months. Starting next month I’m going to be getting back into that, I miss chatting with my friends.
How do you keep the lines of communication open with a seller who stop communicating? A card or note in the email, or a “hey how ya doin” email is about it. Remember, you aren’t going to do business with everybody. If they don’t want to sell, move on. However, a little follow up can be a good thing. I am closing a property today that I first contacted 3 months ago. I just put another under contract that I first contacted almost a year ago. In the past I have bought properties that I first made offers on several years back!
So don’t give up, but make your follow up efficient. Most of the people that quit communicating, you will never do business with.
Author
Definitely correct about the follow up Chan. We won’t give up, it’s not in our blood
Hi Scott,
I think it is very respectable that your end buyer has not swooped in and closed the deal without you guys.
I bet they come around, the longer they sit on it, market is only going down.
Author
We trust our end buyer. Plus if he were to swoop in and take it, he wouldn’t get any more deals from us that is for sure!
So I guess the sellers didn’t go with another buyer? Are they just hoping to find a better offer, then?
Author
They were just looking for more money and wanted to see if they could get it. My guess is that when we follow up next month they will still have the house.
“Strike while the iron is hot” I couldn’t agree more! It all comes down to relationship building. How well you can get people to move on deals and maintain a long lasting relationship. Because a successful deal 1, could lead to easier closing for later deals with the same seller or buyer.
Author
absolutely right Jill! That first deal builds confidence, connects all the dots and legitimizes you going forward.