The title for this post may seem a little offensive, but I really want to drive the point home about some things that I see investors (including myself at times) do that really hurts our collective image in the house flipping business.
What made me decide to do this list is something that happened this week. Something that really makes all of us look bad. No investor should ever act the way I learned an investor acted this week. I’ll share what happened when we get to that item in the list.
Actions To Avoid If You Want A Good Reputation
Being Short With Motivated Sellers
This is one my wife pointed out that I have a problem with from time to time. You see, I do get busy and I am the world’s worst multi-tasker. Don’t even think of trying to get me to do two things at once. Disaster is sure to strike.
This situation happens regularly where I am working on something and the phone rings. Any other business and I would probably just let it go to voicemail.
Not when flipping houses! You don’t want them immediately calling your competition, so we’ve got to pick up the phone. Therein lies the problem. I’m being interrupted and sometimes my conversation with the seller is contaminated by it.
After hanging up, Melissa will say something like “GEEZ! You were RUDE!” Then comes the immediate sinking feeling. I hadn’t even realized it.
I’d have been better off just letting it go to voicemail.
Acting All High and Mighty
This is one my pet peeves. Besides, this one allows me to vindicate myself a little from the last item, because I feel that I do the exact opposite of this one.
After being in this business for so many years and working with motivated sellers, I’ve come to the conclusion that most of the time, sellers don’t fear selling their houses for a low price, rather they fear being taken advantage of. Most don’t know the ins and outs of real estate and figure that you do. You have that power over them, but you don’t want them feeling inferior.
We’d all do much better if we go in with the idea of treating sellers with respect and being friendly. Don’t go in with such a big head that you can barely get in the front door. You’ll immediately build a giant wall between you and the seller.
This one goes beyond working with sellers, this one really involves anyone that you interact with in this business.
Ripping A Sellers House Apart
Yeah, it may be funky. It may be outright disgusting. But you’ve got to refrain from rubbing the sellers’ face in it. We must show some respect and be understanding.
We will all do much better if, when we visit a house being sold, we just point out the things that we like about the house and talk about the potential it has.
The seller knows the condition of the house and is usually really embarrassed about it.
You want to be on their side, working with them. This one is sort of an extension of the “High and Mighty” item.
Treating Contractors Like Dirt
You may immediately be thinking about a certain house flipper that was on one of those house flipping shows over the last several years. I’m not going to name names, but it does rhyme with bongo.
These are members of your house flipping team and as such, you’ve got to regard them with as much respect as you do a real estate attorney or closer.
Sometimes it can be hard, as you also have to negotiate with them to get jobs done faster, for less money and with better quality. This is what leads to the problems most of the time.
Improving your negotiating skills should eliminate some of the problems with this one. If you can find ways to make compromises that benefit both sides instead of just making demands without giving anything more in return.
Be nice to your contractors (within reason, you don’t want to be taken advantage of) and your jobs will go much smoother and the work will be of higher quality. Compliment their work and take time to talk with them.
Promising What You Can’t Deliver
If you don’t have the means to actually close on a deal, it’s best you either don’t contract to buy it or be completely honest with the seller or agents as to what you are intending to do. If you intend to wholesale the house AND aren’t 100% sure that you will find a buyer that can close on it within the time specified, let the seller know that you are not the one that is going to close on it. You will be working to find a buyer.
You don’t want to be the one that convinces the seller that they have their house sold and have them make decisions about their next steps, only to find out that you can’t follow through. This could really screw things up for them, especially if they are facing foreclosure.
There was a local company teaching people about flipping houses that put out a podcast for new investors. I couldn’t believe my ears when I heard them telling new investors to always put every house under contract and to use an escape clause so that they can figure out whether it is a doable deal after they contract it. WHAT?!?!! That is the quickest way to a horrible reputation.
I don’t know about you, but I like to sleep well at night.
Backing Out of a Deal
Here’s an extension of the last one. You really need to do your homework and be confident that your offer is one you can live with and one that you can actually close on (or find a buyer if you are wholesaling).
When I came up with this one, I was thinking more about wholesale buyers that tell you they are want your wholesale deal, only to back out. It never fails to amaze me how many investors will tell you they want it on the phone, only to never call you back or show up to sign the contract.
It’s even worse, when they wait until the day after signing the contract to tell you that they’ve made a mistake. I guess that is better than waiting until closing to figure it out. They still look like an ass.
Forcing A Seller To Sell
This one is the last but definitely not the least. In fact, this one will make you look more like an ass than all of the others combined.
An situation came to my attention this week regarding this item that made me consider a list like this. A seller was facing a tough situation and needed to sell their house. I had made an offer on the house and the seller told me they had another investor coming later in the day to look at the house.
The other investor appeared to have offered more than me. The seller was told that the a small lien on their house would be paid by the buyer. So even though the total paid for the house was less than my offer, they would NET more because I had the small lien being paid by the seller.
That was all fine and good until the seller realized that no where in the contract they had signed, did it say anything about the buyer paying the lien. When the seller realized that this was left out of the contract, she called the investor and asked why it was left out.
This investor proceeded to tell the seller that she must have misunderstood him. She stated that she knew he had agreed because she had made him repeat it when they were discussing the sale.
Clearly, the seller only signed because of what she thought was agreed to. Any self respecting person would understand and either agree to write it in the contract or renegotiate or gracefully bow out of the deal because there was a disagreement.
No, this investor wasn’t about to do that. Instead, he decided it best to inform the seller that he was good friends with an attorney and that the contract was already signed and they would have to close.
What an ass!
We will all be better off avoiding doing these 7 things that make us look like asses. I’m not just pointing the finger at other investors because I’ve also done things to make myself look like an ass on more occasions than I’d like to recount.