Real estate wholesaling can be an incredibly lucrative venture for those willing to master the art of negotiation and the intricacies of the market. For anyone who gets nervous on the phone and wants to close their first wholesale deal, here is some insightful information on how it’s done successfully.
Wholesale real estate is a strategy where you find a rundown house, get it under contract, and then make a finder's fee by passing the contract to an investor who will close on it with cash. In this blog post, we’ll dive into the details of a phone call that led to a $130,000 profit, sharing the exact approach taken in such scenarios and key learnings to help you succeed.
Introduction
Ryan Haywood, who has completed 425 real estate wholesale deals in St. Joseph, Missouri, since 2019, collaborates on this discussion as a co-host. David Lecko, who has created a process that has helped people close 10,000 deals across all 50 states with the software platform called DealMachine, shares a successful call that led to a substantial profit.
The Strategy Behind Closing a Deal
The Setup
David Lecko received a phone call about six months ago following a postcard his team sent to potential sellers. This call eventually led to a significant profit of $130,000.
The Background
Ryan shares his initial experience where he completed a 30-day wholesaling challenge and made $8,500. The motivation behind this was to replace his 9-to-5 income. Interestingly, Ryan achieved this goal within 14 days, showing early success in his real estate wholesaling journey.
The Phone Call Breakdown
Initial Conversation
The implemented strategy involved a highly-structured approach to the phone call. The opening moments of the call were crucial in setting the tone.
"Hey, I received your postcard and I'm interested in selling my property. What can you offer?"
Positive and approachable interactions from the start set the stage for a conducive negotiation environment.
Address First
David advises getting the address right upfront as it allows pulling up key statistics about the property on the DealMachine app. This is instrumental in assessing the potential and preparing for a meaningful discussion.
Exploring Property Details
The call continued with discussing the property's current state and understanding its requirements.
“The property needs some flooring, kitchen, and bathroom work. It's been emptied but requires finishing.”
This shows transparency on the seller’s part, which is a good sign of genuine motivation to sell.
Appointment Setting
One significant tactic Ryan emphasizes is setting up an appointment as quickly as possible. This allows assessing the property in person, which is vital for determining its true value and necessary repairs.
“Can we schedule a visit tomorrow, or would Monday work better for you?”
Giving options to the seller showcases flexibility and accelerates the process, ensuring the seller remains engaged and committed.
Empathy and Relationship Building
Building Rapport
Ryan highlights the importance of empathy in creating a trustworthy relationship with the seller. Establishing a connection can sometimes be more beneficial than merely offering the highest price.
Empathy Pays Off
Empathizing with the seller’s situation, such as understanding the frustrations of unpaid taxes or a non-responsive partner, adds a personal touch, making the seller more inclined to close the deal with you despite potentially higher offers from others.
“People have told me they chose my offer over others because they felt I genuinely cared and understood their situation.”
Closing the Deal
Making an Offer
After analyzing the property and understanding the seller’s needs, David offered $160,000, which the seller accepted despite owing $180,000. The seller brought $20,000 to pay off the remaining loan amount and back taxes, demonstrating their eagerness to close the deal.
Analysis and Final Words
The process took about six months, underscoring the importance of patience and thoroughness. David stresses leaving a 25% margin of safety when making deals to accommodate potential unforeseen expenses and ensure profitability.
“130,000 seems like a lot, but considering the time and resources invested, the margin of safety ensured it was a smooth project.”
Conclusion
Real estate wholesaling can be highly rewarding, but it demands a structured, empathetic, and patient approach. By analyzing the successful strategies employed in this call, readers can gain insights into effectively navigating their own deals, emphasizing the importance of rapport, rapid appointment setting, and maintaining a margin of safety in financial assessments.
Subscribe for More Insights
For more actionable frameworks and step-by-step instructions on achieving financial freedom through real estate investing, make sure to subscribe to our podcast and leave a review to share your thoughts and success stories.
Stay tuned for more expert insights and inspiring success stories from the real estate world!
About Benjy Nichols
Benjy has been a media specialist at DealMachine for the last 2.5 years. He produces, writes, shoots, and edits our media content for our member's DealMachine and Real Estate education.