From: Mike C.
Sent: Friday, April 23, 9:12 AM
To: ** REI Tips **
Subject: Re: Question?I haven’t heard back from him yet, but when I do, I’ll keep you updated.
In the mean time, maybe you can answer this question. I hate to be filling your email with my questions, but I just need to know how I can protect my relationship with my seller? How do I prevent my end buyers from going behind my back on future deals and cutting me out? This potential seller buys property straight from a bulk REO source, so I could be getting property on a consistent basis from this seller. If you can help me, I would appreciate it.
Thanks,
Mike
Hi, Mike. Great question, and one a lot of us contend with at some point. And since I’m answering this one publicly, I’d like to emphasize that your question is not how to protect your interests on a specific deal you currently have under contract. That’s what an “Affidavit of Equitable Interest” can do, should you feel you need it. And you’ll find one in my bundle of 53 free REI forms.
Your question is more about how to prevent your regular buyers and sellers from working around you in the future if they want to. And honestly I’d love to share the secret formula with you here. But the truth is, there’s really no way I know of to do this.
After wholesaling somewhere close to 200 at this point, I have yet to hear of any way we as wholesalers can lock our buyers and sellers into an exclusive ongoing relationship with us. (And really, if you step outside the wholesaler’s mind and put yourself in their shoes for a second, I’m sure you can appreciate that.)
But regardless of this, many of the most successful wholesalers out there do business over and over and over again with the same buyers and sellers. So what’s their secret?
Simply put, it’s being desirable. And in some cases, being indispensable.
How can you do this?
Here’s How to Make Them Want Need You…
1) Establish and cultivate a superb level of rapport.
Be above reproach and have the level of character, integrity and trustworthiness that cause your buyers and sellers to prefer doing business with you whenever they can. Be the kind of person you would want to work with. No, actually be better.
2) Be a rainmaker.
I can tell you, a lot of folks have wanted to do business with me simply for the fact that I established myself as an active and obvious leader in the area. I started and ran our local REIA group for 6 years. Running meetings, teaching workshops, going to investor lunches and standing up during “buy and sell” time with active deals can do a lot to make people want to connect with you.
I’m not suggesting you posture yourself as something you’re not. I”m saying become the kind of person others notice and are drawn to. Look for opportunities to become more of a center of influence and display your activity in the marketplace…and a lot of times you’ll find people want to do deals with you because it makes them feel good to work with a rainmaker. I know this might seem a strange concept at first, but it’s true.
3) Add authentic and unique value whenever possible.
Here’s a fact: Always being of authentic value to people should be a core value of yours anyway. If it’s not yet, then make it so.
So in perspective of the issue at hand, ask yourself how you can actually make it worthwhile for your regular buyers and sellers to go through you on an ongoing basis? How can you make them need you? Find out how it can actually benefit them to continue working with you…then make sure they’re aware of it.
- Can you save them time or effort by covering legwork they would have to ordinarily do?
- Can you somehow expedite some part of the deal? The research? The closing?
- Dont’ be shy about just asking them: “What can I do for you that would make your life easier, so we can do as many deals together as possible?” Then figure out how you can do that.
The bottom line is there’s no guarantees you won’t get cut out at some point. It’s happened to me and it’ll probably happen to any active wholesaler. And the reality is, it’s not like you’re being shafted if it happens (Unless you’re actually getting cut out of a deal you actively presented…and that’s a whole different ball of wax…) Most of the time, it’s a factor of you not bringing enough value to offset the cost of having you in the middle.
So how to most successful wholesalers protect their ongoing buyer/seller relationships?
By giving their buyers and sellers sufficient motivation to keep the relationship going. By being of authentic value on an ongoing basis. And by being the kind of person others want and/or need to do business with regularly.
So that’s what I got – hope it helps. Anyone else have any thoughts to add to this? I welcome your comments below…
Hey J.P. This is Mike.Thanks for answering my question.I appreciate it.I have learned so much from you and your website.Your awesome.
Have a great day.
Mike
Great info, obviously the name of the game is customer service. We are here to make money but so are all the other new wholesalers (which there are always new ones) so you should take time to host a few tables at local real estate events, try to get a good list of properties together (even if not all your own, help other investors) and start marketing them. Youtube videos and a blog helps tremendously in case people google you. There are a lot of cash buyers here in chicago and the investor world is smaller than you’d think. If you can establish yourself as a solid property finder and you dont jack your wholesale prices, your buyers will open doors to other buyers. Good luck to all. ChicagoCashFlowProperties.com
Mike,
Remember people value ‘good’ people (and companies) more then money, read below.
JP,
Excellent point! It is in fact proven over and over again with many things that people will go with what they are comfortable and happy with. Look at any business model, customer service is king, or the business will fail sooner rather then later.
A way to add a little ‘umph’ to most meetings for example, is to buy lunch when possible, small bill but it adds great rapport, and it usually provides a more comfortable and friendly atmosphere to help them open up. Now I’m not saying it works with everything, but you would be surprised at how much little things like that can add up, and go far.
PS: Excellent site! I think it may be more addictive then (Insert addictive substance here)!
Hey, Harry is here.
One way of preventing my buyers/sellers going around me is, I always have them sign my ( Non disclosure and Confidential ) agreement before I give out any info. it helps but NO Guaranty.
JP,
What about an NCND (non-circumvent/non-disclosure) for this situation? No address for a specific property was on this particular form. I know of one being used in this situation. It was a very expensive one I aquired that basically said the parties involved wouldnt bypass if the connection was made and that this was a continuing relationship and that no bypass would ever take place if transactions between the parties took place now or in the future. What’s your take on this JP? Hope it’s sound b/c I paid a lot for this particular form!
Hi, Jared – good question.
My thought is, if I put myself in the shoes of a buyer or seller, why would I ever want to sign such an agreement? I mean, I’d have to have a pretty compelling reason – like believing you could provide me with an exclusive, ongoing line of hot deals I just can’t get anywhere else.
If you can prove yourself an indispensable resource to them, then maybe you could approach them with such an agreement with some weight to your reasoning. But if you don’t have a big enough “reason why” – one they find very compelling, then they’re probably not going to want to have your agreement binding them on an ongoing basis.
Does that make sense? What do you think?
I would only add…
“FIND YOUR OWN DEALS”
I know that sounds blunt, but it really speaks to #2 above. There are two things EVERY wholesaler must have;
1. BUYERS
2. DEALS that MATCH PRECISELY what your buyers are looking for.
That lack of either makes you a very unhappy wholesaler. Now, its fine to market deals for others, that’s cool and I know a couple very successful wholesalers who do that, but if you REALLY want the big pay days, find your own deals, match them with your buyers – and split those paydays with No One!
Hope this helps.
JP,
Yes I can see what you are getting at here. The one I have simply says if I connect person “A” to person “C” then any time person “A” buys from person”C” I get paid b/c I developed the relationship. Maybe this exlaination is more clear on what I meant. Basically if I find a wealthy investor in lets say Tnn and I introduce him to a broker in Michigan that can get him many discounted homes he can buy for rentals then any time he bought from that person I would get paid. This is supposed to be how it would work from my best understanding. I did pay for a “guru” program and have implimented these contracts with several individuals and there are plans set forth to do some big deals that will take a long time before they unfold and are done so it will be a while before I know the outcome. Hope it does what it says! Did this make any sense JP? What is your take?
Feel free to email me direct or call if you like.
I see, Jared. That does make a little better sense. But still, I’m thinking an agreement to get paid on a certain “X” number of future deals between your “A” and “C” would be more reasonable. It doesn’t seem reasonable to me that you should get a piece of the pie forever and ever amen just because you matched the two initially. But that’s just my take.
I had a similar arrangement with a local friend of mine. If I referred a buyer to him, I’d get paid on the next 4 deals they did together, regardless. But after that he wasn’t required to pay me unless I brought something new of value to the table.
Just something to think about.
…jp
JP,
Glad to shead some light and it made more sense. I do see how the way you did it that people might be more likely to do it though. Good point you have here. So far I have not had any trouble but this does give me another angle to work from so thanks! I didn’t say who’s program I was refering to b/c I didn’t know if you would want me to mention it. Thanks for your quick response and as always I enjoy communicating on your blog and all the updated news you send out. It keeps me on the up-and-up on whats going on and new creative ways of being an investor!
Jared
Awesome points, brother. Thanks!
I agree that at some point or another, it may happen. But chances are, its probably not going to end up being one of your stand up buyers that come back to you time and time again. They’ll be a one and done, and they’ll end up literally cutting themselves out of future deals.
Also, I’d try not to get hung up on the “what-ifs”. Just make it happen, and if it does, I’d deal with it then. I know the “what-ifs” pop up a lot for new folks. I still get them today, but the real key is to not let them hold you back from taking action. That is when it is just time to move forward.
One way of preventing my buyers/sellers going around me is, I always have them sign my ( Non disclosure and Confidential ) agreement before I give out any info. it helps but NO Guaranty.
Thanks for all the advice everyone.I appreciate it.I’ve tried a variety of tactics to find my own deals( bandit signs, joining sites like realtytrac, searching FSBO websites, ect). I figured I’d try going through realtors to see how good that works.
I need a system that really works without spending a ton of money looking for leads.I know there’s a way.I’ll keep trying different ideas. I will stay persistent. Once I get a good system down that works for me, I will be rockin the REI world.
Have a great weekend everyone.
Mike
J. P. can you find out who’s course that is for me and let me know? I please want that agreement Jared is using. Jared do you get this?