Jade Jean Blog

On returning from our break, I had each contestant pick a telephone and get ready to make some real phone calls. Mary and Steve settled on a couch at the far end of the room. Karen and Philip found a table in the center of the room. Nora took up her position at the other end of the long room. I stood next to the Moores’ table and barked out the following instructions.

“Each of you has circled ten or fifteen potential don’t-wanter ads that I’d like you to call. When you find someone home, take them through the questions on the Bargainfinder. If you determine they aren’t flexible, excuse yourself and go on to the next ad. Always be courteous. Never burn your bridges. When you get to the tough questions, be sensitive. A house is the largest investment most people ever make, and they are very touchy about it. Try to understand their problem while getting a property score,”

Philip chose his most promising ad, picked up the phone and dialed the number. A man answered,

MAN: Hello.
PHILIP: Yes, sir, my name is Philip Moore. I’m calling in reference to the ad you have in the paper, “home for sale by owner.”

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“Yes.” “What are you trying to accomplish?” (That’s a nice way of saying, ‘What are you going to do with the money?’ Most buyers never ask that question and therefore never really understand the seller’s problem. How can you solve a problem that you don’t understand?)

“Well, we really wanted to cash out. But the market is slower and we need to move soon. I suppose we’d accept a down payment and carry some financing.”

Ah. Now you’re making progress. The seller understands he has a problem and is willing to be flexible to solve it.
“What would be the lowest price and best terms you feel you could live with in order to sell quickly?” (We’re getting to the bottom line.) “I imagine we’d need at least five thousand dollars down. We’d carry the rest.”

“Remember,” I concluded, addressing the Challenge team, “the purpose of asking these questions is to generate enough information to score the property. If the property scores well, you’re onto the next step—calling the hot line and letting us help you draft up an offer. But the first step is to find a highly motivated seller. “And finding a highly motivated seller is what we’re going to do right after we take a break.”

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“About sixty-eight.” “I see.” (This is not very flexible. If he had said seventy-five or eighty, we would have gotten excited.) “Why do you need to sell it fast?” “We’re moving to California.” “When?” (The closer the moving date, the more flexible he will be.) “Two months.”
“Have you had any offers?” (This question brings him back to reality. If he hasn’t had any offers, his price is generally too high. If he has had several offers, ask what they were. This tells you what he doesn’t like. It may also indicate that he’s not a don’t- wanter.) “Haven’t had any offers.”
“How long has it been for sale?” (The longer the better.)
“Six months.” “What is the current financing?” “It has an assumable FHA mortgage of $50,000 at eleven percent with payments of $525 per month.” “Are the payments current?” “Yes.”

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“This has several good clues in it,” she said. “ ‘Bring offers,’ ‘will take second’ and ‘consider lease purchase.’ “ “Bring offers’ is the weakest clue,” I told her. “It’s like ‘must sell’— everybody uses it. On the other hand, ‘lease option’ really means something. Common sense tells us that if he’ll sell it or rent it, he might not need cash. This opens the door for a nothing-down offer to buy.” “What about ‘moving’? Is that a good clue?” Mary asked. “What do you think?”

“Yes, especially if he’s moving out of state.” I nodded. “The more clues the better. And here’s a tip. The larger the ad, the smaller the flexibility. The seller who gives lengthy descriptions of his property using words like ‘immaculate’ and ‘custom built’ is hinting that the house is great but the financing is lousy. He’s a wanter. You’re looking for a don’t-wanter who runs smaller ads with blatant financing clues like ‘low down,’ ‘will carry financing,’ ‘will trade for equity.’ Once you find the don’t-wanter, then you can check out his property. Do your prospecting on the phone, not in your car. No use looking at a property if you can’t finance it. Let your fingers do the walking.”

We went on to analyze several more ads until I felt they were catching the subtle nuances—reading between the lines. Then we opened actual newspapers to the “Condos and Town homes for Sale” section and
started circling real ads. This brought out more clues and tips such as:

· If an ad says “nothing down,” make sure it doesn’t allude to obtaining a new loan using a Veterans Administration program designed only for veterans.
· The best kind of flexibility is in price and terms.
· The ideal situation is when the seller is carrying the financing with low or no down payment and a below-the-market price.
· These are rare but so are diamonds.
· The best kind of loan is an existing FHA or V A loan. Anyone can assume them—veteran or not, employed or not. In fact, all it takes to assume one of these loans is fifty dollars, a social security number and the ability to fog up a mirror held under your nose.
· Ads run by real estate companies are generally less flexible than for-sale -byowner ads because of the added commissions. But creative Realtors can earn their keep.
· Think wholesale! Got to have either the price or the terms or both well below
market. If not, you’re just gambling.
· Vacant” is a good clue. Someone is making the payments without the benefit of occupancy.
· “Just reduced” means the seller priced his property too high and has now lowered his price to market. You want something that is 10 to 20 percent below market.
· Never buy a property from a seller who is not highly motivated to sell.
· “Financing available” means the buyer will need to obtain a new loan. It’s harder to qualify for new bank financing than for seller financing.

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It was strange advice. Moreover, it was risky advice. And I wasn’t sure I was ready to take that kind of risk. Now he said, “What’s your main message? To be self-reliant? Yes! To let go of security? Yes! To take a risk? Yes! Why don’t you follow your own advice? Take a risk! Yes! Forget the five thousand dollars in ninety days. Forget yourself and your reputation. Teach them what you can. But let them be responsible for their own lives. Allow them the privilege of learning from their own failures. And above all, love them. Accept them. That’s your real challenge.”

“But if they fail, I fail,” I responded. He pondered for a moment. “Yes,” he said, “but you’ve given them opportunity. Hope. You can’t do more than that.”

It was time to begin again. The director called, “Lights! Action!” “Well,” I began, “principle time is over. Nitty- gritty time is here.” I explained that they needed to learn how to read the classified ads— to notice the subtle clues that indicate seller flexibility. “It’s a numbers game,” I said. “Only one in twenty ads is really flexible. You have to keep calling till you strike pay dirt.”

I had designed an exercise to test them. “On the next page there are
ten sample ads,” I said. “Check the one you think is the don’t-wanter.”
“Just do these ten?” Steve inquired. “Would a blue- vaser ask that question?” I asked. “Not on your life,” Steve shot back. “You are opportunity detectives. You don’t need my permission to do anything.” I wanted him to think like a blue-vaser—not dependent on other people but thinking for himself, acting independently in all things. .”Which ad shows the most flexibility?” I asked. Mary pointed to number five.

Moving out of state. Must sell 2 bdrm, 2 bath upstairs flat fully equipped. Asking $49,500. Bring offers. Will take back second. Will consider lease purchase. See to appreciate.

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“I like it.”
Philip raised his hand. “Karen and I have our name also. Moore and Moore Investments. Has a sort of ring to it. And we put our name and
phone number at the bottom.”

“Kind of catchy. OK. Nora. How about you?” “I like to use my name in the middle of the card—Nora Jean Boles. Then at the bottom it just says ‘Real Estate Investments’ and my phone number. How’s that?”
“You’re one step closer to being in business for yourself. How does it feel?”

“More exciting by the minute,” Mary said. With that discussion ended, we finished lunch and took a fifteenminute break. Mary took time to call home again. Nora sat at the table leafing through the written materials in her Master Planner. Philip and Karen stepped out into the hall for a cigarette. The camera and sound crew fiddled with equipment in between bites of sandwiches. I took a moment to huddle with Dr. Lee.

“Where are you?” he asked me. It was his special way of asking me
how I was feeling. “I’m OK. Feeling a bit rushed,” I answered. “These lights and cameras are really cramping my style.”

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As we all sat down to a catered lunch, I wasn’t about to let them rest. We continued to forge ahead. “Now,” I said, “While we eat lunch I’d like to return to something we talked about this morning—business cards. All professionals have business cards—realtors, title company officers, bankers, lawyers and investors. So should you. This lunchtime is set aside for you to design your own card.”

“What should our cards look like?” Nora asked. ‘What does an attorney’s card look like? It’s simple, clean, professional. ‘John Doe, Attorney at Law.’ Same with a doctor or an accountant. Professionals don’t use flashy names like Megabucks Industries. That’s tacky. Try to be classy.”

“What business are we in?” Steve asked. His wife answered for him. “The investment business.” “As we eat our lunch,” I said, “Be thinking of a name for your business and how your card will look.”

Before we’d finished eating, Steve raised his hand. “I think Mary and
I have a name for our company,” he said. “How about ‘Bonenberger and
Associates’ in the middle of the card? Then we’ll put our name and
number in one corner. In the other corner, ‘Real estate investments.’”

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Don’t Wanter Process of
Conditions Personal Management Property People
D Divorce X
O Obsolescence X
N Negative cash
flow X
T Transfer X
W Wrong
management X
A Arrears in
payments X
N Negative
location X
T Taxes X
E Estate
situation X
R Retirement X
C Competition X
O Out-of-area
owners X
N Neurotic
fears X
D Debts X
I Ignorance X
T Time (lack of) X
I Investment
capital needs X
O Ornery
partner(s) X
N Need for
status symbol X
S Sickness X
Totals 13 4 2 1

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“The article describes how Don became aware of a million-dollar bankruptcy proceeding that was being held up by one property—a $150,000 vacant office building. The court was worried that recurring vandalism might lower the value of the property. They decided to sell it
quickly to someone who could occupy the building to stop the vandalism. Don learned by word of mouth that they were highly motivated to sell. He offered $40,000 with a $2,000 down payment. Although it sounds unbelievable that a $150,000 building would sell for
as little as $40,000, the court accepted Don’s offer. Why?”

“Because they were don’t-wanters,” Steve answered. “He then asked the court to allow him to take possession of the property. By doing this he was able to rent it out and collect the rent …even before he closed on the property. He rented the building, as is for $500 per month. He also rented the forty-three parking spaces to adjacent businesses for $15 apiece—another $645 per month. But the bet was yet to come. Because the bankruptcy took another fourteen months to complete, Don didn’t have to make mortgage payments to the court although he was able to keep all of the rent proceeds0ver $16,000 income on an investment of only $2,000. When the bankruptcy was finally resolved, Don sold the building to an adjacent property owner for $85,000 cash. Let’s total up Don’s profit from this one transaction:
$45,000 profit from the sale of the building $16,000 cash flow from 14 months of rent $60,000 profit!

All on a $2,000 investment. How do you fall into deals like that? You’ve got to be out there falling. Got to be looking, studying, finding, sifting through dozens of cubic zirconiums, tons of gravel until you find something that sparkles, something that glitters.

“This afternoon I’ll give you more detail on how to find these bargains. This morning I’ve tried to keep the details to a minimum. I want you to just understand the principles.

“I really believe that each of you already has what it takes to make it.
You’re already wealthy. How does it feel to be wealthy, Philip?”
“Wonderful.” “Let’s go have lunch, shall we?”

Taken From:The ROAD TO WEALTH