Jade Jean Blog

At 9:00 that evening, the Challenge team reconvened at the Bonenberger’s small home for the final session of the first day. We crowded into the tiny living room. The hot camera lights made it even more uncomfortable. It was so far from the intimate atmosphere I wanted.

I began by reminding them of the next day’s schedule. We would meet at 8:00 A.M. at a park near the Daniele Hotel dressed in jogging clothes with a portable tape player.

“I got two great calls on my newspaper ad,” Mary said excitedly when I’d finished talking. “But I’m still not sure what to do with them.” She explained that the seller wanted five hundred dollars down with a price four thousand dollars below market. She’d given it a score of twelve. I gave her the assignment of calling the seller and setting up an appointment for us to see the property at 10:30 the next morning.

“Let’s break camp for tonight,” I said, knowing that they must be weary. “It’s been a long day on the mountain. Time to pitch the tents, rollout our sleeping bags, make a fire, rest up for the morning. I’ll betyou’re a bit sore between the shoulder blades—you’re probably not used to carrying heavy backpacks. Your face is sunburned. And those new hiking boots are heavy and awkward. Your ankles are tired and aching.” “And the altitude is getting to my head,” Mary added, laughing.

Taken From:The ROAD TO WEALTH

“Good. OK. Let’s process this example. Here’s a $50,000 house that can be bought for only $30,000 if you can just come up with $20,000 cash. Where do you get the $20,000?”

“Get another mortgage,” Philip suggested. “That’s one solution. The new loan would have to payoff the existing loan of $10,000 and the seller’s $20,000, plus your problem- olving fee of $5,000 and closing costs of maybe $2,000. That totals $37,000. Wouldyou be excited to buy a $50,000 property for only $37,000 and put $5,000 in your pocket? You bet! OK, group. Back to the phones.”

The rest of the afternoon was spent on the phones. Toward five o’clock I let them return to their homes. Nora gathered up her new learning materials. I walked with her through the lobby of the hotel and into the parking garage. We chatted by her car while she fumbled through her purse looking for her keys. She looked over-whelmed—like a wet puppy in a rainstorm. We finally found her keys still in the ignition of her car.

But the door was locked. We finally called a policeman to break into the car. After she drove off I went back to my suite. I crashed on the bed—tired to the bone. Things had gone worse than I’d expected. Our telephoning should have uncovered at least one possible diamond instead of the cubic zirconiums we had ended up with.

“It’s a numbers game,” I rationalized to myself. “Our number just hasn’t come up yet.”

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“Not bad. Maybe a little too strong. Better to say, “What price did you have in mind?
“What do you mean by flexible?”
“Good.”

SELLER: What do I mean by flexible? You name it. I need out. How long has it been on the market? Maybe eight months. We’re behind on our payments. We don’t want to lose it.

KAREN: How much cash do you need?

SELLER: I really need about fifteen thousand dollars, but I guess if I got more I could lower my price. …

STEVE: If we gave you twenty thousand dollars. … “Don’t give him solutions yet, Steve.”

PHILIP: Would you take out a second mortgage on the property? “That’s a solution. Understand his problem first.”

STEVE: How can we settle the issue with you? What do you need from me?

“Good. Give the ball back to him. Let him solve it. The person asking questions is in control.”

NORA: What are you trying to accomplish?

SELLER: Well, like I said, we’re behind on some payments and we need to. …”

STEVE: What would you consider a reasonable offer on your home?

“Listen to him, Steve. Let him talk. Keep silent. What does silence mean? It means, ‘Tell me more.’ “

SELLER: We got a few payments back. We don’t want to lose the house.

And if we got twenty thousand or thirty thousand out of it we’d probably be happy.

PHILIP: So if I gave you twenty thousand dollars you’d be satisfied?

SELLER: Well, maybe. If I got it real fast.

PHILIP: I could probably arrange for that. OK. Can we come out and look at the house?

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“What you’re looking for,” I continued, “is a lower-priced property with a low loan balance. Now, let’s do a role-play. You be the buyer and I’ll be the seller. You can ask me any questions you like but remember to get a score. All you know is that my price is fifty thousand dollars and my loan balance is ten thousand dollars. The ball’s in your court.”

NORA: What are your terms? Will you carry a mortgage?

SELLER: Yeah, I’ll carry some. My equity is forty thousand. If you gave me fifteen thousand down, I’d probably carry the rest …about twenty five thousand.

MARY: What about the location?

SELLER: It’s an okay neighborhood. It’s coming back.

KAREN: How firm are you on your price?

SELLER: Well, I might be a little flexible.

PHILIP: What’s the condition of the home?

“Philip, don’t move on too fast. He’s indicated some flexibility. Explore it further.”

NORA: Um, would you take forty-five thousand for it?

“Nora, the first person to mention a number loses. Avoid suggesting numbers. Keep giving the ball back to him.”

NORA: What’s the lowest price you would take?

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We both listened to the tape. The seller was moving out of state. The three-bedroom house had a small, unassumable mortgage with a price tag of $122,500. This was the first red flag. The seller told Steve that she had recently listed the property with a realtor and that this reduced her flexibility because of the commissions involved. Another red flag. She wanted $60,000 and would consider carrying the balance of her equity.

I called the group together again to process Steve’s call. As we listened, I could see that Philip was catching on quickly. Nora, on the other hand, looked tired, suffering from circuit overload.

I showed them a way to buy the property with nothing down and actually pull five thousand dollars out for themselves at the closing. But I advised against trying it.

“Now, let’s stop being creative,” I said, “and start acting like businesspeople. Let’s get to the bottom line. What kind of mortgage payments would we have if she accepted our crazy offer?”

“Shoo-ee!” exclaimed Steve. “Two or three thousand a month? Couldn’t rent it for enough to even make the payments. We don’t even have to run this through our Bargainfinder to begin to realize that this one is a cubic zirconium. Remember, use creative financing only to make a good deal great—not to make a bad deal average. And this one was a bad deal. So we pass on it.

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MARY: Well, you know … just to know how much financing you’re going to need?

WOMAN: Well, we’re not doing the financing. You’d have to come up with your own.

MARY: How much of a down payment are you looking for?

WOMAN: That’d be up to the bank.

MARY: Okay, well, what type of interest is on the mortgage you have right now?

WOMAN: We got our loan six years ago, and it’s not assumable.

MARY: Has the property been on the market very long?

WOMAN: No, about a week. Had a lot of people look at it.

It didn’t take the group long to realize that this was not a flexible seller and that any further time spent on this call would be a waste.

The Challenge participants blue-vased themselves through several more calls. They were groping, but gradually the rough edges began to get knocked off. As they became more comfortable with the process, they made smoother and smoother transitions between questions. I drove them on, encouraging them, knowing that if they could hurdle the fear of talking with strangers about totally foreign concepts their self-esteem would grow. Steve called me over to process his last call.

“Listen to this,” he whispered as he turned on the tape recorder. “I think we have a hot one here.”

Taken From:The ROAD TO WEALTH

“That’s what the Bargainfinder is for. You need answers in all five major areas: flexibility, location, financing, price and condition. If you hang up without scoring the property, then you’re just wasting your time. But on the whole, you asked some very gutsy questions, like, ‘What are you trying to accomplish?’ and ‘So you can be flexible?’ But you didn’t dig deep enough. When he said, ‘I can be somewhat flexible,’ you should have asked, ‘What do you mean by “somewhat flexible?’ You also didn’t ask about his main motivation for selling. Is he moving? Did he inherit the place? Was it recently vandalized? Did a tenant move out and leave a mess?”

“So,” Philip said, “It wouldn’t do any harm to call him back. But he’d know my name.” “You’ve nothing to hide. Call him back tonight.” “OK.” “Let’s hit the phones again,” I said. “Everyone this time.” After another thirty minutes of calling I gathered the group togetherfor another teaching session. I wanted to show them what a cubic zirconium looks like. For my demonstration I chose one of Mary’s telephone calls. We played it back.

MARY: What is the existing mortgage on the house?

WOMAN: Existing mortgage? Why would you need to know that?

MARY: Well, just to know how much you still owe on it.

WOMAN: Why would you need to know that? I don’t understand the question.

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PHILIP: OK. You’re the owner, right?

MAN: Right.

PHILIP: OK. Could you give me the square footage?

MAN: I don’t know that.

PHILIP: It has a garage, you said?

MAN: No, it has a utility, a storage shed outside.

PHILIP: Like a carport?

MAN: No, it’s not for a car; it’s probably about ten feet wide and maybe twenty feet long. It’s for storing lawn mowers and stuff like that.

PHILIP: Tell me, is it a brick home or a frame home?

MAN: Frame.

PHILIP: All right, thank you very much, sir. ‘Bye, now.

MAN: ‘Bye.

Philip hung up the phone, looking puzzled. Somehow, he knew he should have gathered more information. I had been watching over his shoulder and decided to assemble the group to process this call so that we could all learn from Philip’s experience. We stood around the table where Philip and Karen were sitting. Philip played back the call on his tape recorder. We all listened.

“I sound very bad on tape,” Philip lamented. “For a first-timer, you sounded great!” “I didn’t get all into it. I didn’t find out the value of the home. Um, what kind of terms he was interested in. It happened so fast that. …”

Taken From:The ROAD TO WEALTH

MAN: Yes.
PHILIP: Yes, could you tell me a little bit about the home, sir?

MAN: It’s three bedrooms. It has a real big yard. It has two patios, One about 25-by-25 brick patio with brick sidewalk. It’s got a smaller, probably 8-by-ten patio in the back. It’s got a living room, built-in kitchen with appliances. It has another room you can use as a real small family room or something. It has a utility room, place for a gas or electric washer. It has a gas grill and utility shed outside. It doesn’t have a basement.

PHILIP: What’s the mortgage balance?

MAN: Oh, there’s no loan on it.

PHILIP: No loan? Okay. All right, I know this is a very personal question, but could you tell me, what are you trying to accomplish, or what’s your goal with this?

MAN: I want to sell it.

PHILIP (Laughing): OK, so you can be flexible?

MAN: Somewhat.

PHILIP: Somewhat? OK. And the price again is how much?

MAN: Forty-six five.

Taken From:The ROAD TO WEALTH

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.”

Taken From:The ROAD TO WEALTH