MLS or Multiple Listing Service is a local database of all homes for sale by real estate brokers. Using MLS has its pros and cons, but is still a must for any real estate agent. Learn how to use it and what makes it different from other sources like Zillow or Redfin. Join your host Jeff Rutkowski and his guest Dan Wright as they discuss all things about MLS. Dan is the director of acquisitions for CT Homes. He shares how they are doing over 100 deals this year, thanks to MLS. Learn how to filter the properties, analyze the deals, make the terms, and more today!
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How You Can Get Over A Hundred Deals With MLS With Dan Wright
We have an incredible episode lined up for you with a special guest, Mr. Dan Wright, Director of Acquisitions for CT Homes LLC, here in San Diego. We’re going to dive into how they are on pace to do over 100 deals in 2021, the majority of them coming through the MLS. That first leads us right into what you guys know as the word of the week. The word of the week is MLS. MLS stands for Multiple Listing Service.
The MLS is a service that is available in all 50 states across the United States, primarily for real estate agents. Real estate agents list and sell properties for many different homeowners across the country and they have access. Once you become a licensed agent, you can have access to the multiple listing service where the majority of properties that are traded across the country trade through.
To get access to the MLS, there are three ways of doing it. 1) Become a real estate agent. 2) Develop a relationship with a real estate agent that allows you access to it. 3) In some states, you can become a licensed assistant to a real estate agent to get your access. What we’re going to be talking about in this episode, whether you’re a real estate agent or not, as a real estate investor, you can implement and take action on what we’re about to get into. Mr. Dan Wright, welcome to the show.
It’s good to see you. I love the energy.
You got to bring high energy. Learning takes energy. That’s what we always say around here. I’m so pumped to have you on the show. Dan is a good friend of mine. He is an awesome guy and investor. He has been with CT Homes, LLC for many years. Our resident expert JD Esajian that we have in there all the time, owns and operates that company. Dan is pretty much the right-hand man of that entire ship and operation and has been involved in over $100 million in real estate transactions. As I said, he is the Director of Acquisitions for the company, which is amazing. You are on pace to break 100 deals in 2021, right?
Yes, we are on pace. We have about 68 so far. We have 39 in the inventory that we either purchased, rehabbed, getting rehabbed or it’s on the market to be sold. It’s quite a few. It takes a whole team.
Have you ever not broken 100 deals in a year?
Not since I’ve been there.
One hundred is getting old, though. When are you going to hit 200?
We’ve had those talks. In one year, we did 111. We sat down and said, “Let’s do more. What’s the next number?” We said, “Let’s do 222. Let’s double it.” That was a monumental task. We were a little too excited when we came up with that number. It’s all possible but it’s all scaling. For us in our team and what we want to focus on with quality over quantity, 100 is good. We put out a good product and we have a lean, mean team that gets it done.
CT Homes, 2021 is on pace to be the most profitable year in the company’s history. Congrats on that. I gave you an introduction of what you’re doing now but to let the audience know, I love all the guests to share their backgrounds quickly. What did they do before real estate? Did they have any experience? How did they get to where they are? I know different people relate to different types of backgrounds. Some people think they disqualify themselves because I do this, which has nothing to do with real estate. Your story is similar.
I went to school for aviation. I wanted to be a commercial pilot. My timing wasn’t very good because my freshman year was when 9/11 happened. The industry changed completely but I stuck it out. I switched to an aviation sales-type job with a focus on aviation management. I did that for 8 or 10 years and with a primary focus after graduating, private jet charter sales. I had zero real estate experience. Probably the only experience I had was buying a condo. That was a start. I love watching Bob Vila’s This Old House. It’s a great show.
When I bought the condo, I saw a fixer house and I was like, “Perfect. I can do that.” I thought I had enough skills to do it. Luckily, my wife talked me out of it and we got our condo. To wrap that up, what I was doing was aviation. I didn’t have real estate experience. It wasn’t until I met the team at CT Homes with an opportunity to move to San Diego. That’s not like me to move across the country and completely switch industries.
In MLS, it’s all about finding the properties that fly under the radar. It’s finding that potential that isn’t obvious.
I was in Connecticut, yes. I like to plan and I know what I know but at that time, I was getting burned out. That job in aviation was on-demand 24/7 and high stress. I was working nights, weekends and holidays. When the opportunity came to join CT Homes and move to San Diego, I took the risk because I knew that moving here, was a proven team. They had the systems in place. I didn’t know what I was doing but I knew that I could be taught and coachable and I could get plugged into it. That’s how I got started. To answer your question, I had no experience.
It sounds like you got a good wife. She helped you avoid some trouble there. It’s funny how so many people do it because of the reality shows, they look at it, “That’s no big deal. I could handle that.”
It always looks easy. That 30-minute show is nothing in the reality of what it actually takes.
Get educated. Don’t pay attention to what you see. I did an episode of flip this house with JD, a house in Orange. I remember he had it. It’s systematized the process. I remember the camera crew. It was HGTV. They said, “You need three problems to overcome during the episode.” JD, at this time, was doing 100 deals a year. It was going smoothly. I remember we had to put this hose in the attic and then pretend with all this water stuff, “What is going on here?” TV is not real. It’s not as easy as it looks, folks. No real estate background, connected with the guys, became part of this team, and the rest is history from there.
What I thought would be a great value for this episode are the 68 properties so far in 2021 on pace for over 100. The vast majority of those are coming through the multiple listing service, the word of the week. It’s one of those things where there are pros and cons. For a new investor or experienced investor, it’s great because you’re not investing any marketing dollars in finding out leads. It’s low-hanging fruit. It’s sitting out there for you but the flip side of that is it’s the most competitive. Of all the properties listed on the MLS, what percentage of those are going to fall into the category of a fixer that would be attractive to an investor?
The ones that would be listed, just rough numbers probably be 5% or 10%. What we do is look at every new listing because it’s not just about the keywords but also about the pictures and what we see in the price point, and certain motivation levels that we’re looking for in the MLS. Out of what gets listed every day, about 10% of that might have an opportunity, and then we’re trying to offer on all of those if we can. The reality is, half of those are true fixers that need a cash buyer.
You got this 10% slice of the pie that every investor and their mother is fighting over and looking for. That’s what I want to get into. How have you guys had so much success in one of the most highly competitive fields? We teach our students here at FortuneBuilders that you want 3 to 4 marketing campaigns going at any given time.
I know you guys do radio, direct mail, and all of these different things as well. The MLS we would recommend definitely be 1 of those 4, no matter who you are, for those reasons. You’ve alluded to this. The first step when you guys are approaching is you’re going to filter down. You got all of these properties. What techniques are you using to filter down to be looking at that 10% that has the highest probability for an investor?
With the technique, there’s no science behind it. It’s looking at every listing. There’s no way around it. I’ve heard of some investors that like to do auto-searches to put in the keywords, fixer, contract specialists, calling all investors. Those are the hardest ones to get. Those are the most competitive because everybody and their mother sees them. We’ll still offer on those but what gets most of our attention are the ones that fly under the radar.
JD and I like to joke, “It’s panning for gold.” You got all these listings. You got to look for the ones that are either marketed wrong. Sometimes, we see the pictures and it doesn’t match the description at all. The description is like, “The perfect house that’s beautiful,” but you look at the pictures and it’s like, “Did they put the wrong pictures in because this thing from what I’m seeing needs a total gut and it needs to be flipped?” That’s how it is. It’s going through every listing and finding that potential that isn’t obvious.
To be clear, you’re not physically going through every property. You’re filtering through online.
It’s all online in front of the computer.
Keyword searches are something that a lot of investors do use but outside of that, pictures are something that’s marketed improperly. Anything else? Listings that maybe are back on the market or expired? Any other things you could throw out there for the audience?
What’s special about the MLS that’s different from Zillow, Redfin, and all the free online ones because a lot of investors do want to use those sites because it’s free and easy to access. You don’t need to be licensed. What that doesn’t show are confidential remarks. Confidential remarks are special remarks that are below the ones that are syndicated that agents put in that are meant for other agents. It could be something like motivated sellers. There’s a divorce or death on a property. There could be a foreclosure or notice of default on the property or it could say, “Looking for a quick cash close.” A lot of those are put in the confidential marks that don’t get syndicated to other sites.
In some states, it’s referred to as agent-to-agent remarks. You see that. I remember that in Connecticut. Dan is absolutely right. That’s the stuff that you’re not going to see anywhere in Redfin, Trulia, Zillow, all of that. I know you are licensed. You have a brokerage eXp. What is your opinion on the average investor out there? Should they get licensed as an agent as well? If so, when? At what point in their career?
I would say, “Why not?” There’s no harm in getting licensed. I’m licensed but I don’t use it in the capacity of an agent, writing offers and showing houses to buyers. I use it for access to the MLS and then writing offers for CT Homes to buy an investment property. I’m using it a little bit differently but primarily, it’s for access. When I got it, I hadn’t moved to San Diego yet. I was still in Connecticut. I was still at my old job. I was like, “When I move here, I want to hit the ground running and know something.”
I took a three-month online course. I did that in Connecticut. When I moved here, I took the test. At least I started with something but it still didn’t compare to what you do if you have your license. The first week on the job at CT Homes, I was like, “I don’t think I learned anything. It doesn’t apply to what we’re doing.” You learn a lot of technical things that don’t happen day-to-day.
Other agents, you have a little more credibility with a real estate agent in that population and environment. It’s all about access. That’s the same reason I have my license as well. You’re going through. You’re filtering. You find a property that catches your attention for whatever reason, confidential remarks or something in the pictures. What step are you taking after that?
We want to do this first thing in the morning. We like to filter and get a head-start on it. We’re going to go through every listing. A little nugget part of this too is you’re not just looking for fixers as an investor. You need to know your market. The best way to learn the market is by looking at every listing and learning price points, what houses go for in certain areas, and the price per square foot. You learn a lot even if you don’t find a fixer that day, which you will but the market knowledge you gain is tremendous. That’s what helped me, too.
As we get through every listing, the next step that we then do is call the agent. We’re not running to the property to look at it. We’re not writing an offer. We need to learn more about the property. There’s only so much. What’s in the MLS is just a basic outline but there’s always a story behind it. That’s why we want to talk to the agent to get that story so that as an investor offering cash, we can put together the best offer for their clients.
You’re doing a little discovery call before you’re investing any time, boots on the ground, going out to see the property.
That’s exactly what we call it, a discovery call. We want to learn more about it. Sometimes, sellers and agents aren’t always on the same page. Sellers might have a pie in the sky type of number they want, and then the agent is strong-armed into listing it at that high price. When we call the agent, we’re like, “We see this fixer and it’s priced pretty high. Can you tell us more about it?” I can’t tell you how many times I’ve had agents say, “It’s my seller. They have this number. I told them we list it high for a week. Send me whatever you want to offer.” If you didn’t call, you might be a little timid to submit an offer on that property because it’s priced so high.
What are some things you might hear on that call that would be like, “There’s nothing here. No motivation. We’re moving out to the next one?”
Normally, what it is, it’s the agent telling us, “We would love to take a cash offer but we already have four offers from end-users at or above full price. We’re not needing a quick-close cash offer. It’s not what we’re looking for.” “Okay. Move on.” That’s the whole point of that call. It’s either going to be something we’re going to spend time on or it’s not. If we’re going to spend time on it, we want to learn more about it.
The great thing about this system too is you’re dealing and meeting a lot of new realtors in the market and maybe reconnecting with realtors you’ve worked with many times before. The one thing that is important to remember is that you’re branding your company in a way because you’re talking to so many agents that you’re going to be doing business together in the same market. I love the approach. JD and I talked a lot about this on the last episode.
When you go through the MLS, you’re not only learning the market, you’re learning the agents.
Even on the flip side, for every agent that brings you an offer, no matter what, you’re getting them a counteroffer and some good news. You’re building those relationships. What are some things you’re doing in this scenario where you contact the agent? You discover it’s a dead lead. You’re not going to invest in looking at this property. What are the things you’re doing to establish a relationship with that to have them keep you in mind for the future type of thing?
The first thing we always do is we want to ask the agent, “Do you have anything else coming up?” We’re calling on this one listing but anytime we have an excuse or a reason to call an agent, we always want to ask that agent, “Do you have anything else coming up? Any other fixers?” We have to remind them. That’s not always on top of their mind to be like, “I have this fixer coming up. I want to give it to you.” We always ask and then we also say, “Are there any other agents in your office that you’ve been talking to that have something coming up because you can represent us as the buyer on that?”
We’ve gotten quite a few deals that way too, just by communicating that. It’s not about the deal I’m calling about now but if there’s something else we can work on, great. If not, it turns into a follow-up. It’s networking if it’s an agent. When you go through the MLS, you’re not only learning the market. You’re learning the agents because you get to see the agent name. For the sites that are syndicated, it’s not always obvious who the listing agent is with their direct phone number. The MLS is great because it says who the agent is, “Here’s the phone number.”
When you start to see an agent’s name over and over, you can tell that agent is doing business. They’re high volume. That’s typically the agents you want to network and build a relationship with so that in the future, you have a leg up over other investors. Hopefully, you’re going to be getting a pocket listing from them. That’s where a lot of these come from.
It all starts in the MLS. That’s where it all starts, talking to the agents and giving yourself a reason to call them. Over time, you will get pocket listings from them. You’re not going to get a pocket listing from an agent who is calling you out of the blue. That normally doesn’t happen. If it has, Jeff, you tell me. Has that happened to you?
It has not. I wish I could say it could. For those of you that may be wondering, a pocket listing is a listing that an agent is going to bring to market but it’s not to market yet and they’re like, “Dan, we got this coming in a week. I’ll give you guys the first look.” A lot of times, you’ll see it hits the MLS and immediately goes under deposit.
Sometimes too, it could be a seller that doesn’t want it on the market. If they have a situation where it’s a hoarder, it’s hard to show or there are some reasons they don’t want it exposed to the world, that stays off-market as well where the agents say, “I need to get a cash offer because I’m not going to put this on the MLS.” The seller doesn’t want it on the MLS because those are pure gold.
We looked at the scenario, “This is a dead lead. We’re not exploring it. We follow up and connect with the agents.” Let’s talk about the scenario where, “There’s something here.” Before you answer that, though, I do want to quickly let our audience know. As always, if you’re interested in learning how to start as a real estate investor, if you’re wondering, “This all sounds great but what is the first step? What are the things that I need to know to get rolling as an investor?”
One thing that was pleasantly surprising to me when I started learning to invest was there’s not a whole lot that you need to get started. In terms of brick-and-mortar, you don’t need to order inventory supplies but there are vital pieces of information and education that you need. I always tell people, “Real estate is a business. You can make a lot of money very quickly but you can lose a lot of money even quicker if you don’t know what you’re doing.”
If you’re interested and want to know what you’re doing, as always, visit FortuneBuildersShow.com. That will get you a free ticket for a one-day training with Than Merrill or one of the other awesome trainers that we have training that particular week. They’ll give you those steps to get started. Please take advantage of that if that interests you. We are on the phone with an agent. We were doing this discovery and this thing has potential here. What are we doing after that?
Once we talk to the agent, we connect and get through a few key questions that are going to help us. The next step is to analyze the deal. We’re going to take the information that’s in the MLS. We’re talking about the size of the house, bed and bath count, garage, lot size, views, busy street, and all that stuff. We’re going to pair that with what the agent told us. We’re going to run comps and numbers.
The MLS is amazingly good in running comps. I’ve tried to do it with other websites and platforms like Zillow. I don’t know how you do it. I’ve had friends that try and do it for their house and they stumbled through it. I tried to and I was like, “You get spoiled on the MLS because it’s so easy and you get detailed like the best information to put your analysis together.” That’s what we do in the third step.
After we talk, we analyze it. It’s running comps, going to the property, getting our repair estimate put together, the budget for the rehab, estimating our hold time, getting your cost of money put together, which you should have already but it’s all those things that go into the spreadsheet to get your offer. Analyzing it is the next vital step before you offer. What a lot of investors do is they make the mistake of seeing it on the MLS, putting their offer together, and then sending an offer in without ever talking to the agent or analyzing it correctly. That’s where things can go wrong quickly.
I remember I started off as a real estate agent years ago. Those offers annoyed me. I was like, “I don’t know who this person is. I’ve never spoken to you. Here’s this offer out of the blue. What the heck is going on?” I always found that awkward. In analyzing the deal, there are those two numbers again, folks. ARV, After-Repair Value that you’re going to get on the comps, and then the repair costs. In what scenarios would you be putting an offer out without physically seeing the property? What do you have to see online to empower you to do that?
That comes mostly in that discovery call with the agent. If you’re an investor and you talk to the agent, you say, “I’m experienced. I’ve done multiple deals in this neighborhood,” which we can say because we do volume. We have the metrics in place from the systems that we put together that we can formulate our repair budget without seeing the property because we’ve done so many like it. There are key questions we ask the agent that’s going to help us put together that rehab budget. We’re able to put that together without seeing the property. That’s our preference.
When we’re doing the volume of deals we’re doing, it’s very hard and we don’t have enough time in the day to go to every property. That takes time. If we can get on the same page with the agent with our ballpark number initially, that’s ideal. There are times where the agents don’t want it to be shown, where the MLS and the confidential marks will say, “Shown with accepted offer only.” That’s when they’re encouraging what we call a blind offer.
Those are good. To me, you want to see a lot of those.
Sometimes too, if there’s a tenant situation, it could be an unsafe property, whether it had a fire or there are hoarders. They literally don’t want people going there.
What happened, JD was sharing a property that you were dealing with where you had a son living on the 2nd floor, a mother on the 1st, and they had restraining orders against each other. He told us that but we never heard how it played out.
It’s still playing out. I was talking to the tenant because we’re still working through this process. That’s a long story. Jeff, we would have to have a whole other podcast to get into that. That was a pocket listing where the family had their issues. They’re fighting and restraining orders against each other. That was a good scenario where it’s like, “We can’t have this on the MLS.” We got that as a pocket listing but that agent we got it from, we met through the MLS, it all ties back.
I can’t wait to hear how that plays out. I’ve encountered a lot of crazy stuff but nothing like that. Are both of them still on the property?
No. The mom and the brother moved out. The problem son is upstairs. He took over the whole house. We’re working on coming up with a cash-for-keys agreement with him.
Being a real estate investor is definitely not boring. The stuff that you come across, sometimes you’re an investor, psychologist or pastor. You’re doing all hats there. Let’s keep progressing. First, I didn’t give you a heads-up on this. Are you ready for what we call here on the show the Fear Factor?
Are you Joe Rogan now?
Joe Rogan? Does he do that?
A failure to plan is a plan to fail.
Remember the show Fear Factor?
I forgot Joe Rogan was the host there. His podcast is pretty good, too. It’s not as good as this one. He is doing some good things. The Fear Factor, why do I like to do this? I’ve had the honor and been blessed to train real estate investors all across the country for many years now. One of the number one questions I always get in some way, shape or form is that they want to do this but they’re afraid to take action, “I’m afraid to market because what if the phone rings? I’m afraid to write an offer because what if it gets accepted?” Fear is not just something that’s isolated the business. It’s something we all deal with in life. What would be a tip you have on overcoming fear in your life personally and business?
The quick answer and what I tell myself is, “How bad do you want it?” No matter what it is, personal or business, it’s easy not to do it because you’re afraid. I always think back to my college days when I was a freshman and nineteen years old in aviation. Getting my pilot’s license was scary but it wasn’t scary until my tenth lesson. The flight instructor got out of the airplane. He said, “You’re going solo now. You’re doing this by yourself.” You talk about fear and your heart is jumping out of your chest. It was like, “I can’t do this. I would be crazy to go do this now.” It’s how bad do you want it.
I remember telling myself like, “I do want it.” Also, my flight instructor is a coach and mentor. He wouldn’t let me do it if he didn’t believe in me. It’s having that mentorship and listening to others. With business, now I always talk to JD too with personal stuff and business. It’s a plan. I always say, “A failure to plan is a plan to fail.” As long as you’ve planned properly, you shouldn’t be afraid. If you are afraid, you didn’t plan properly.
There you go, folks, words of wisdom on how to overcome fear with Dan Wright. Back to the MLS offer system here. By this point, we filtered properties. We’ve done a discovery call with the agent. If we determine that this is a potential good lead for us as an investor, we analyze the property and then you’re going to call the agent back. You’re going to present an offer. What does that call look like? What does this sound like? What are the main things you’re focused on there?
The main thing that we want to do is get back in touch with the agent. As an investor writing cash offers, you and I both know our offer isn’t always competitive with other offers when we’re dealing with retail buyers. They can pay more. They’re going to live in the house. They’re not looking to make a profit where we are. We’re going to be lower. That’s where we want to get on the same page with the agent so that we can let the agent understand why our offer is so much lower.
There are a lot of terms that we can include that it’s not just the cash. Price is one thing but the terms that we can include that we’ve perfected over the years at CT Homes, we’ve learned what sellers need besides the price that helped them get excited to take our offer. We want to have that conversation with the agent.
Let me put you on the spot here. I’m the agent. I appreciate your offer but this is significantly lower than what the seller is looking for.
It’s quite a bit lower than the list price. What I want to talk about is this house needs to be fixed up. This house is geared towards a cash investor. It’s going to go cash. You and I already had that conversation. It’s not going to qualify for a mortgage. Let’s talk about the ARV. With agents, we don’t want to call it ARV because they may not know that stands for After-Repair Value.
I like to get on the same page with the agent and ask them, “Jeff, if this house was fully updated, what do you think it could sell for in market nowadays? Let’s get a baseline. Let’s agree on something.” If we both say, “This house could be worth $500,000 after renovations,” I then want to talk through the rehab, “It’s going to need windows, roof and kitchen.” Talk through that. What I want to do is arrive at our purchase price. I’m going to back into it so that it makes sense.
I can completely agree that our offer looks very low compared to the list price but when we start agreeing on numbers, our offer makes sense all of a sudden. If we can sell the agent on why our offer makes sense for us, they have a better likelihood of going to the seller and presenting the offer so that they’re not offended. We don’t want to offend anybody but we want to educate them on how we arrived at our offer price, and then also focus on the terms that we can include that are going to help the seller.
That’s brilliant because what you’re doing is you’re arming the agent. The agent is about to go present this offer and negotiate on your behalf. You’re equipping them with the proper tools, so they’re not, “This guy is lowballing me.”
If an agent is telling me, “Dan, that’s a lowball,” how do you think he or she is going to go to the seller with that? They’re going to say, “Look at this lowball offer.” They’re both going to laugh. The one thing we don’t want to do and I would encourage every investor not to do this is don’t send in an offer without having that conversation. When they open their email and see what they deem a lowball offer, it’s not going to go very far.
Outside of educating them on that call, anything else that your boxes you’re checking on that offer call?
Timelines, we want to understand, “When are they going to be presenting offers? Is it as they come in? Are they going to sit down at a certain time?” It’s also another chance to collect more information on our competition, “Do you have other offers? Where are those coming in at? Are we close?” Agents don’t want to tell us an exact number but we can feel them out on where we’re at so that we’re competitive. It gives us a last look so that we can maybe jump to the top of the stack before those offers are presented.
I will ask you a similar question. We’re still in a hot seller’s market where they’re calling the shots. It’s common. Maybe a property comes up on Friday and they say, “We’ll be reviewing all offers at 5:00 PM on Monday.” In a scenario like that, do you want to be first in? Do you want to wait until Monday? Do you want to be last in? Where are you positioning yourself?
It’s a combination of that. I do want to be first in. I do want to have that first phone call because there are times where they say that because the seller told them to say that, “I want to review on Monday at 5:00,” but then the agent says, “If we get a strong offer, we don’t need to wait.” I’ve had that before where I’m told to wait and the next thing I know, it’s pending on Sunday.
I was like, “I thought you were looking at offers on Monday.” They were like, “A strong offer came in. My seller took it.” That’s what I like to do. I like to be the first one. At least have the conversation about your offer, call them back on Monday to see how we are looking, and then make sure that the agent received our offer.
The offer is in. They’re going to present it to the seller. Maybe you’re the only offer. Maybe there are multiple offers.
I hope we’re the only offer.
It’s not too common nowadays.
In this market, it’s pretty common for them to have twenty offers. Going back to that filter, when it’s the contractor special fixer, those are the ones that get 20 to 50 offers. It’s not fun being in that mix. It goes back to that filter, looking for the ones that fly under the radar because then maybe you’re 1 of 5. If you can have better terms, then it puts you at the top.
That’s where you want to be. National Association of Realtors reported nationwide, on average, every listing is receiving four offers. Southern California is a lot hotter than all the other hot markets. What are you doing after your offer goes in?
After it goes in, going back to the timelines, when are they going to present? I want to have an idea of when our offer might be accepted or expect a counter. It turns into a follow-up at that point so that we can keep communicating. What we want to do is overcommunicate. We want to give that agent a level of comfort that, “I’m responsive. I always answer my phone. I’m not going to ghost you.” If I’m overcommunicating, it gives them that level of comfort that they want to work with us.
What that last step is, it’s a follow-up, whether it’s a short-term because our offer is about to get accepted, or it’s a long-term follow-up because maybe we’re still not on the same page yet, which happens a lot. We don’t always get the deal the first time. Maybe other investors ran the numbers wrong, which happens a lot. They don’t have the tools and systems in place. They end up backing out. The follow-up is key. If you’re not going to follow up, don’t do any of this. It’s all a waste of time because the majority of our deals at CT Homes come from the follow-up and being the 2nd, 3rd, and 4th escrow after the previous buyers don’t perform.
Pursuing something is all about how bad you want it. Whether it’s personal or business, you have to want it.
JD alluded to that. It was a very high percentage. You’re forcing the backup position if you’re offering isn’t selected.
It was over half.
I didn’t realize it was that much. Let’s run through that scenario. If your offer is accepted, that’s great. You open escrow. You move forward or maybe they counteroffer you. You go back and forth but, in this scenario, the agent informs you they accepted another offer. Ideally, you want to move into the backup position. What does that conversation sound like?
First, I want to congratulate them. It has continued to build rapport with the agent. I’m not going to be a Debbie Downer and get all upset. It’s part of the game. It starts with that. There are a couple of key dates that I want to cue in on with the agent about that previous offer so that I have the appropriate timelines to follow up. Once I have those two key dates, that’s when that escrow is likely to either fail or move forward. I want to know those dates because I want to be calling that agent on that day because they’re going to have a good indication of how that escrow is looking at that point.
Ideally, it’s getting a signed backup position. That’s where we are the second one. The agent says, “They took an offer of $40,000 higher.” I was like, “$40,000. That was my whole profit. How are they doing that?” To me, that tells me it has a high likelihood that deal could be falling back to us. I want to push, talk to the agent, and get a signed backup addendum in place. What that means is, as soon as that first escrow fails, it automatically reverts back to us and then we’re automatically an escrow. That property is not going to hit the market again. They’re not going to be fielding more offers. It comes to us and that’s ideally what we want.
You’re finalizing the terms of the backup. They’re not coming back to you and renegotiating. Those terms are locked in.
It’s locked in and good to go. You got to sit back and wait for the first guy to fall out, hopefully.
There you have it, folks. That’s the MLS offer system coming from the Director of Acquisitions at CT Homes. You did pretty good with the Fear Factor question. I’m going to get you out of here with one more unexpected question. You’ll do great. Many of our audience members reading are, either brand new looking to get started in real estate or scaling an existing business. What is the number one piece of advice you would give to somebody reading and it’s something they know they want to do but don’t know where to start?
I got to take myself as an example. Watching the shows gives you that level of false confidence that you can do it. Luckily, I didn’t get myself into trouble that way. When I moved here and joined a team, that was eye-opening, having a team, mentor and coach. I didn’t start as the Director of Acquisitions. I started as an Acquisitions Associate. I had to start from scratch but I’ve learned from back then, the current Director, and having that mentor, guidance and help. Without that, I would not have been successful at all.
That’s huge advice. If you ever have the opportunity to get inside an office of successful real estate investors, to me, I had that experience years ago with CT Homes in New Haven, Connecticut. I remember seeing, “This is what this business is supposed to look like.”
You’re not having to create those systems because, when I got plugged in here, all these systems were laid out. It’s like, “This is a machine.” To not have the knowledge to think like, “How would I have done that on my own?” I would have been fumbling through. It goes back to having the systems, a mentor and a coach.
If you happen to be in the San Diego area, swing by the CT Homes office. Say hello to Dan. He is an amazing investor and guy. He is a Green Bay Packers fan, though. Nobody is perfect. Thanks, man. I appreciate you coming to the show. We’re definitely going to have to have you back again soon. Everyone, I appreciate you tuning in. I hope you enjoyed this episode.
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