Why Creative Finance Investors Love Overpriced Homes

Welcome to the Smart Real Estate Coach Podcast, your source for actionable, real-life, practical investing advice. Each week we help you make a quantum leap somewhere in your business, your finances, and/or your life. Subscribe, leave a rating and review, and learn more at smartrealestatecoachpodcast.com. All right, welcome to this week's Solo Cash. You're stuck with me. It's Chris Prefontaine, your host, and You know, I was thinking through, I've done a lot of mindset SoloCasts. I've done a lot of, of course, over 500, I don't know if it's 600 now, interviews. What I wanted to do today, a little bit different, is I wanted to do a little bit more of, I'll call it in the trenches deal structuring on this SoloCast. And I'm going to title it, and they can title it whatever they want as a team, but so you know where my brain is going, I want to talk about overpriced listings. Overpriced homes. I don't want to say listings because we're not realtors, but overpriced homes with sellers and why I love them. And I want to teach you why and how to love them. Okay? Because I want to help you position overpriced homes as an opportunity instead of a frustration like, oh my God, what are they doing? See, our Q&A Thursday on this topic recently got a lot of response. So I want to direct you there too. But I'm going to try to incorporate a lot of it in this In this solo cast. And I'll tell you guys, let me just say this before I get started here, because I can dive in and go on a riff and forget. Our In the Trenches boot camps that we run here, right here at our office in Newport, Rhode Island, and it's free for apprentices and associates, totally free. You just got to get here. 3 days of training with us privately. I'm going to be in the room with you if you decide to do that. My point of bringing it up in this particular solo cast is real simple at the beginning. We do live calls on your behalf. Like, let's say you bring 10 leads, we're going to call them for you right in front of you. And you're going to see a lot of this. This topic I'm extracting today is just going to give you one little glimpse of what goes on. And it's just one little niche within the scripts, which is overpriced home, right? So I don't, I basically, my thought process on the solo cast today was I don't want you doing what most other investors do. Because we don't do that. What do most investors do? They run from overpriced listings or they get combative. There's a lot of things I'll go over here in the SoloCast, but we look for them because as long as you ask the key questions, which I'm going to explain in a few minutes, like I'm going to give you some serious like 1-sentence, 2, 3-sentence hacks that when you're talking to a seller, you literally can't wait till they ask you certain things. You literally can't wait. Now, before I dive in there, why do— let's think about something. Why do beginners and most investors in most other niches avoid them? Because I just blatantly said, oh, they avoid them or they get frustrated. Well, why though? Why? Because most other niches, I'm going to call it, they're more predatory, like wholesaling or flipping, because now they go, oh, I can't get a discount, or Or they don't know the skillset of negotiating, or they lack the ability to pull out a motivation so they know whether they should follow up or not. Like, that's a key. If there's no motivation, you're following up, you're just totally wasting time. You could be going after people. I shouldn't say going after. You could be attracting people that need your help, right? So now let's pivot. Why do we love them? Well, there's little to no competition. Because frankly, people don't know creative like we know creative and that we can show you how to do. And when you have an overpriced home and seller, if their motivation is right, which I'll teach you how to get in one sentence, then time's in your favor, right? Literally, time's in your favor. You don't chase because when the motivation reveals itself, you know when and how often you should follow up or not and let them come back to you because Overpriced listing. I don't. I keep saying listing on accident, guys. Overpriced homes and overpriced sellers today almost always rings in my brain to be motivation tomorrow. Not always. I'll give you the ones that that don't that don't fall in that. So if you're arguing comps with a seller, you lose day one, right? You're going to have much much better results. Much better results by moving to their side of the table. Like I want you to mentally shift here. So instead of combating, right? They're here. You're here. Jump to their side of the table. So when a seller won't lower their price, here's what I want you to do instead of banging heads. I don't want you to do what most investors do. I alluded to some of them, but that's arguing about comps, trying to prove them wrong. Like these are the comps I got. You know, right away. They're in the defense and their wall is up. And then you're pulling in the emotion, maybe more so with them than you, but you're pulling in emotion to that. And it's going to, I promise you, it'll go away nowhere. And you're going to walk away or they're going to walk away, in my opinion, too soon. Right? So the key line, and then I'll work it into the script, is you knowing, but then translating this to the seller, that the market makes up the numbers. So Mr. and Mrs. Seller, the market makes up the numbers. You and I don't. So now, boom, you took yourself out of the picture. You're kind of on the other side of the table. So here's how you reinforce that. Let me just kind of go through the script with you. You say, look, let's say it's John and Sue. Hey, John and Sue, look, I'm on your team, right? I don't make up the numbers and you don't either. The market does. Like, the market will tell us whether we're priced right or not, right? I just don't see the comps to support the price right now. I'm just curious. So when you price this, how did you arrive at that number? Now they might tell you like a true appraisal that was within 6 months. Okay, then I screwed up. Oh wow. Thank you for sharing that. Or CMA, a comparative market analysis, which is a realtor, which you got to check, but they should be within a mile, within 6 months timeframe. So let's just say that all doesn't prove right. So your inclination is correct, in other words. I would then say this to the seller. These are all just scripts you can use. Here's the reality, guys, or whatever. I think I called him John and Sue. Here's the reality. In the conventional market, let's say hypothetically someone falls in love with your price of $500,000. Let's just say that's what it was. But my comps aren't showing that. Here's what's going to happen, John and Sue. You'll be on the market for X amount of months. Then you're going to find a buyer. Let's say they fall in love with it, but they don't have cash. Okay. Problem arises. They have to do an appraisal to get financing, right? You and I can't control this. So they do the home inspection, they drag you through all that time, then they do their appraisal and you're wasting 2 to 4 months and the price is going to come back too low. Now, would a buyer getting financing— forget the bank not approving it for that, they're going to have to come up with extra cash— would a buyer knowingly want to overpay for your house? If they're getting a loan? Likely not. They're not going to come up with all this extra cash because you want more and the comps don't support it, right? And then you say to them, what if the market slides by then? And of course, I don't know their motivation we're working on here, but 2 to 4 months or 6 months might put them out of what they're trying to accomplish too. All right? So now you kind of just educated them. You became the authority there, right? It doesn't matter if you're brand new to real estate or if you've been doing this for several years or a whole bunch of years. I learned the hard way, back during the crash that doing creative deals is much better. It's a much better path in real estate in general than, let's call it, the old way— getting paid once, using banks, signing personally. 3 paydays, getting paid 3 times on a deal, it's better. 3 ways, not one. Money now, money over time, and money long-term. And I don't care if you're in an up-down sideways market, it doesn't matter. You can and should operate with the utmost confidence. There's literally nothing I love more. than helping people create systems and simple systems and processes to become massively successful with our 3 Payday System, and doing so in literally any market and doing it geographically literally anywhere. So if you've been learning and learning and listening and studying and not taking action, I'm telling you, after going through it myself, it's costing you tens of thousands, if not hundreds of thousands of dollars, by not taking action on the 3 paydays the way you should be getting paid. Many of the people that were brand new, just like you, that joined our community have fast-tracked their startup. Now, I mean, wouldn't that be ideal? If you said, okay, should I go fast or slow? Should I take action now or later? It's costing you too much money to wait. Each one of you are at a point in your life, I'm sure, where you want things to be easier. You want things to be better for you and your family. You probably realize that you not only want more, but you deserve more in this life. So, to be able to give your family everything they want, build a legacy, For you personally too, and to have time freedom to start enjoying life. Frankly, whatever else you're seeking. And for some of you, now's the time, for example, to just focus on security. Maybe it's building a big solid bank account for retirement. We take these things super, super seriously, and it's my life's biggest reward to help you achieve them. I want to give you a free discovery session with our team. It's free. It's 15 or 20 minutes. You have zero to lose and everything to gain. And to understand how you might fit into the 3 Payday System that we've done now in over 80 markets as of this filming, go to smartrealestatecoachpodcast.com/discovery for a free call with our team. smartrealestatecoachpodcast.com/discovery. Because it's not whether or not you can do it or whether or not you fit, you can do it. It's whether or not you'll take action and do what it takes, and we can guide you through that process. smartrealestatecoachpodcast.com/discovery. We'll see you soon. John and Sue, here's an idea. If we can't make the price work, maybe we can make the terms work. And just kind of pause, let them, let them sit on that. And then here's how you do it, just so you guys know. Again, I don't know the scenario and you can work on this live with us in our In the Trenches bootcamp if you have sellers, but let me just give you a scenario. If it's free and clear, We can do owner financing and free and clear, meaning there's no mortgage. We can, we can do owner financing and we can extend the term out long enough because why? Because we're making principal-only payments. Most other investors, if they even think about owner financing, most don't. But if they do, the other investors, what they're doing is they're adding interest right away. They're not even trying to go principal-only. Guys, I'll tell you, when we give sellers their price and we get our term and we do principal-only payments, We win big time and we accomplish their goal. It's a win-win. Or they have a mortgage, but they have a good chunk of equity, which could be taken over time with no payments or principal-only payments. See, so a longer term helps and helps you pay a premium. Why? I don't know. Let's use a number. Let's say that I'm paying $2,500 a month principal only on that, on that, well, $500,000 would be a little low price. Let's say on a million-dollar home, pretty standard for us, we're going to pay $2,500 a month principal only. And the seller says, well, yeah, I'd go out 8 years or 10 years. Guys, $2,500 a month, and we've done this exact deal on an oceanfront home in Massachusetts not too long ago. $2,500 a month is $30,000 a year. Do I care if I overpay by $10,000 or $15,000 on that house or even $20,000? No, in less than a year, I'm going to work that down. That's why a premium can work with the right structure. See, you can say this to them too. Price is flexible when terms are flexible. Isn't that cool? So you could say, look, I'm probably your only viable buyer. And if they still won't budge after that, then just keep flexible and keep in touch. But here's the key. Okay, so this is the script I promised you. If there's no motivation, meaning there's a bunch of examples here, but make me move price on Zillow or zero timeline, or you're not seeing like a problem to solve and you're not, you're just not figuring it out. Like they say no to everything. Okay, here is the key question. If you don't do anything else in this process that I just talked about, the key question is this. You say to them, I'm curious then, if you don't get that price of $500,000, what's your plan B? Or what's your backup plan? And just be quiet because that tells you everything. Why? Well, think about this. Just boom, instantly you're going to know because you say, what's your plan B? And they go, well, I'd have to lower it. In which case you'd go back to your premium or What do you mean plan B? I have my job starts in October. I got to be there. Or the kids have to start school. I got to be there. Now, you know, there's motivation and you know that you should tighten up your follow-up. Or they say, oh, I'll just stay. I don't care. I could stay for another 10 years. All right. I'm probably not going to follow up. I'm going to send what we call in our system. I mean, very practical. Here's what we do in ours. We set, we have 12 form letters that our community can use. They're all pre-done. And one of them's called Not Now, one of them's called Cash Only, one of them's called With Realtor. So I'd probably send them a Cash Only or a Not Now. And I would never follow up because they'll call me if their motivation changes, right? That's it. Real simple. So you have this sort of in your brain, depending on what their answer was on motivation, you have, it might be a 15-day, it might be a 30, 60, 90-day follow-up. Or here's something really cool, guys. I'll add this. And this wasn't in my thoughts today for the solo cast. We have a white-labeled system through REI BlackBook that has all of the Smart Real Estate Coach workflows built in. I'm talking about you get this system and your workflows are built in, meaning how to follow up, when, when to text, when to call, when to send a letter. It's all built. You don't have to build it. You just click certain statuses and the system does it for you. That is years of workflows being tested. And on top of that, you get a website with that too. So go to smartrealestatecoach.com/reiblackbook and you can learn more about that. This allows you, this system that we have and the scripts I just gave you, both of those together, picture this. So the scripts are going to increase your skillset and make you the authority. And the REI Black Book customized workflows for the Smart Real Estate Coach community, that's going to take you both of these things. are going to take your emotions totally out of the picture. This is about solving sellers' problems or challenges, or in the case of debt-free people, they don't have a problem or challenge. They're just trying to accomplish something the market won't help them accomplish, meaning they might want a premium, right? And please understand one main constant in real estate. I say this on every show I'm on too. One constant in real estate is the market's constantly changing, right? And every time the market changes, what does that spell for you? Opportunity. That's it. In my 34 and a half years, as of the time of this filming of this solo cast, I will tell you, and I've said this at different segments of the market, and I feel super strongly about this this year, there's never been a better time to be in creative for a lot of reasons. When we started creative, I don't know, 12 years ago as a company, it was not mainstream. I could tell you we had 2 competitors teaching this. One's out of business now. One still teaches it immorally and unethically. In my opinion. Okay? But now there's like 20 people teaching it because they went out and did a deal and they think they're a coach. Scary, but that's reality. So I will tell you that you have an opportunity to learn this the right way, unlike most investors, to do it morally and ethically and to do the right thing for sellers and have a plethora of deals. When we're talking our 3 Payday System that we trademarked federally that no one else has, when we talk about you exiting, utilizing the 3 Payday System, And we talk about the size of those 3 paydays ranging historically in our community from a low of $45,000 all 3 paydays to a high of $350,000. There's no limitation, there's no flaw there, but that's just what we've seen in the community. And you'll be somewhere within there, I would think. When you talk about the size of those, how many of those— I'm just going to ask you to personally ponder this— how many of those 3 payday deals do you actually need to change, like literally change your finances and your life and your lifestyle and your daily schedule and your time with your family? Think about that. How many? I don't know the answer, but one of the many things we teach at the bootcamp, and we'll teach it at our main live event this year in Rhode Island too, in September. Go to 3paydayslive.com if you want to be the first to know about that. 3, the number 3, paydayslive.com. That's our live yearly event. But one of the things we'll do there is we'll teach you a formula that will allow you in almost every case to eke out 6 figures. That's $100,000 or more. Every owner financing deal that has certain criteria, and we'll teach you how to find those. We'll teach you at the bootcamp, we'll teach you at the live events, guys. Now, if that's not enough to get to one of the bootcamps or one of the live events, when I just told you you could do, I don't know, maybe you do 3, 3, 3 deals next year that are free and clear properties that we show you how to eke 6 figures out of. What would that do to your world? I don't know. I would encourage you to make sure you're subscribed to our podcast here if you haven't done that yet. And I thank you for being a smart listener. And also to our YouTube channel, because on our YouTube channel we have, gosh, we have Motivational Mondays, we have Q&A Thursday, and we have Deal Structure Sundays where all this kind of comes together and you won't miss one. We've been doing this for about 7 and a half, 8 years now. So every week we don't miss one. So go ahead and subscribe here to the podcast or your favorite podcast platform. Subscribe on YouTube so you don't miss any of that. And for goodness sakes, join us at the 3 Paydays Live. Event this year, threepaydayslive.com, or our In the Trenches boot camp right here in the office in Newport, Rhode Island. Guys, thanks so much for listening and dealing with yet another solo cast and listening to me go on a riff. I'd like to hear if this was helpful for you because this was more in the trenches, kind of practical versus 10,000-foot view stuff that I usually do on a solo cast. Send me an email, chris@smartrealestatecoach.com. In the subject line, put Podcast feedback. Love to hear from you. Make it a great week. Hey guys, are you simply sick of juggling a dozen different software tools for your real estate business? I know I was, and I know I'm not a tech person, so it was frustrating. A subscription for this, you got a subscription for that, and they don't even work together out of the box. That's very frustrating, especially in the real estate world where your best time spent is going to be out in the field or on the phone with sellers. And now you're stuck hiring a tech guru just to make all that sync up. So let's ditch the chaos and let REI BlackBook handle everything. Automate your lead follow-up, track every deal, analyze things quickly for you, make offers all in one platform. In fact, with the Wicked Smart platform, we now have access, if you're in the Wicked Smart community, to all the other associates' properties. Can you imagine that? 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We're going to help you take the guesswork out of your next steps. See you in the next episode.