The Proper Way To Cancel Your Bids

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This is the no Closer show where you get the latest developments in distressed note investing and learn the secrets of how you can control millions of dollars worth of property for panties on the dollar. Get educated and entertained by someone who has closed thousands of deals and lives to support you in achieving the same. Now here's your host CEO of We Close Nodes, Scott Carson.

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Welcome this episode of the Note Closed Show. As always, Scott Carson here today and today I Want to talk about canceling bids? All right. I know note investors when you're getting started and learn the ropes. It's exciting to make offers. And oftentimes we'll get ahead of ourselves and make offers and stuff without really understanding the process or what we're bidding on. I've seen it happen many times where people overbid for an asset because they're evaluating as a property instead of a note transaction, or they miss out in the low monthly payment or the low UPB or the low value. There's a variety of things. We get excited to make offers. And this episode is all about what to do when you're like, oh, I need to cancel my bid. You know, what's the best way to cancel your bid? What are the reasons to cancel your bid? What are some things to help you get out of your bid that will allow you to save face without getting, you know, blacklisted or removed from the distribution list from that seller? Because that's important. You don't want to get blacklist. And it will happen from time to time. I mean, we make offers on a lot of stuff, stuff that we don't expect upon closing because we know we're making a bunch of offers. You know, in one of the things that I teach, hey, make a bunch of offers, right? The more offers you make, the more you're likely to get accepted. And then working through the due diligence process, there's times we make offers that we don't even expect our number to be accepted, but if it is, that's fine. And we will fade it down through the things. There's some things to keep in mind. And like, I just had a conversation with a seller, a note seller, hedge fund guy. Just a few weeks. Actually, not a few weeks, a few minutes ago, actually. That's why I brought up this episode. So I got a student main offer on a note. It's a low value asset. They made an offer kind of high, higher than I would have. And. But the number still makes sense. It's still about a 15% cash and cash return based on if she closes it. Well, here's the thing. Here's the legitimate reasons why you can cancel bid and get out of the deal and still save face. A. The first thing is the value comes back way lesser than what you expect. Okay? So if they tell you the value is 80 and it comes back at 60 and you asked to reduce or fade your bid and they cancel it, that's a reason enough to walk away or condition the property is not what it looks like online, even if it's a performing asset and property looks trash. I've even had to cancel some bits like this. The conditions of the property just can't come back looking really bad. That's the first thing to cancel a bid on is the values don't make sense. Second thing would be something pops up in title, something clogs up. You know, maybe there's an assignment missing that'll go more to your collateral, but maybe there's an outstanding lien from previously outstanding on the part. I had this happen before where I was gonna go to buy a note on a property and the old lien is still showing. In fact, it wasn't released when the loan I bought refinanced that one out. So I wouldn't close until that lien was released. And it took a while for me to do that. And they wouldn't have gone to get that released. I wouldn't have closed on the deal. I wasn't gonna, I wasn't going to be the one responsible for that because technically I was buying a second lien, not a first lien. And if it's a first lien, they need to show that it's. It's truly a first lien. Another thing besides, you know, if the taxes are way higher or if it's a tax sale, it's been wiped out. Those are things that you should know on the front end a little bit by looking to see at the taxes. But how much taxes are owed. You know, it all depends how much time on the front end you have to do your due diligence. But values and you know, encumbrances, title issues are two of the biggest thing. Another third thing is collateral is missing. There's just not a collateral file or the collateral has big gaps. And especially with assignments, a mortgage is missing copies of the, you know, the original land contract, if it's a contract for deed is missing. Things aren't recorded properly. Those are some things that you can cancel your bid. Say, listen, until you have the assignments done, I'm not going to end up closing on this. You know, those are all very relevant things. Of course, if something happens like Covid or a borrower, you know the loan is shown as performing. And once you get the due diligence payment and it's not performing, that's caused to cancel. If there's, you know, I'll give you example. I've got another student who's trying to close on a deal and the it shows the unpaid balance being one amount well, in reality, the unpaid balance is like four grand less than what it showed on the spreadsheet. And so she's asked to reduce her bid by that amount, by that percentage. Well, the seller's not gonna. He's all, no, no, we're not gonna reduce our bid or not allow you to fade or reduce your bid because UPB's last time like that makes no sense to just cancel. They're gonna do that just, you know, because it was, it was not a bad deal. But at that reduced upb, he's received payments. You know, the sellers received some payments. So I was like, well, then he needs to supply those payments to you, which is what resulted in lower up. So if numbers don't show up, matching up, borrower's name don't match up, there's stuff like that. There's, there's reasons to cancel. What you don't want to do is lie and say, oh, the value came back lower or the condition came back lower. Well, if you didn't pull numbers, don't tell a seller that. Because a seller may request a copy of the BPO to prove it. They may ask for it. Especially if you ask for a reduced bid, there's gonna be a reason why they want to see the reduced bid. Is, you know, is the BPO show less is, you know, Realtor report, Realtor numbers in the market. A CMA show different. Those are important things to ask. And a half. Okay, but don't say there's things on title that showed up when you didn't pull a title report. Don't lie about things. Okay, now one thing you haven't heard me say. Oh, my funding fell through. You can say that, but that's something you don't necessarily want to be your number one thing. Oh, my funding fell through, my funder walked. Because you should always have a backup to a backup. A seller is going to accept your bid with the idea that you can close on it. And of course, if you're buying like 20 notes, you probably through due diligence values and things like that, you may reduce, you know, some of these based on condition and end up with five or 10 and go that route. But this is why you should be marketing for capital at the same time that you're doing your due diligence or even beforehand, because it's important to have it because you have two, three weeks, maybe even 30 days or more for due diligence into funds. So that's as long as you're marketing on a regular basis, some sort of Fashion or you've got a database of investors that are ready to pull the trigger. That can be helpful for you to do that. But that's the thing. What you don't want to do is hide from the seller. The seller's blowing up your phone and there are some sellers out there, some, you know, note sellers that will get, you know, they'll text you two times in 30 minutes, they'll call you two or three times in a day asking for you. And the best thing, you just say, hey, I will call you back at the end of business for me. Or if, and it's okay to say, I have a full time job, I'll call you after 5:00, my time or I'll try to call you this afternoon or I'm on a plane. You know, those are some things to look at. You know, that's, that's the thing that you have to realize, ladies and gentlemen out there, the more you communicate, the better it is, the less you communicate. And then you just suddenly show up at the date where they're looking for you to start, sign a contract and go to funding and you don't have anything done. That's not a relevant reason. Now another thing too, and I ran into this today. I asked for the legal status and I said I want to, I want to speak to the attorneys that are handling foreclosure. Well, the hedge, the seller on this was like, oh no, we won't, we won't make any introduction to the attorneys. You can, you will need to have that once you close. And I'm like, no, I do not accept that. I need to speak to the attorneys to see exactly where it is in the foreclosure process, where the borrower is, how difficult to borrow is, especially because I'm buying some notes that have quite a bit of equity. All right, I bought them at a discount, but I want to make sure that a, that we're foreclosing in six months, not two years, you know, or less. I want to know what's going on with the bars, the bar looking to reinstate. I mean, they haven't filed bankruptcy. Anything we've seen in due diligence so far, servicing records match up. But the hedge fund sellers, oh no, we're not going to give you, here's the name of the attorneys, but they're not going to introduce you. I'm like, well then I'm going to cancel my bid because I need to know exactly where it's at. I need to know exactly and speak to that attorney where they're at making sure that legal bills are paid up to date, that I'm not being told one thing on a spreadsheet that could be filled in and it's actually something else that's a legitimate reason to cancel your bid if the seller refuses to give you your information and due diligence. Now you can't talk to the borrower. That's a CFPB violation. But you should be able to talk to attorneys with the approval. Now, attorney's just not going to talk to you unless they have some sort of approval or email from the seller saying that they can release that information because you're not their client. Right. But if the client gives information to talk to you, that is what you should be asking for. Okay. It's important to know that. And if this is why I asked for it, if they won't give that to me, then I'm, I'm not afraid to cancel my bids, even though I've already, you know, sucked money in BPOs and ONIEs and some time. I'm not going to play Russian roulette with my investor funds on these deals. I want to make sure that a, what they're telling me is legitimate and I get it directly from the horse's mouth or the horse's ass, depending on what you think of the attorney. And is it attorney that I want to keep? Have they done their job? Because when you are buying up, especially in judicial states, you want to make sure that the foreclosure timeframe matches up. You don't want to be surprised like, oh, the borrowers are probably going to file bankruptcy, that will delay things or the bars have expressed interest in doing a loan mod. I want to know those conversations. Has the bar responded to the attorney? Have they showed any interest in doing anything? Those are things you need to know. And it's not just taking somebody's word about spreadsheet. I need to see it. I trust but verify. Like when I ask, I need to see proof of insurance. Okay, well, borrower has insurance. Great, let me see it. If you've got force place insurance, just tell me that you've got it. That's all I ask. I want, if you're going to tell me something, I want you to verify it. Now if they will not verify, they will not verify it. Then you're either going to reduce your bid or you're going to cancel and move on. Don't be afraid to pick up your chips and walk away from the table. All right, but like I said, don't go silent, don't go dark, don't block people's phone numbers because you don't want to talk to them. That only looks bad on you. It looks on whoever may have referred you to that seller, all right? So don't do that. Look, you've got funding issues. The funding just. This is the same thing. Hey, my main funder, walk, give me a little bit more time. I need a little bit extra time for funding because the seller would rather still close with you than have to go remarket the asset over and over and go through another 30 day period if you've already agreed to the number. And the numbers make sense. So that's what I'm talking about, ladies and gentlemen. Cancel. A bit happens. You know, you could cancel. There's a platform out there where it's notorious that the sellers on this thing drag shit out. The. The platform's not good about following up with the sellers or the individual note sellers on the platform. And that's enough reason to cancel. I'm just going to cancel this because you guys are taking forever. You got your head up your ass. All right, Yes, I said that. Okay? Like I said, if you ask for some information or you find something out, it's okay to cancel as long as it's irrelevant information and you can prove it. Don't lie. It's better said, listen, I'm canceling my bid. You know, cancel my offer based on this reason and this reason. One, those reasons need to be relevant. It's okay, seller. And sometimes if it's. There's a broker involved, they may use that information, go back and get you a better price, especially say, fade your bid. That means reduce your bid, not cancel your bid. You're going to cancel your bid, then you need to say, I'm canceling my bid based on A, B and C. And that's okay as long as it's true. All right? But like I said, don't hide, don't block people, don't respond. Look, I get things happen. And if you get, you know, sick or something like that happens and you have to disappear for a while, that's okay. Just make sure it's. Say, hey, I apologize for disappearing on you. I had this happen. And just be honest with it. Or you can all say, listen, I just got. We got overwhelmed with a lot of offers, is exceeding our capital stack. Can I have a little bit more time to raise more capital on this? And that's what it comes down to. You know, you're going to have investors that pull their Funds and walk that do something else or they decide they get cold feet. It just happens, ladies and gentlemen. It. Just embrace it. Say, hey, my investor walked. I need to get. Can you give me a little bit more time for some more funds in the next week or two? Most of them will say yes. They might grumble or growl a little bit, but very few will want. Would rather decide to go back to remarket the asset. Unless you've drug things out beyond and beyond. I had one guy. That was a funny thing. We closed on a deal with a guy, and it took a little while, forever. And I had three other assets, and he wanted. He came back to me. So I need the name of the entity. I said, we're getting a new LLC for these three deals with the new investor. He's okay. Well, 24 hours went by and we didn't have the name of the llc and they didn't have a tax ID number yet because we were waiting for our attorney and, you know, entity creation company to do that. Well, then the asset manager came back and blacklisted me. Oh, you took forever. I'm like, I just. It's been barely 24 hours. We were working through this. We didn't have the name yet because the investor. We finalized the funder. So that's why we're doing the, you know, operating agreement, that kind of stuff. And he wanted to blacklist me. And that's okay. It is what it is. There's more fish in the sea, ladies and gentlemen. So it's important if you have. If you run into, like an, oh, I overbid. I made a mistake. Just fess up to it. I missed this on my due diligence or I got my lines crossed. It happens. That's more legitimate than being fearful and running and hiding. There's nothing that pisses me off more than when somebody makes an offering and then I'm following up with them. Hey, where are you at in your due diligence? How's it going? And I don't get nothing. Don't be scared. Just, hey, I'm working through this. I'm sorry. I'm a little delayed in some stuff. I'd rather hear that and get a legitimate answer from you. The no answer at all. Because no answer at all looks like you're hiding it. You don't want to do that now. You will have people that will blow up your phone like, ridiculous. And sometimes you want to say, hey, just chill, dude. You ain't got to email me. Call me four times in 30 minutes. I'm not sitting around waiting to answer your phone call. I'll get to you. Everybody's a little bit busy. Just to have a little bit of patience and go from there. If people are pushing, it's okay to push back. But give it reasons. Be legitimate, be. Be transparent, be honest. All right, I've had to where it's like, I can't fund on this deal right now. My investor just walked. I apologize. Give me some time. I'm trying to get things done or I've got an emergency I've got to take care of. I'm not going to be able to follow through on this. You know, you may be able to get away with that once or twice, but you're consistently doing that, you're going to have a bad name. Because I get phone calls from sellers all the time. They're like, hey, who's. Is this guy legitimate? They dropped your name. Or this person that you're connected with, do you know this person? They said they know you. Are they taking your training? I'm gonna. If you're with me and I know that you've taken a class and we've talked, I'll vouch for you. I'll give you the on the dollar, I'll pick up the phone and give you a phone call, make sure you're relevant. But if you've never taken any training, never closed on a deal, don't go making offers until you're ready to rock and roll, until you've got somebody there holding your hand through the process to go from there. So anyway, best way cancel a bid is be honest, have a legitimate source, don't be scared and do your due diligence. If you go out and do that, and I guarantee guys and gals, you'll be closing more deals than you'll be flaking on. Just don't flake. Be direct, be honest, and you'll find success that way. So go out, take some action, everybody, and we'll see at the top. Bye. Sam sat.