The truth about "Yes" in real estate & why it's critical to always have a plan B
Regardless of what part of the real estate business you are in, there is always one thing that remains constant, success in real estate requires an agreement between two or more people. It's a team sport where two or more players needs to work together in order to reach a common goal. Personally, this is what makes the business so exciting and at the same time extremely frustrating. What I find exciting is the opportunity to build relationships with people on a regular basis, helping them reach their financial goals by investing in real estate and solve their financial problems by purchasing their properties. What I find frustrating is when people say "Yes" to a real estate transaction when they really mean "Maybe". Even after 8 years in the business, I sometimes forget the importance of always having a plan B in any real estate transaction to protect the time and effort I invest in each transaction.
Fact of the matter is no deal is done until the paperwork is signed, and most importantly the money is in your bank account. At any moment of any transaction (buy, sell, lease, refinance, lend, etc.) there are untold issues that may arise to stop that transaction from closing. This is just a fact of life in the business. It's the people component of the business though that is the most unpredictable and frustrating.
Here are just a couple of examples of "Yes" turning into "No":
1) Just a few months ago, I was working with a new investor who was very excited to purchase investment property through our Turnkey REO program. After finding a property that met his investment criteria he decided to move forward with the purchase agreement and close on the deal. At the time of closing, he was contacted but did not respond. Days go by and more messages, voicemails are left to contact us for closing and still no response. Weeks go by with more message/voicemails and no response back from the investor. Turns out a few months later we learn that the investor decided to go to Asia for a few months and decided they didn't need to contact us to let us know they where going to pass on the deal.
2) Last month, I got a great fix and flip opportunity under contract that I intended to wholesale. The project was simply bigger than I wanted to take on myself so I marketed it to a short list of serious rehabbers in the Los Angeles area. Well, I pretty quickly got a local investor to commit to purchasing the deal after they assured me that they had the funds and were ready to close. One week later I learned that my investor's business partner did not want to do the deal because they were uncomfortable with the manner in which we needed to transfer title.
Luckily in both above cases, I was able to close the deals with other investors after scrambling at the last moment. Truth be told there is nothing new or unique about the above situations. Deals fail apart everyday in real estate. It's just the way it is. What I learned, however, is that I need to do a better job of putting together my plan B. I need to expect the deal to fall apart right from the begining and have a back-up plan ready to go. Maybe even have a back-up plan to my back-up plan. It's easy in real estate to get comfortable when everything looks like its going smoothly. However, by preparing for "Yes" to turn into "No" you can close more transactions and save yourself from the frustration and emotional drama that can be created when a deal dies.
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