The Power of People Skills - Dealing with Difficult Sellers

Mike DeHaan: [0:02] On Air Brands. There's always different strategies, and you have to have that flexibility. And I think a a reason that a lot of people end up stuck on the sidelines is the first time they encounter any sort of resistance or they encounter something where they feel like it's not fair for them, they lose it. Right? And they're like, I'm not gonna move forward with this. And the thing that sucks is, sure, it's not gonna be fair for you, but if you wanna make, you know, a couple million bucks a year or in the future because you're buying probably at such a discount, don't worry about the little details. Honestly, if you're buying right, you're gonna do well. Even though it's it really sucks at the time, just let it go.

Speaker 2: [0:39] Welcome to the collecting keys real estate investing podcast with your host, Mike DeHaan and Dan Austin. From wins, losses, horror stories, and tactics for optimizing your business, Mike and Dan take a real uncensored deep dive into the ins and outs of running a full time real estate investment and wholesaling business.

Mike DeHaan: [1:02] Alright, guys. Welcome to episode 26 of the Collecting Keys Real Estate Investing Podcast. Did you just say 26?

Dan Austin: [1:10] Oh, shoot. I did.

Mike DeHaan: [1:11] We are going backwards. Episode 36 of

Dan Austin: [1:14] the Dang.

Mike DeHaan: [1:15] I know. And I I literally just said that before I went live. I like, 36. Episode 36 of the Real Estate Investing podcast.

Dan Austin: [1:23] It's been a week, man. I get it. It's been a week.

Mike DeHaan: [1:25] Well, it's been, like, a couple weeks because we kinda record these in batches. So it it kicks it out a little bit, and I always have to go back and see where we actually are. But, yeah, we've had a I guess, we've I would say since we've recorded last, the market has officially started to shift a little bit. You can kinda see it. A lot of people are talking about it right now as, you know, interest rates have been climbing. We've known it's gonna slow down, and I think the slowdown has officially started. We just had a property that we listed, and we sold it in, like, a week, which is fine, and taken off for a little bit below ask. Mhmm. But there's been reports of people dealing with similar sort of situations all over the city, all over the country, where stuff that they would have gotten an offer on, you know, several offers within the first weekend are now sitting for one week, two weeks, several weeks without any offers. Yep.

Dan Austin: [2:16] Yeah. Which is funny because, you know, not too long ago, you'd get ten, twenty offers Yeah. On that same property, and it would be a frenzy.

Mike DeHaan: [2:22] Mhmm. And which is I mean, it's fine. Right? Like, that's how it was. Like, when I first started flipping houses, what, 2018, 2019, I mean, the first few properties I listed that I sold, the expectation was it would sit for thirty to sixty days. You know? You kinda, like, work that into your calculation. So what we've been dealing with over the past little bit has been completely unprecedented in the history of flipping houses. But Right. You know, that still doesn't make it like, it's amazing how quickly you adapt. And you're like, what's wrong?

Dan Austin: [2:52] What's I know.

Mike DeHaan: [2:53] And this last one listed, I mean, after, like, four days, I got through the first week, and we didn't have an offer. And I was like,

Dan Austin: [2:58] uh-oh.

Mike DeHaan: [2:59] Yeah. Like, this isn't good. I had, like,

Dan Austin: [3:01] I had, like, maybe, like, showings total. Yeah. And we we got we we actually did get two offers out of those four. Mhmm. And one was over asked, but we it came in late, we'd already accepted another one. That was a much stronger offer, just less than we wanted to accept. You know?

Mike DeHaan: [3:19] Yeah. Well, the the one they said that was over asked, it was like an FHA with 20% down, and there would definitely be some FHA questionable things on the house. No. No. I think we've

Dan Austin: [3:29] we fixed it because we were targeting FHA buyers on this place. Right? I was anyways during the rehab. I was targeting making sure that we we kinda stepped through the hoops on a certain thing. So it probably passed. No no questions asked FHA. Mhmm. We even put hot water tank straps on it. Oh. You can believe that. Look at

Mike DeHaan: [3:45] that. You gotta gotta leave that, though. You always gotta leave that so the inspector can justify their cost.

Dan Austin: [3:51] They got The TPR the TPR valve was, like, nine inches off the ground, which is it's supposed to be, like, three or some I don't remember. Yeah. So we left that for him. You know? We'll give that inspector something. There you go. But yeah. Yeah. We did. But it was, a weird I've I don't know why maybe it was just the timing of when they got their rates looked at that an FHA would be better than conventional. I mean, I'm just you don't usually get 20% down

Mike DeHaan: [4:14] Yeah. FHA. Well, I think FHA is typically a little bit cheaper if you even if you put more down on it. I don't know. I've never got an FHA loan. I really looked into it.

Dan Austin: [4:24] Yeah. I don't know that you would I yeah. It might who knows? I guess, what with that, I would typically not think that that would be the right way to go, but that's what they thought. And so, yeah, we missed we they they came in late. We already accepted an offer. We are we negotiated a price the night before that, which I'm happy with if they if they come back with a bunch of, you know, repairs. It's gonna be like, really? Come on, guys. Yeah. Not gonna happen. Yeah. Well well, I mean see how they go.

Mike DeHaan: [4:49] Yeah. And and the well, the higher offer too also justifies that if the people do come back and want a bunch of repairs, we can just be like, nope. We have this other offer, and we have justification that somebody will pay more for it. So, you know, if anything, if they come back with repairs, we should just counter with a higher ask. Right. Exactly. For the repairs, honestly. We could be like, yeah. We'll do that, we want full price, and we'll take care of all that for you.

Dan Austin: [5:10] Yep. Totally. Yeah. I think the only repairs they could come back with, there's a question of what would maybe be the roof. It's a three tab shingle roof. You know? Sometimes people don't like those. Inspectors will say, oh, it's only got three years of life left on there or something like that.

Mike DeHaan: [5:23] You know? They want us to redo the whole roof, and they can't fall off on explicit again.

Dan Austin: [5:27] Exactly. That's the only major I'm like, you know, we'll see. But it it looks clean. It's clean enough for me. So but, yeah, you're right. Mean, things are things are changing on all the markets. Right? I mean, I don't think that real estate the question is how much will what we're seeing in the broader economy bleed into real estate? Obviously, we're seeing people it's the buy the buyers are slowing down, but they're still they're still there. Right? We're still selling properties. But, you know, you look at things going on, you know, it's kind of funny because we get a strong jobs report basically. And then that reaffirms the market, you know, belief, like, that the the Fed's gonna raise rates again because now they've got good strong jobs. They're they're still trying to get inflation under control. And so now you see the the broader markets kinda dip again after they had a little bit of a bump, like, what was that last week or whatever? Yeah. So that's to me is just indicative of, a bear market and everybody's getting kind of nervous on on the rates going up because that's gonna affect things. And so that's what the markets are reacting to that. It's kind of funny how it's these nuances, how the market reacts. And then, you can see companies starting getting more defensive strategies.

Mike DeHaan: [6:36] Mhmm.

Dan Austin: [6:37] You know, Tesla, this is, you know, I I follow them quite a bit because I just like the company and what they're doing and a little bit of a fanboy. Elon Musk sent out an email saying that everybody had to be this is what I also laughed too because, he said everybody had to be in the office at least forty hours a week. Yeah. I have I have some friends that work for, companies that Elon owns, and forty hours a week is, like, part time at his companies. Like, they grind. Like, they they freaking work on the on the in those companies, SpaceX and all that sort of stuff. But then

Mike DeHaan: [7:12] that was indicative what people thought was

Dan Austin: [7:13] that was indicative of him saying that they were gonna cut jobs. Mhmm. Because people would naturally just like, I'm not coming back to the office for forty hours a week, or

Mike DeHaan: [7:21] I can't come back to

Dan Austin: [7:21] the office forty hours a week and they'd leave. And then there was another email sent out to the company that he was worried about the economy and that they're going to do a hiring freeze. And so, know, and then you're starting to see other companies, cutting a little bit of staff or doing hiring freezes. So, you know, people get scared, but it's like they're, you know, they're getting in a defensive strategy.

Mike DeHaan: [7:39] Yeah. But, I mean, when you look at, like, those sort of companies, you look at where like, they need to be worried because they make so much of their money off of their stocks. Right? And, like, like, doing the buybacks and and those sort of things. I mean, Elon Musk's whole fortune has come from the unprecedented rise in Tesla stock, which is completely unjustified if you look at their earnings. Right? Right. So, I mean, for him to be a little bit cautious makes sense. But if you look at, like, the everyday person, you know, the the problem with the sort of economy and how it's sort of presented to people is realistically, for most people, what the stock market does on a day to day basis does not and should not affect them, but they act like it does. Mhmm. You know, thanks to public media and, you know, the the ramblings of people on social media that make things look like a giant deal. Like, you know, unless you're retiring or, you know, you're living off of your your stocks or something like that, what the stock market does, if it dips, all it really does is create a buying opportunity for people. But people act like it means that they shouldn't do anything in their life because their stock portfolio has dropped. It's like this is your time

Dan Austin: [8:45] to be taken action, man.

Mike DeHaan: [8:47] It is. Right?

Dan Austin: [8:48] It's buy opportunities.

Mike DeHaan: [8:49] Yeah. And if you're looking over a long period of time, you know, exactly. It's it's it's an opportunity to start generating more wealth for yourself. But, typically, what people do, because I don't they're foolish, uneducated, I don't know, is they freak out, they sell, and they sit on the sidelines. They don't do anything. And it's like, this is, you know, the time to start be start paying money start being making money. So, like, was it was I think it's Charlie Munger that he would say is be greedy when others are fearful and fearful when others are greedy. Feels the other way around. But, I mean, that's exactly what we're in right now. Everyone's fearful. Now is the time to start being greedy. Now is the time to start, you know, buying assets and doing all that sort of stuff. And even on the real estate side, you know, we've seen it even on on a wholesale front as we're looking to offload some of the properties that we're looking to assign. The buyer pool suddenly much smaller. People are concerned about it. Right? But if you but if you look at the fundamentals of real estate as a whole, if you're buying it at a large discount, you should still be fine even if things you know, you're buying a property at 25% discount. Even if real estate drops 25%, you're still gonna be breaking even. Yep. You still got a property.

Dan Austin: [9:55] You still have an asset.

Mike DeHaan: [9:56] You know? Exactly. And the supply and demand is incredibly skewed still, pretty much everywhere all over the country, especially locally here in Spokane where the demand is still high, even though stuff is taking a little bit longer to sell. There's still a large buying pool, and there's not a huge amount of properties on the market, even though it's slowly increasing. I mean, there's still a lot more demand than there is supply for it. Right? So, you know, I I I think that chances of a big decrease in hard assets is probably kinda low. And stocks is going things have already dropped, but that just creates a buying opportunity. If wanna get into things like crypto, who the fuck knows? Like, the only thing that's really come out of that is, oh, you're a thing that was supposed to be a hedge to the normal economy. How did that work out for you when it tracks with the stock market 100%?

Dan Austin: [10:43] You know? It's like all that stuff. You know, there there could be some conspiracy here too that the that the Fed that the government wants to pop the crypto bubble. They don't want that. Right? And, yeah, all the all the crypto bros out there talking about that hedge, you just said, it's like, that is not true. There's no they're like, but the data, if you look at the fundamentals, I'm like, what fundamentals? The fundamentals of crypto versus, like, the S and P 500 are minuscule. They're the fundamentals of crypto are like a blip in time. And you were seeing that happen. I mean, I'm not saying you shouldn't invest in them. There's a lot of people investing in it, but it's like, you should diversify. And that's where people have problems is they think that the asset they're investing in, because it's doing great now is always going to do great. And that's the one golden ticket and you found it. It's like, there's a time where you should scrape some of your profits. You and I do that in real estate. We sell certain properties, take that equity out of it, repurpose it. Same thing with your stocks. There should be, you should take some, you should take some of your wins, kind of like at the casino, you know, throw a few chips in your pocket and then keep gambling. Yeah.

Dan Austin: [11:43] I mean, that's what you should do. Do you gotta take your wins when you can? And, yeah, you might lose some of the upside doing that. But over the long term, which, again, I always preach this, real estate's a long term investing game. You know, over the long term, you're gonna be better off.

Mike DeHaan: [11:56] Yep. Yeah. For sure. And, you know, crypto stocks, if you believe in any of those things, now's the time to be buying. And then, you know, for for real estate, you know, if you do think a crash is coming, which I don't think it is, just like so the supply and demand, but now is probably the time to be hoarding cash for that or to be stabilizing your properties so that if things do get a little bit sideways, then you at least have the best possible asset that you can. Yep. Like, on all those things, I would say if you're if you own kinda shitty companies, if you own those random altcoins that don't actually have any value, if you own, like, really dumpy properties, maybe offload those ones and start moving into the more desirable assets that other people will wanna have in the future. You know? It's like it's like, I would say these sort of periods are when it's less appropriate to gamble on things that don't really make sense long term like you said. Because investing at its core is a long term game, you know, regardless of what you're investing in. So

Dan Austin: [12:54] Yeah. And and you gotta remember that, you know, the economy doesn't just stop. Things tighten up and and and things are correcting. I I believe that they're correcting right now. You know, you're looking at the stock market where we took some unprecedented gains in real estate stock crypto through 2020, 2021. And if you just look at the graphs, you're like, wow, that was a lot. And then now they're correcting back down to like that those pre pandemic levels almost is what it's looking So it's like, is it really that bad? Maybe not. Maybe we just had a lot of excess dumb capital in the markets, which we printed a bunch of money, which also you know? And you you heard all these people getting their stimmy checks Mhmm. And investing in the stock market. Like, that was all over the news. Like, people had excess money. They're doing stuff with it. But I, I think, like I said, the economy is not going to stop. Flippers are going to flip buyers are going to buy. So there's still opportunity out there. So if you're, if you're a flipper, are you just going to stop? Like if that's your full time business, like, no. You still need to make some money. You're gonna tighten up. You're gonna buy a little bit better as we're seeing people are getting a little bit more cautious on what they're buying. Mhmm. But there's still money to be made, and there's still opportunity to go out there and invest, and you you just have to do that. And I look at it as, the dollar cost average method.

Dan Austin: [14:07] Like, we're still buying. We're still doing things. We're closing on a multifamily, what, this

Mike DeHaan: [14:12] today? Called before. I think I'm gonna be signing today, so we're probably funding on Monday. But

Dan Austin: [14:18] So, I mean, you know what I mean? Like, we're we're still got good fundamentals on it. It works for us today. It's gonna work for us tomorrow.

Mike DeHaan: [14:23] Mhmm.

Dan Austin: [14:24] Those sorts of things are those are the opportunities where you're gonna gain wealth. Yeah. Yep. Yep. So yeah.

Mike DeHaan: [14:30] I mean, you know, ultimately, I think it's just key to find the key people that are gonna be able to keep things moving. They're gonna wanna keep doing business through these times because this is what sort of separates the men from the boys, you know, is these periods of time. Like, you look back to 2008, 2009, and they're in the last recession, the people that were taking action then, they made generational fortunes. Absolutely. Whether that was in real estate, that was in tech, that was in, you know, their own stock market investing. Right? Those sort of things. People that doubled down, they did extremely well for themselves. And, you know, this will be no different. Even you look back to COVID, like, when the everything kind of tanked at the start of COVID, the people that doubled down and bought a bunch of things at the bottom of that, they made a shit ton of money over the

Dan Austin: [15:13] last two years. Well, yeah, we know guys that were that were saying they pulled back. Right? And that's kinda when we really doubled down. We were just starting out doing this full time, and we made some pretty good gains while other people stepped on the sidelines and then had

Mike DeHaan: [15:26] to pivot because people like us came in and took over the market. Sure. What's interesting is I actually remember hopping on a local, BREA meeting, real estate investment meetup in Spokane that was all done over Zoom because COVID had just started. And one of the big wholesalers in town did a whole talk about how they he was, like, laying off all his staff, and they were going really defensive, and they were doing all these things and really stepping back. I remember you and I, we were just getting started, and we were like, well, like, what do we do? I don't know. And we made the decision to just double down and see what happened. And I don't know where he is anymore. He's certainly not doing the deals like he

Dan Austin: [15:59] used to. Yeah. He's not. He was doing a lot before then.

Mike DeHaan: [16:02] Yeah. We're doing pretty well. So, you know, it's it's it's interesting. And, you know, ultimately, it just comes down to buy quality assets, expect to hold for a long period of time. If you have anything that is sitting on like a fat gain still, maybe looking look at exiting that and diversifying a little bit more. But if you do believe in it, don't don't fret. You know? And if you put yourself in a position where you have to liquidate that, honestly, shame on you. You kinda overextended when things were kinda when everyone had been talking about when is it gonna happen for the last six month months, you doubled down and said, screw it. I'm gonna I'm gonna throw all caution to the wind. That's sort of on you at that point. So Well, yeah. And if and

Dan Austin: [16:41] if you believe that there's some fragility, so your your your brain is saying, oh, I gotta be careful. There's some fragility. Well, we're we're in the game where that's that can benefit you. Right? Because there's gonna be more distress. If you if you're worried that things are gonna get worse, you know, over a period of time, well, that means there's gonna be more distressed sellers in the marketplace. Yeah. And the more opportunity. Now the exit, you you've gotta make sure that you're appropriately acquiring those contracts at the right prices. Don't buy them at yesterday's prices. Right?

Mike DeHaan: [17:09] Mhmm.

Dan Austin: [17:10] You need to buy them at the future prices. Mhmm. And what you expect them to be. But that's also talking about sellers. This is a transitory period for them. They, they aren't as gonna, they're not going to be as quick to react. And they think their house is still worth a million dollars, even though it's a piece of crap and they're about to lose it. But they saw their neighbors six months ago, sell their house for 30,000 over asking a $100,000 over asking And they're you know, sellers in general sometimes can be, I don't know. What what's the right term? Like, what would you what would you call them? Sometimes

Mike DeHaan: [17:38] They they tend to have rose colored glasses on their situation.

Dan Austin: [17:41] There you

Mike DeHaan: [17:42] Like like like, they they see the best in whatever they have, and they kind of ignore the realities that are

Dan Austin: [17:49] around them. And oftentimes, they can be, somewhat ignorant to, like, what the actual world's doing. Or I always say, like, they take inaction, which is why they're in their distress situation because they weren't able to take action for whatever reason. And they kept digging themselves in a hole and they don't see that and they kind of get defensive or or whatever, but they become a challenge. They can be challenging to deal with. And now that we're in this period of time where, you know, as the investor, as the as as the buyer, that yesterday's price that they could have gotten does not work today, and it's not gonna work tomorrow. So you have to go in there and deal with this and learn how to deal with tough sellers, really, is what it comes down to because they're only gonna be tougher in this next six to twelve months.

Mike DeHaan: [18:29] Yeah. And and there's a lot to that, you know, dealing with these sellers. And I think that this time looking at you know, if you're looking at real estate, if you're predicting things to sort of go down or you know that there are these people that are over leveraged on their properties, you know, this is something that we've been talking with people in our instant investor program about is sort of positioning yourself for these changes. A number of people have asked about what we think they should do to sort of prepare for changing the market. And positioning yourself with, you know, knowledge of the market, establishing your brand as a business, establishing your reputation as investors. So that way when all these sellers do come around, they're more willing to work with you because you have more of a presence in your local area. And not only that, but educating yourself on how to deal with some of these difficult sellers like you mentioned and overcoming the situations that they will probably come with. You know, so many of these sellers these days come with different kinds of baggage. And it's only gonna get worse over especially over the next little bit where you're now dealing with they have this personal, mental, emotional, family, legal, whatever baggage along with their misguided beliefs and what their property's worth and what's gonna happen in the future, you're gonna encounter a whole bunch of issues and situations with that. So that was actually what we're gonna talk about for our educational piece today as us and several people in our instant investor group have been dealing with difficult sellers recently.

Mike DeHaan: [19:48] So really quick, gonna do a little read for the instant investor program, and we'll be right back. The instant investor program is our twelve week group coaching program, which includes a self driven course and access to our private investor community. We will take you through the full process of how we find our leads, how we market, how we do our sales and follow-up, and how we determine the best strategy for every opportunity that comes our way. On top of that, you will also join a community of other like minded investors nationwide that are all marching towards the same goals, and you'll have direct access to Dan and myself so you can continue learning and growing with us as we continue to adapt and grow our business. So whether you're a new investor or already established, our systems can help take you to the next level. So if you think you might be a good fit, go to the instantinvestorprogram.com and schedule a call, and we can have you talking to motivated leads in as little as two weeks. Alright. Welcome back. That was perfect. A little break there. So I could call from the title company. So I'm gonna be signing for that six unit we just talked about at 02:00 today. That's a difficult seller. Yeah. Exactly.

Mike DeHaan: [20:47] And this is actually we're gonna lead with was this seller in particular is a is a difficult one that we've been dealing with. And so going into how to deal with these diff difficult sellers, you know, it's kind of a wide ranging topic, but there's a lot of different takeaways you can get from these different situations. And there's a couple different kinds of difficult sellers. Right? Like, there's ones that are difficult by temperament. There's ones that are difficult by situations out of their control. There's ones that are difficult because they're just difficult people. Right? You know? Like and they're just kinda ignorant to their situation. Especially with older people, we find some of these challenges to be come up frequently if they're, I would say, crotchy old men. And this one in particular so we we got this place under contract in February. It is now 06/03/2022. And we wanted to he wanted to wait to close this thing until June because he wanted to collect some more rent because he was getting, like, subsidized rent from the government. And he wanted to drag it out, basically, so he could make some more money. We're like, that's fine. Whatever. Buying this it's a six unit property that's worth probably $8.50. We're buying it for $6.25. We're making off like bandits.

Mike DeHaan: [21:57] Like, we'll do great. Literally last week, I'm in San Diego with a couple friends, and I find out that this dude basically so we had to get an appraisal on this property for a loan. The appraiser called me and basically was like, yeah. So this guy isn't gonna let me know the property. And I was like, what? Why? So I so I gave him a call and spent twenty minutes in the parking lot of a Mexican restaurant in San Diego on the phone with him just talking about, like, why aren't you gonna work with the appraiser? Like, you are literally a week away from $625,000, and you're gonna let fifteen minutes of work get in the way of that. And he was just like, yep. I don't see why I have to be involved. He literally said, this is not a part of my contractual obligation to you to have to get involved with this. And I was like, how about if we do it? What if we send our guy out there to meet the appraiser? We basically have to just get your permission, so as the appraiser isn't going to work with us, isn't gonna allow you know, do this whole situation. We can send our guy, you don't have to do anything, and we'll do it. And he's just like, nope. I'm not gonna let you disturb my tenants because I don't want them to not pay me rent for June. Yeah. I'm like, he's so afraid of his Yeah. I'm like, he's so afraid of his tenants.

Mike DeHaan: [23:06] Like, it doesn't matter because we're gonna buy it. If they don't pay rent, it's gonna be our problem.

Dan Austin: [23:10] Exactly. Yeah. Like, yeah. He is like, I I guarantee that's exactly too. I know when I walked property with him, he was so afraid of his tenants. Like, he was just he wouldn't even go in the units with us. He was just difficult. I mean, that's what you that's what you deal with. Right? Right at the last minute, the final hour.

Mike DeHaan: [23:26] Yeah. And and so what we ended up having to do in this situation, and this was this is why, you know, when you deal with these tenants, the thing that sucks when you're the investor, and this is something that a lot of investors, I think, struggle with because, you know, you have pride, You know, you're trying to make money looking at your bottom line. You know, you know that you're in the right, but you have to recognize that these people, they don't necessarily care. And so, honestly, when you get situations, you're gonna have to eat shit a lot of times. And that's exactly what we're having to do in this. So to close it, we were getting a commercial loan, which is gonna have way lower cost. It was gonna allow us to start off not having to refinance. We're gonna have, you know, a lower payment. Instead, we had to go and get a hard money loan to close this deal. The whole process is probably probably gonna cost us about 5 to $6,000 even though we're only gonna have this hard money loan for two weeks, if that. And now this dude is costing us a bunch of extra money for no reason other than the fact that he's just being an ignorant old bastard.

Dan Austin: [24:26] Yeah. You

Mike DeHaan: [24:26] know? And when it when it comes to dealing with sellers like this, you have to approach it with a position of being firm, but fair, right, and, like, realistic and understanding that you're gonna have to be infinitely flexible on what you're gonna wanna do, and what you're willing to do. And I always say you always gotta have a backup plan for your backup plan. Yep. You know? So, like, our our backup plan for if you didn't wanna cooperate was, okay. Cool. Then we will do it. Like, we will facilitate it. 99% of the time, seller to cool with that. They just, like, don't wanna have to be involved anymore. A backup plan to that is like, well, we go and give you get a hard money loan that I know we can get because we're buying at such a discount and I have the relationships to do it. And that's kind of the last plan. But having that those backup plans as you're going through the whole process allows it so that you get as many deals as you can. And then buying good deals allows you to have the flexibility to have to make these pivots and pay the extra money or do whatever you need to do. And it sucks it's gonna cost us $6,000, but we're buying an asset with a $225,000 spread. That's when we're planning to hold for the long term. And I was doing the math this morning. If this property now grows at a reasonable rate of was it 4% per year, three three or 4% per year over the next five years, it's gonna be worth over a million bucks. Right.

Mike DeHaan: [25:39] Right? So our return is ridiculous. And tell you what, when we sell this thing for 1.1 in five years, I'm not gonna give a shit about $6,000.

Dan Austin: [25:47] No. I'm gonna send the seller an email and be like, thanks. Yeah. Right? Like, thanks for being a jerk, but it didn't it didn't hurt us too much.

Mike DeHaan: [25:55] Yeah. Exactly. You know? And and it is just it's kind of a a challenging situation. So one of the guys in our instant investor group, we had a a meeting our our group call last night, our weekly meeting, and he was talking about kind of a similar situation where he had a package of five deals with this seller. The seller was kinda squirrely and was, like, doing all this weird stuff. Right? So he knew it was gonna be weird. His lender his hard money lender was requiring him to get an inspection on these properties because they were completely unseen. Like, he hadn't even seen them yet. Our our student hadn't. And he showed up. The inspector showed up, and the seller was, like, but I guess, like, the inspector started to, like, open up, you know, the utilities and, like, like, looking at shit that an inspector looks at. Right. And the seller freaked out and was like, nope. And kicked the inspector out of the apartment, not of the apartment, out of the unit, you know, and said, like, we're not going to any other ones. We're not doing this transaction more anymore. We're not doing any of this stuff. And, basically, he created huge fuss. And then to make it even worse, what he started trying to do was drag out the transaction after that and was refusing to cooperate with our student because our student had put 10,000 in earnest money.

Mike DeHaan: [27:07] So this seller was now like, if I drag this out and we go past the contingency phase and we don't cancel it, I can still see money.

Dan Austin: [27:14] Yep. Yeah. Total seller move on that part. Like, be irrational completely irrational. But the the best part about it was is this guy's still trying to reengage with it with our guy.

Mike DeHaan: [27:24] I know. So the deal's

Dan Austin: [27:25] not dead.

Mike DeHaan: [27:26] Yeah. Exactly. And so that's one of those things is I was, you know, we're chatting with our our students in McKinney, and we were like, well, you have different things you can do here to try and deal with this guy, like, different kinds of funding you can look at. Maybe you can try to wholesale them sight unseen if it's a good enough deal. Like, try to drop the price and say, you know, hey, mister Seller. Like, if you're not gonna let us into it, that's fine. I just gotta be at a 30% discount of what you're saying because I'm gonna be expecting the worst. You know? And all those things, like, there's tactics you can do to get around them. And then the backup plans to the backup plans are, you know, you try to wholesale it sight unseen. You try to find the key buyer in that market that wants those style of properties and can move it. And the funny thing is he thinks he already found that guy he was saying last night.

Dan Austin: [28:07] Yeah. He did. Yeah. He had him. Yep.

Mike DeHaan: [28:08] You know, he said he had a guy that was super, super interested and was willing to buy all of them. He gonna make, like, $50,000 across all these properties with this buyer. And the guy was like, well, can I just get, a basic look at them? Like, I don't even need to do, like, a full inspection. Actually like a walk through on a couple of them so I know what I'm walking into. Yep. You know? And I was like, there's your negotiation. Right? So now you have an exit that you know exists. What if you go back to the seller and you say, hey. If he can go and walk through two of the properties, my guy out there, he's not gonna do a full inspection. He's just gonna go take a look. Right? You get into the guts of it.

Dan Austin: [28:39] Sure that the house exists, that there's four walls, that you know what I mean? And that's fair. You're trying to sell a property. Right? Have that conversation. Like, that's all we wanna do. We just wanna make sure the property looks like what you say it looks like.

Mike DeHaan: [28:50] Yeah. Yeah. So, you know, there's there's always different strategies, and you have to have that flexibility. And I think a a reason that a lot of people end up stuck on the sidelines is the first time they encounter any sort of resistance or they encounter something where they feel like it's not fair for them, they lose it. Right? And they're like, I'm not gonna move forward with this. And the thing that sucks is, sure, it's not gonna be fair for you, but if you wanna make, you know, a couple million bucks a year or in the future because you're buying probably at such a discount, don't worry about the little details. Honestly, if

Dan Austin: [29:20] you're buying it right, you're

Mike DeHaan: [29:21] gonna do well. Even though it's it really sucks at the time, just let it go.

Dan Austin: [29:25] Yeah. There's been so many times where we've had to deal with that where we had certain desires with a deal that kinda goes sideways, and we still scrape something out of it. It's just not what we wanted, but we're still producing revenue. We're still producing income. We're still doing deals. We're still buying properties. I mean, the six unit you just talked about, yeah, we're gonna have $7,000 more in cost. Yeah. Do we wanna do that? Absolutely not. There's been other deals where we should have made way bigger fees. Mhmm. But we had to take a right turn and make half that. And but you have to be able to pivot and don't feel like the deal is dead just because all of sudden the seller's acting that way. Because I would say more often than not, sellers act somewhat irrational at some point during the transaction.

Mike DeHaan: [30:04] Oh, yeah. All the time. You know? And and even when things seem like they're going well, I know you we just got a crappy review on our Google. Yeah. Because we had this guy, like, right before closing, he suddenly came out and said, well, I'm not gonna sell now unless it's for a $100,000 more because the market's gone up. And we're like, well, that's not gonna happen. And, you know, he was beating around Jud a little bit. So Dan called him and basically was like, hey. You gotta sign this these documents. We're gonna sue you. And the guy got super pissed off and, like, went on this whole tirade and all sorts of things. You know, we could technically pursue it, but it was such a small deal. It's, like, it's not really worth it. You know, it's, it's, like, 7 $7,500 fee or something like that. And it sucks because I feel bad for Judd because he put in literally months of work on this deal.

Dan Austin: [30:47] Yeah. It's been pain. It's been a very irrational seller. The whole situation. Right?

Mike DeHaan: [30:51] The whole situation. And, you know, things that could have may potentially avoided that, you know, we could have been proactive on some of the parts earlier. There's a lot of things that were, like, waiting on people that we could have probably pushed a little bit harder. We could have also maybe been, more open with the seller on listening to, like, his needs and concerns because there was things that came up kind of at the last second as I was reviewing. Was like, why did we not know that earlier? You know? And at the core of it, when it comes to dealing with these difficult sellers, you have to listen to them and help them solve their own problems. Right? You know, because a lot of stuff you can't necessarily do for them. You can, like, facilitate some things. You know, like, have one right now where the biggest hiccup that I imagine we're going to have is sellers trying to figure out how to move and, like, where to go. And if we can facilitate that, it's gonna go from us being a week out and the seller becoming extremely defensive because they are about to have their household that they're living in Right. To, you know, like, oh, we're providing a service. We're helping them out. You know, we are listening to them.

Mike DeHaan: [31:52] We are solving their problems, and we'll be able to, you know, do the deal and make some money. Right?

Dan Austin: [31:57] Well, I

Mike DeHaan: [31:57] think it was the

Dan Austin: [31:57] key to solving their problems. And and one of our other students, while we're having this conversation, brought up, like, a lot of times we like to go with logic and numbers and some sellers really like the they go you go down that logic path because they like it. But then if that's not working for you, flip to the emotion side of things.

Mike DeHaan: [32:12] Mhmm.

Dan Austin: [32:13] Start selling them on the emotion part of, like, what they're gonna get when they sell their house or the relief that they're gonna get when we can do this. And when you're saying solving their problems, moving's a big one, we generally speaking can help people move for pretty low cost if that's what it takes. If it takes finding them a place or getting them help to move because they just don't have the facilities to actually move their junk that they have there. Know, relieving that stress, that emotion that they're feeling tied to and and understand that that where they're at. See it

Mike DeHaan: [32:41] see see the deal through their eyes. Yeah. And and those things are the keys to modern day off market real estate investing and wholesaling. You know? And this is one of the reasons I think a lot of the people that were doing very well in 2000, you know, fifteen, sixteen, seventeen are no longer around. It's because back then you could just find like a a family or like a couple that had a house and they're like, yeah. You know, I'll I'll make less money on my house because it's easy. And I, you know, I'd I'd like, I need to be able to move in this other place and the market hasn't increased an incredible amount. You know, they probably have like a roof that they knew they were gonna have to sell that repair to be able to sell. Yep. You know, they probably had these situations they knew they had to do, but over the last couple years, we haven't had that. Like, people would buy things with crappy roofs because they had no choice. Right? And so now the modern method of doing that is you have to like, those people are gone, the rational people, because they understand other options. So you end up stuck with only the people that come with baggage. Yep. Right? And so at the end of it, it's not really a real estate business. It's a people business, and you're providing a service to your sellers. Right?

Mike DeHaan: [33:45] And it's that was something that was interesting that was said on our call last night too with one of our newer members. He was like, we're kinda going about this. And he goes, how come you do it that way? Like, I always kinda had the impression that wholesaling was just getting the biggest spread you can in a property and making money. You know? Like, it is. But now in order to do that, you gotta provide outlets for people because they're gonna always come with something, whether that's gonna be working with their lawyer, solve a probate, or or help get through their divorce, or dealing with, like, conversations between kids they're trying to figure out to do with their mom's house, you know, or helping people move because they need somewhere to live or, like, it's endless, the different situations that come up all the time. And I would say it's almost every single deal these days. You know? Yeah. Absolutely. And and At least 80% of them have something like this that we have to overcome.

Dan Austin: [34:30] Yeah. At some point, you gotta remember that it's not about the piece of property. It's not about the structure. It's about the person and the the things you're gonna solve for them, and that's where you're making your money. That's that service you're making your money on. It's people you you lose sight of that too easy because your numbers, you're looking at the deal, you're looking at the house, you forget about the person.

Mike DeHaan: [34:48] Yeah. Exactly. And and a lot of people don't even realize that if they're OG investors. We just released a, YouTube video on our YouTube channel, the Mike and Dan show. Guys should go check out where we talk about this recent podcast episode. We kinda light up this guy named Jamil Danji. He's a OG wholesaler, and he spends his entire bigger podcast episode talking about how all wholesalers do is rob grandma. And I was like, maybe that's what you did, like, seven years ago. I was like Exactly. Now even if we wanted to, I couldn't rob grandma. Like, there's no grandmas to rob.

Dan Austin: [35:21] Like No. Exactly. You're absolutely right.

Mike DeHaan: [35:24] They have they have they have too too much baggage. Yeah. You know? So, like, there's too many things in the way of the transaction to make that even a possibility. Yep. Yep. So Yeah. You know?

Dan Austin: [35:32] If you're if you're dealing if you're out there, you're negotiating and the seller's difficult, like, just have some, you know, some comfort in, like, that's how it's supposed to be. Mhmm. It's not just you. It's just not your seller, and that's where you gotta sharpen your steel right there is is get your your knife edge sharp with your sales skills. And remember, you're looking at the person and and providing them a service and how can you provide that service to them. That's where your profit's gonna come from, and that's how your profit increases.

Mike DeHaan: [35:57] Yep. Yep. Exactly. So, you know, I guess, full circle, dealing with difficult sellers, the keys are gonna be listen to them, figure out what their concerns and their problems are, and have strategies to overcome those.

Dan Austin: [36:10] Mhmm.

Mike DeHaan: [36:11] Be prepared to eat shit if you need to because if you're buying right, you're gonna make way more money that it's probably not gonna matter. I mean, obviously, be within reason. If it's like a $50,000 difference, that's a little questionable. If it's like a $6,000 difference and you have a $200,000 upside, like, just just pay it. It doesn't freaking matter.

Dan Austin: [36:28] Just eat it.

Mike DeHaan: [36:29] You know? And then I think as you're going through a lot of these situations with people, a good way to approach it, like I we've always approached it is if this situation was on the front page of the local newspaper, would we look really bad? And if the answer is yes, then we probably shouldn't do it. Or, like or if this seller was our grandma and somebody was trying to do this transaction in our shoes with our grandma, we'll be pissed off with that person. If the answer is yes, that means we should probably not move forward with it. So, anyway, it's part of the game. You'll get used to it. It's a, you know, part of just the off market game in general is just dealing with these challenging people. So, anyway, make sure you follow us, like and subscribe to the podcast is always great. Go and download a bunch of them because the download numbers are huge. So go and, like, create, a new account on iTunes and just download all of our podcasts to boost our numbers and our rankings. That'll be awesome. You can check out our website collectingkeyspodcast.com. If go to collectingkeyspodcast.com/calculator, you can get the calculator that we use to analyze all of our deals and do all of our renovations. And it makes it super easy if you're getting started and you kinda have paralysis, as analysis paralysis.

Mike DeHaan: [37:42] And besides that, our, mastermind group is slowly starting to grow and take off. So instantinvestorprogram.com, go there and schedule a call with one of us, see if you'll be a good fit. And besides that, is there anything else I missed? Think we should be good.

Dan Austin: [37:54] No. I think that's it, man. Yeah. Alright. Let's sign out. Cool. Investor man Dan with, heavy d pulled that one out of our I haven't heard that one in a while, have you?

Mike DeHaan: [38:05] Yeah. Yeah. Not not not since I've, you know, lost a bunch of weight from college to bring me back to my dark ages. Thank you for that.

Dan Austin: [38:10] Yeah. Yeah. Me me and heavy d are over here, you know, doing our thing. But, yeah, let let's get out there. Talk to some sellers. Listen to listen to them. Collect some checks.

Mike DeHaan: [38:18] Heavy d and bald man Dan sounding off. Thanks

Speaker 2: [38:22] for listening. Please leave us a review on iTunes or wherever you get your podcasts, and check us out at collectingkeyspodcast.com for tips and guides on starting your own real estate investment and wholesaling business.