WHEN A DEAL GOES SOUTH

From Buyincomeproperties.com

Real Estate Agent and Broker
WHEN A DEAL GOES SOUTH
By
Jul 6, 2005, 00:29

No one likes to think about it, let alone talk about it. How do you get out of a deal that has gone south?

At some point in your real estate career, if it has not happened already, you will run into a deal that drains you of money and energy. I’ve been there. No one has to hold up a neon sign telling you “bad deal?you know it when you are there.

So why is it ?we know it’s a bad deal ?but we continue with the drain to our pocket book and energy? A lot has to do with ego. We don’t want to admit we made a mistake. How would it look to our friends and family if they knew we made a “stupid?deal. We are supposed to be knowledgeable in real estate.

I hope this gives you some room to breath and relax ?we have ALL been there and made mistakes. The steps to take are:

Admit you made a mistake. At least to yourself. The first step to a thousand-mile journey (according to Chinese proverbs) begins with the first step. The first step will be to admit the mistake. It is only human nature to point fingers and blame it on our spouses, partners, or whomever.

It wasn’t the president’s tax decisions that made you fail. The president didn’t personally single you out and blow up your deal up. Your banker, who told you X interest rate and then reneged on a higher rate, didn’t screw you up.

Whether the shoe fits comfortably or not, we bought the shoe. It is our shoe to wear. Even if someone else made a mistake that screwed up our deal ?there was at least a portion of responsibility in our direction. And that is the point I am trying to make. Unless you identify what YOU had to do with the mistake ?you are doomed to fail again.

I know a guy who is going under because his secretary stole a large amount of money from him and made him insolvent. Now, it certainly wasn’t his fault that she was a thief, but he needs to analyze what he had to do with it. If he sits back and analyzes it ?he will see that giving her too much authority was his down fall. Will he do it again? I don’t know. When he gets out of his blue funk I hope that he comes to grips with the part that was his fault.

Step back and try to look objectively. This is hard to do when we are so close to the problem. Sometimes it takes a fresh pair of eyes to see things in the proper perspective. Ask for constructive feedback from other real estate associates. How would they have done something differently?

This is where it comes in handy to know people in the industry.Take your loses early. When you’ve made a mistake ?don’t kid yourself. Fess up to it quickly and cut your loses if need be. The worst thing you can do is throw good money after bad.

Don’t be so pig-headed that you would rather hang on to your alligator than let him go. (An alligator is a house that you feed and it eats you).

If you signed a contract and put earnest money down, only to find later you estimated its value incorrectly, then let it go. It is better to lose the $500 to a $1000 dollars than sink more money into a deal that will not work.

Analyze the mistake. This goes hand in hand with learning from our mistakes. We must analyze what went wrong. Was it our accounting, our lack of knowledge in rehabbing, our misplaced trust?

Don’t skip this part. It is essential for learning and growing. I know of a person who bought a rehab outside the local area (2 hours away) and then hired a contractor to do repairs. Didn’t supervise the contractor close enough. And then, when the house was done very shoddily, it couldn’t be sold for the expected retail price (it should have been worth $30,000 more than what it eventually sold for!). At that point, she had to sell her house for what she bought it for and kissed that $30,000 good-bye. Oh yeah, forgot to mention, that person was me (ouch, I remember it well).

Oh sure, it was his fault for being such a crappy contractor, but it was my fault for not following up soon enough. Most of the work he did was not noticeable ?but I never took the steps to inspect. I could have crawled under the house and saw what he was doing (or hired someone to do it), but I never did. I was short on time. And you know what they say about haste.

The technical aspect. Have a lawyer analyze your contract if a deal is going sour. This adds another pair of eyes and brains to the situation. Perhaps your lawyer can see a legal way to resolve your situation, or mitigate the damages.

Learn. The process of elimination is a hard way to learn ?you know, do everything wrong until there is only one way left to do something. That brings us to learning. Learning from others is by far the quickest way to learn. Buy real estate courses, find out how the gurus are doing it. Sift and sort the information (and take everything with a grain of salt).

If you can’t afford real estate courses yet, then go on ebay and buy some used courses. Listen to them, study, and then sell them to recoup your money, and then buy more. At some point, if you are serious about real estate, you are going to have to invest in your education.

This can be books, courses, or seminars, just keep learning. There is no point where you will know it all. The world is a huge, progressive place, so there is no way to know everything. If you think you know everything, you are headed to the hall of fame. The hall of fame for big mistakes, that is.

Go forward. Last, but definitely not least, go forward and progress. Mistakes are just the learning tools for success. Failure is no excuse for not trying. There is no one who walked the first time they tried. So why is it we think we must succeed ALL the time at all things. Just because we fall down should be no excuse for not trying again.

Robert Kiyosaki, businessman and author of “Rich Dad, Poor Dad,?failed more than once. Each time, he learned from his mistakes and went on to do multi-million dollar projects.

Brandy Eismon