Wholesaling/Flipping Ugly Houses: The 4 "SW's" Of Prescreening Perseverance

Ron LeGrand

Feb 18 2011

The 4 "SW's" Of Prescreening Perseverance

Wholesaling/Flipping Ugly Houses, part 5

by Barbara "BJ" LeGrand Cockrell

Following Ron's advice over the years, and having attended ALL of his training (numerous times) to become a real estate master, has truly helped me internalize SW, SW, SW, SW..

"Some Will, Some Won't. So What? Someone's Waiting!"

It's so important to persevere; the better you get at prescreening the easier your job will become and the more money you'll begin making with less work.

In the beginning you'll spend time on unqualified prospects, just don't lose sight of the main objective:

Weed Out and Deal with Only Motivated Sellers. Unmotivated Sellers Will Quickly Destroy Your Confidence And Make You Wonder Why You Ever Wanted To Be Involved In Real Estate In The Firest Place!

I really want you to succeed in the world of real estate investing and my goal here is to help you get really good at prescreening leads. I wasted a lot of time on bad leads before I stopped trying to create “chicken salad out of chicken crap (as Ron would put it).”

As I've mentioned in previous articles in the series, it is critical to ask the seller what they think their house is worth. Why you ask? Well, they had to come up with an asking price somehow and this might give you a pretty good indication right off the bat as to whether this is a good prospect or a dead lead. For example, if the asking price and the estimated value are the same, the lead is DEAD. “When the horse is dead, you don't kick it and you don't beat it. You just remove your saddle and move on!” Learn this lesson early on and save yourself a lot of time and effort.

Here's a basic that Ron says applies to all investment property you intend to buy and resell at a profit:

Never Buy a Property Unless You Get FREE Equity The Day You Buy

Or Know How To Create It Shortly Thereafter!

The only way to get free equity on the day that you buy is to make sure your purchase price is less than the market value. This means the seller must be willing to give it to you freely, or you know the value is more than the seller believes it is, or both.

When the seller is asking less than the estimated value and they owe close to asking, always ask them: “Will you sell the house for what you owe on it?”

You should have enough information within the first two minutes of a conversation to know if the deal is worth pursuing. All you need to know to determine your path is: ARV, Asking, Loan, Repairs, and Are Payments Current?

As Ron emphasizes in his training, nothing else matters until the prospect passes this hurdle. Most won't. Remember “SW”? With this information alone, you can quickly provide the answers to all of these questions:

1. Is the seller willing to give away equity?
2. Is there enough spread for me to want to get involved?
3. Will repair costs eat up the equity and make the deal complicated?
4. Is it a short sale prospect because the payments are behind or it's in foreclosure?
5. Is it loaded with liens I may get released to create more equity?
6. Is it a very high priced house that scares me to sleeplessness?
7. Will I have to start making payments in the future because the loan is current and the spread isn't big enough to justify cashing out now?
   

So, how are your assistants doing at filling out the property information sheets?

NEXT WEEK: More on "Prescreening Perseverance"