Conference Call Recap 1/28/09

I'll keep this one short and sweet because I didn't take notes last meeting...

Reverse Engineering the Deal
This is something Jeff Kaller talks about in his "Kaller Method". It's an interesting concept that lets you back into an offer price that the lender is most likely going to approve (without countering). How is this done? Here are the major steps:

1) Pull comps to estimate 90-day quicksale price
2) Determine bank's delegated authority (% of BPO bank will accept)
3) Calculate 20% profit margin
4) Subtract this profit margin, realtor commissions and closing costs from 90-day quicksale price - this is the price the bank must accept (the lender's net) to get you the 20% profit margin
5) Divide the lender's net by the delegated authority %. This gives you the number the BPO must come in at.
6) Ask yourself the question, "Can I get the BPO to come in low enough to do this deal?"
7) If yes, make an offer that is 11% higher than the lender's net (6% commissions, 3% closing costs, 2% misc. fees) so the bank, after subtracting these costs, will net a number you know they will accept.

Does it work? I created a spreadsheet that follows this reverse engineering logic and found it very helpful when talking with negotiators.

Outbound Marketing - New Approach
I mentioned that I'm trying a very straight approach in my next marketing efforts using SalesTeamLive. I customized my letters and postcards to remind homeowners what a foreclosure will mean in real terms (no credit cards, no leased cars, etc.) and explained how I can help them. I'll let you know how it turns out.

Setting a Vision/Mission for your Business
Let's face it. We all want to earn a great living. However, our business is more than about money. It's about helping homeowners. And when you talk about your business in this light, you'd be amazed what happens. Here's a personal story to bring this point home..

Before becoming a real estate investor, I spent 15+ years developing the brand strategies for some of the biggest brands in the world and, most importantly, those that had lost their way or lost thier purpose in the world. How did I give them back thier relevance and purpose? I talked them out of being a product-centric company and into being a company with something important to say. I created a vision for each of these companies that was much bigger than their products, much bigger than the competition, and hit a nerve with their target audience.

Here's an example for Crest Toothpaste: Rather than being known as the toothpaste company that whitens your teeth, they instead have the opportunity to be known as the company that brings smiles to the world (by giving you whiter teeth). This one little change in the way they talk about themselves makes all the difference and separates them from every other toothpaste company. It would probably double their sales overnight with a good advertising campaign.

Back to real estate investing....When asked about my company, I can either talk about myself as a short sale real estate investor or start the conversation by saying the mission for my company is to help save families in the Greater Los Angeles area from the devastating effects of foreclosure. And I firmly believe this. Which description of my company do you think people want to become a part of? Something you should consider next time you give your elevator speech.

Being a Warrior
I can't tell you how many times that extra call, extra thank you email, extra meeting at Starbucks has made all the difference for me in either getting deals or establishing a relationship with someone I recently met that will yield deals in the future. Personally, I'm more of a big picture kind of guy (hence the example earlier) and not very good at tying up loose ends or dotting my I's and crossing my T's. However, we all know that this business is as much about relationships as anything. And a few good relationships could mean hundreds of thousand of dollars. So the next time you're tired, lack the confidence or could easily skip making that extra contact, go the extra mile and be a warrior. It will make all the difference.

That's all I got. If it sounds like I'm preaching, my apologies. Some of this stuff is just streaming from my consciousness. Please add to this posting any other topics we discussed so our conversations are not lost.