The 24-Week Challenge: Week 14 – Closing Deals

Here’s the question we’re working on resolving during the 24-week challenge—how do real estate investors build real wealth and freedom without access to millions of dollars in capital?

We’re on week 14 of the challenge: Closing Deals and Zack Childress, who’s been investing in real estate for 16 years now, is guiding us through the steps to get to the answer in 24 weeks.

We’ll learn today what we need to do after we’ve made an offer and found a buyer. Yes, you have created a deal, but you don’t get paid until closing is complete, so don’t relax yet.

You need a team of professionals [a Power Team] that will work with you to close based on the strategy you’re using. For instance, not all title companies accept assignments of contracts involved in wholesale deals. It’s your job to know who will.

Who is funding the transaction? Are the funds in place? What’s the earnest money situation?

Consider hiring a virtual or an in-house closing coordinator. They stay in contact with the various people who handle the various closing details so you don’t have to. Find transaction management companies to interview online.

“Don’t be a victim. Follow through on everything you delegate. This is your deal.”

Watch and learn:

Listen and enjoy:

What’s inside:

  • How a Power Team works on deal closings
  • Follow up with your Power Team on every task
  • Getting your documents in order
  • Learn the importance of eliminating assumptions

Mentioned in this episode:

Transcription:

Download episode transcript in PDF format here…

So, the big question is this, how do aspiring real estate investors like us escape from the rat race and build real wealth and freedom without access to millions of dollars in investment capital and start to live the life that we know we deserve? This is the question and this podcast will give you the answer. My name is Zack Childress and welcome to the Real Estate Investing Talk Show.

Our topic today is Week 14. It’s all about closing the deal, right? Last week we talked about finding the buyers. The week before that we talked about making the offers. Every week has been a build upon itself. So, for making the offer and we’re going to sell the contract, we’ve got to find a buyer. But now when it gets time to closing the deal, what are the things that we have to think about? What are some of the things that we need to be aware of when that pops up? That’s when we have to realize that we’re about to be in the close. We’re about to be in a position to make money and we have to start thinking about closing the deal. So that is really what our week 14 is all about today. So, let’s talk about the closing, the deal aspect of the business when you were at a point to close the deal. There’s so much that you need to consider before you even get to the point to close the deal.

And one of those things is, is having your team together. I’m going to give you an example. When you’re working your business to the point of say closing the deal, there’s so much more that you’ve got to think about than just closing the deal. Like you can’t wait to get to the close of the deal and not have things done ahead of time. For instance, your power team, right? You know, I was working with a coaching student. They got a deal under contract, but they did not build their power team in the location in which that deal was. They found the deal without the power team, and that’s part of closing the deal – having the right power team on your team, having the right closing attorneys, the right title companies, having them queued ahead of time so that when you get to the point to close that you’re moving in the direction of the right title company or the closing attorney and that has to do with the type of strategies that you’re going to deploy.

So for instance, if you’re going to be doing a wholesale transaction and you’re going to be assigning contracts and you’re picking the title company in the contract, you need to make sure that when you assign that contract with the title company that you’ve chosen, that buyer is going to go to that title company and they are going to be in a position to honor the agreement – as it was stated in the contract. You can’t assume that all title companies are going to work with an assignment of contract, okay? Some will work with it and some won’t. And the ones that won’t, a lot of times it’s just because they haven’t been explained exactly. For instance, when the students I’m working with was going to a title company, they were saying no, but when they sent them the contract and showed them in there what the assignment was, buyer reserves the right to take title and name of the entity of choice. They were like, “oh yeah, we do this”. So sometimes it’s not that they don’t do it, it’s just they don’t understand how you’re explaining it. So therefore, they immediately say no.

But the moral of this whole story is, is that if you don’t set that up early, then the reality is, when you get time to go to close, you’re going to have a challenge. You’re going to have a challenge or you’re going to be backpedaling trying to get the deal done because you didn’t have the right team together. And here’s the other thing, there’s also what’s called follow through. You can’t assume that when you hand something off to somebody like a title company or a buyer or an agent or a mortgage broker or a lender or a bank, that they’re going to keep moving through and then when they don’t do what you ask them to do, you play victim and say, oh, it’s not me. It’s not me. It’s something else…. It is you! You’re the one that preset it. You’re the one that established it. You’re the one that handed it off. You’ve got to continue that journey through. You got to follow up.

You got to make sure that they’re moving forward. You’ve got to make sure they’re doing their part and you also got to step in to become a man about it. And you gotta say to yourself, well, why didn’t you follow through one? Could I have done differ or what could you have done different? Let’s synergize habit seven, right? Let’s synergize and let’s figure this out together. That my friend is how you get paid in life. You don’t get paid in life by delegating and not following through. You understand? The secret to life is follow through.

You want to ask some of the wealthiest people in the world. They’ll tell you, they delegate everything, but they’ll also tell you that they follow up. Is it done? Did you get it done? What was it that stopped you from doing it? What could I have done different to help you achieve it? What could you have done different that could have helped it be achieved? That’s real estate guys. You understand? That’s real estate one-on-one. That’s life one on one. That’s business one on one. That’s Sales 101. This is 101 guys. This is life. Follow through with everything. Don’t play victim because you’ve handed it off to somebody and then they go, “oh, well it didn’t get done.” Okay, well, whose fault is that? It’s your damn fault, okay? That’s whose fault it is. Put your big boy pants on and wake up. It’s your fault. Just because you handed it off to somebody and they don’t get it done, doesn’t mean that you can play victim. It’s your fault.

At the end of the day, everything is your fault and the sooner you acknowledge that, the faster you’re going to move through life because when you start acknowledging that everything that happens to you is by our choice that you made or did not make, then you start to realize that it is your fault. That’s my number one rule in life. Anything that happens to me or doesn’t happen to me is my fault because of a choice I made or a choice I didn’t make. And when it comes to business, the number one rule of understanding your progression is the choices you make or you don’t make has a direct reflection of how you’re going to move through a successful business model. Listen to that for a minute because when we get to closing, for instance, the number one rule in closing is preparing your file.

If you don’t prepare, your file and you don’t build your power team correctly. When you go to close and it doesn’t close. If you’re the type that starts to blame everybody, then you’re always going to be the victim and anything that happens in your life. But if you’re prepared, you build your team, you follow through, you don’t assume that things are going to get done. You don’t blame others when you handed them something and they don’t execute because you didn’t follow through. When you take ownership, you start to listen. You start to be aware and you start to understand that success or lack of success is by the choices that you choose.

Being prepared for a closing is your choice, okay? Don’t wait til the moment of impact to then say, oh, well, they won’t close it. I can’t believe they won’t close it. Now I’m not going to make money. Well, that’s your fault, not theirs. How many different title companies are out there? How many different closing attorneys are out there? You chose one and didn’t follow through with them. So, who’s fault is it? Yours. Yeah, I’m in a rare mood today, as you guys can tell. Yes. I’m in a rare mood today.

So, talking about preparing a file. I encourage everyone to you as real estate investors to treat your business like a professional business, and that means prepare file. I don’t care if you’re wholesaling, if you’re doing creative financing, if you’re doing wrap mortgage, subject to’s, if you’re creating notes, you’re doing rehabs, prepare, fall on the property and that file will help you stay organized. Do I have a title company that will execute this? Do I have a lender that will fund this? Do I have a buyer that will pay for this? Do I have the contract? Do I have the assignment agreement? Do I have the inspection? Do have the estimation of repairs. Create a file. That file allows you to know where you are and where you where you’re going in the process, okay? Prepare file. Build your power team. Those are two number one things you start out with, okay?

Now when you’re getting ready for the closing, one of the other big things you’ve got to understand is working with an assignment, right? Do you have the right person on the team to do the assignment? Do you have the right team? Do you have the buyer in place? Do you have an assignment of contract? Is the assignment of contract signed by the buyer and is there money has been transferred to, so now they’re in control of the contract? That’s the easiest close that you can be prepared for – is an assignment of contract. It’s the easiest one. Now when you’re starting to look at funding, let’s say you’re doing a close where you’re going to use transactional funding, you’re going to do an A to B, B to C close. I think today doesn’t need to be called closing the deal. It needs to be called, “Stop Assuming Others Will Do What You Tell Them to Do”. Stop assuming it and take control and follow through. That’s our topic today. Stop assuming and follow through.

That’s our topic. I like that topic.

Here’s why. When you assume there’s an old adjective to that, this is, you’re making an A-S-S out of you and me at the same time. Assume, right? So, don’t assume guys, don’t assume and follow through. That’s the key here.

So, we talked about assignments, we talked about preparing the file, we talked about building your power team, and now let’s talk about your funders. Don’t assume, here we go again. Don’t assume that just because you’ve submitted a deal to a lender, that that lender is moving through your file in the speed in which you expect. There’s another word, expectation, that you expect them to follow through with.

Hey, isn’t that the truth? Having time? Do you ever go and expect closing on one day? And I’d be like, oh nope, paperwork’s not ready to yet. He learned that really quick in this business.

Yeah, expectation will kill you in life. It’ll kill you in business. A key in everything. you know, when I narrowed down people’s challenges with business success, whatever it is they’re doing, I can usually narrow it all the way down to an expectation that someone that did not happen on the other end. That’s where the manifestation of frustration started is that expectation, right? So, if you can eliminate expectation, if you can eliminate assumptions and you can create, follow through like a madman, you will be successful in anything you do, right? Because I don’t expect too much on too many people. I follow through to make sure what I want to be done gets done, right? If I just expected it to happen or assumed it would happen and I went about my day. Well, what happens when it doesn’t happen?

Why get frustrated? I get angry, I get disappointed, I get anxiety because why? Now? It’s all coming back on me because I assumed that I expected the closing to go on time and the closing to be handled the way it should’ve been done. Everybody to do their part. But do you understand that you’re responsible for that. You’re in control of that, not them. You. So, if we build our follow-up game tight, we create a tight follow-up aspect of our life and we follow up with all the people instead of assuming and expecting and we follow up with them, we won’t have that disappointment. We won’t have it. And that’s the reality. So, when it comes to the lenders and the transactional funders and the asset-based lenders and the hard money lenders and the banks, we got to follow up. That’s how you get your closing done.

Number one role to closing is follow-up. That’s why we’re intertwining this message with follow-up because you can’t just assume the closing is going to go the way you want it to. I mean anybody who’s been in real estate for any time at all will tell you that closings don’t always go the way you want them to. They don’t, and if you’re not prepared and you’re not following up, then it’s going to hit you like a brick wall at the last minute and then you’re going to go, well, why didn’t someone tell me? Well, who’s responsible for your life? Them or you? Who’s responsible? You are, not them. You’re responsible, right? You’re responsible. When some of my students say, “oh, closing’s falling out, no one told me.”

This is what I hear. That’s what I hear because it tells me that they’re not taking ownership in their own business. It tells me that they are not being responsible with the transactions that they’re trying to achieve through follow-up. Follow up. Let’s talk about earnest deposits. Earnest deposits are one of these things that you got to understand when it comes to getting the closing done, that a contract is actually not even fully executed until monetary exchange has been made. That could be a dollar. That can be $10. That can be a $100. That could be $8,000. It depends on what’s negotiated. You guys understand earnest money deposits are always negotiable, and if you’re dealing with a bank, you may not feel like that that’s the case, but it is. They’re all negotiable, okay? The higher the earnest money deposit, the more serious people take you. That’s true.

But I want you to do this for me, too. Any title company or any closing attorney, you want to request from them what’s called an earnest money deposit release form, or also known as a release of deposits, okay? You want to just get a copy, put it on file somewhere and anytime you have an earnest money on a deal and you’re not going to close it and you’re within inside your contingency period, you need to fill that form out and you need to send it into that title company or Attorney’s Office for a release of your earnest money deposit as long as you’re within inside your contingency period. And on top of that, you’re in line with your contingency, right? You cannot have a contingency that says contingent on approval of inspection and then say, oh, I’m going to pull out because my financing didn’t go through.

Well, that doesn’t work. Okay, so you got to be in line with it. But earnest money deposits are not something to be scared of. You just have to have a release of earnest money deposit sheet so that you can fill it out and get your money back if you’re within inside your contingency. We live by this as wholesalers, right? Because we don’t wholesale all of our deals and so we have to make sure we get our funds back now. And there’s a big difference with wholesaling with a for-sale by owner and a wholesaling with an agent. The agent knows the legal aspects. They know that when you’re signing a contract that seller signs a contract. That contract actually it can be voided because monitor money has not been exchanged. So why do you think they hound you for the earnest money? Because they know that their commissions are on line if they don’t have a fully executable contract.

When we look at for sale by owners, I can’t tell you how many contracts have gone in with for sale by owners and never even put an earnest money deposit down until I actually wholesale the agreement. Yeah. Is that risky? Obviously, it is risky because they could come back and void the agreement because they can say it was never fully executable. But you know, when I first got started I didn’t have that type of funds to be put in earnest money deposit down on all the contracts I was putting under contract. So, you know, I just, I put it under contract, put the $100 to $500 for escrow, and then I would find a buyer and flip the contract to a buyer and have them go open escrow. So, there’s different ways to do that.

So, let’s talk about the deposit. I mean the demand of funds letter. So, the demand of funds letter is a letter that is inside our 30-day fast track. It was something that I created 12 years ago, 10 years ago, something like that. I’m going to title companies to figure out how I could get paid off of deals, wholesale type transactions where the buyer was a financed buyer, right? I went to the same seminars that you guys did 16, 17 years ago. We were taught we had to have cash buyers. Well, when the market took a tank and cash buyers ran for the hills up in Virginia, we were sitting around trying to figure out how we were going to keep doing the business. Well, what I did realize was there was a whole flood of other buyers coming in when the market took a crash, which is what all of us should be doing when the market takes a crash again. We should all be running in ready to buy were landlords.

These landlords were popping out of the wood works. They were buying houses because they were what, cheap now and they were renting them so that the market would stabilize again and then they would sell them. That just gave you the wealth model to real estate, if you actually listened. When the market crashes, we buy, we rent them until the market peaks out again, and then we sell. Well, that’s how you make the most money. You get all the cash flow, the write off the depreciation, all of that. Plus, you get the forced equity that happens from the upswing in the market. But you’ve got to be prepared to do that. We’re in the market right now to be prepared for it. Real estate is hot right now, guys. I mean, it is hot, hot, hot, and so when you talk about the demand of funds, that’s what I used it for.

I used it so that I could put the buyer who had to get financing under direct contract with the seller that I had negotiated with and I can include my assignment fee in that agreement so that the buyer would now purchase the property and finance my assignment fee. Gamechanger. Change the industry, okay? Put me right back on the map. I went from 15 employees down to two and then I went right back up to 15 employees again. And you know what, it’s kind of funny. I was thinking about this last night, actually. I was watching some stuff with Grant Cardone and he was talking about like how when he was 25, he had come out of all these addictions and you know what I was thinking, well man, at 25, you know, I was 24. I was really stepping away from an old wife coming into a new.

And then he was talking about how he made his first million and then he lost it and he really didn’t regroup again until he was in his late 30s and 40s. But it started making me realize how many times I’ve moved through a market cycle where I’ve built a big business and then the market shifted and I had to go down to like two or three employees and then I waited the market out and then I rebuilt it again. I think that is very far in between. Do you hear people that do that? You know, it’s like when something tanks, they just give up on it or they move away from it and then they go back to a job.

Well, in most times when you’ve been coming to a dip, you’ve been very prepared and you’ve been researching and knowing what’s coming and taking the steps to be prepared so that the company does stay afloat. And then once it comes back up again, you can bring that team together. And there’s a loyalty with that. So, if you don’t know it’s coming, you need to learn how to project.

Amen to that, right? That’s definitely very powerful. You can’t expect that all things will stay the same, right? They’re not. All things will change over time. You can’t expect that, especially with the real estate market. That is a true blue through and through. So, going back to closing the deals, if you’re using the strategy, like in our 30-day fast track and then you can’t expect to get a deal under contract, walk down to your title company and say, hey look, I want to use this DOF. They’re going to look at you and go, “what? What are you talking about?” That’s why you have to be prepared. You got to be ahead of the game. You got to go out to the title companies. You got to bring your DOF form down there.

If you have the 30-day fast track and you gotta walk it in and you to say, “hey look, this is a form I want to use that allows me to get paid out of escrow based on the seller and the buyer going to new agreement and I have a fee included in this.” Do you or will you use this? Or would you like to rewrite this in a way that fits your legal team? You understand? I’m not trying to force a square in a round hole. I’m going in ahead of time. I’m communicating ahead of time so that I can make sure that you know, because here’s the reality. All attorneys see things different. I was sitting with someone the other day and they were talking about all the different trainers they had been to and then I was giving them my theories and philosophies on investing and they were like, you know, it’s so funny.

Everybody has these different angles. And I was explaining to them, look, there’s a thousand and one ways to make a million dollars in real estate. You don’t need them all. You need one, you need one, and you need to perfect it, and you need to get good at it. Same thing with advice and attorneys. You understand all attorneys are going to look at everything different depending on how their brain sees it. How they look at it and what legal aspect or the angle they want to take. Same thing with using title companies and closing attorneys. When we’re putting a DOF format that was written by first American title out in California and we bring it into a title company or closing attorney. (We use closing attorneys here. I’m in Alabama.) They’re not going to use that same form. They’re going to want to write it differently.

They’re going to want to put different language in it that’s going to work for them and their market is and that’s why you have to make sure that you’re prepared for the closings. See, that being prepared for the closing is not turning in your bank, you know, wiring information and say, send me a check. No, it’s all the stuff that you got to do ahead of time so that the closing goes smoothly and that you keep your follow-up game tight.

So, here’s where we’re going to talk about next virtual closing coordinators. A virtual closing coordinator is a service that is absolutely fabulous. What is the VCC? Well, these closing coordinators are just that. They are companies based here in the states. You have Pro TMC, Best Transactional Coordinators, if you just Google virtual closing coordinators, you’ll see a ton of them out there.

They are companies that are designed to do your follow-up for you. That’s really what you’re paying them to do. Once you have a buyer and once you have a seller and you’d have escrow, you turn it over to them. They do the babysitting. They make sure the buyers are moving forward, they make sure the agents are on cue. They make sure the lender is getting things to the title company. They’re communicating with the title company on your behalf. They are your follow-up team and they’re moving that transaction closer and closer to the closing while you’re over here building your business. You understand you’re building your business, you get deals together, you’re handing it off to your virtual closing coordinator. They’re stepping in there, managing that process and following up for you through the execution of the close. One of the best things I ever did when, you know, when I was first getting started and I didn’t have an in-house team and I was trying to, you know, reach that million dollars a year mark man, you understand?

If you’re closing one deal right now, every three to four months, it may not be that big of a deal. If you’ve got the time for follow-up and execution and consistency, it may not be that big of a deal, but as you start building this business and you start moving this business forward, closing the deal is the most important process. It basically is all the work that you’ve been doing is now down to closing the deal. That’s why this week is so important. It’s all down to closing the deal and if you can’t put the time and energy and the follow-up and you can’t make sure that that’s getting done, then the reality is you’ve lost all that work and time and energy you’ve put into the transaction. So, this is where they came in for me because like I said, one every three to four months probably won’t bog you down, but when you start executing two, three, four deals a month, you either hire someone in-house to handle all your coordination of closings or you need to use a service like a virtual closing coordinator to do that for you.

And I’m here to tell you, you’ll absolutely love the fact that you can hand that off to them. Now, here’s the beauty of it. It’s time allotment, right? It’s time allotment. Instead of me following up with the buyer and following up with the seller and following up with the title company and following up with the lenders, I’m now what? Only following up with the virtual closing coordinator. I’m mitigating my time management down to one central point and then that point person is now executing all the follow up for me and it’s gonna help you. It’s gonna help you with risk. It’s going to help you with management, it can help you with time. It’s going to help you with growth and scalability and it’s going to start to give you the ability to build the business and get more deals under contract and push them into the lead intake and into the funnel to get them to the virtual closing coordinators so that they can take it from there.

That my friends, is how you start to see the business as it grows and it climbs when it comes to closing the deal. And so, closing the deal is really the key to making money in this business. I hope that you guys start to understand that the main part of closing the deal is your follow-up. It is your preparation and your follow-up preparation, making sure that the things you’re going to be doing. You have closing attorneys or title companies that are going to work with you and the follow-up to make sure that it’s getting executed.

Moving through, so you’ve been listening to the Real Estate Investing Talk Show. I’m Zack Childress and I’m on a mission to create 10,000 real estate bosses over the next year. Will you be one of them? Head over to my website, ReiSuccess Academy.com/labclass and register for my free web class where you’ll discover how to escape from the nine to five grind and become your own boss in real estate. See you there.

 

 

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