Do You Believe Everything You Hear Is True?Posted on June 9, 2014 by
Today I read an article written by Harry S. Dent who is a famous economist. Mr. Dent is predicting that the Dow is going to tumble down as much as 60% to 6,000 then ultimately tumble again to somewhere around 3,300. Mr. Dent predicts that Gold will fall to $750/ounce and crude oil will eventually fall to $10 per barrel and unemployment will skyrocket, he quotes “It’s going to get ugly”. Mr. Dent predicted the 2008 financial disaster and has been correct about many financial issues over the past 10 to 15 years.
I’m not an economist but I know that we, in the business of houses, have always survived through every cycle the economy has ever thrown at us. Even during the great depression of the 1930’s landlords who had affordable housing survived through those tough years. I believe the secret of being able to keep our properties and even make money in tough times will be based on not so much how much debt we have on each property but how much our monthly mortgage payment is every month. Whether you plan to keep any property as a rental or you plan to sell a property with seller financing terms I believe this will be the key to your survival and ability to prosper in a down cycle of the economy.
A problem I am seeing today where newer investors are concerned is they have no skills talking to sellers. For the past 15 years money has been easy to get for most real estate investors until 2008 when the market dropped out of sight and many investor/speculators lost most, if not all of their properties to foreclosure. Because of the looming market predictions I believe every real estate investor should learn the skills many of us have used for years to negotiate our deals with the sellers directly. I see all too many investors who continue to throw dollars at deals hoping they can get property for CASH. The problem, not all investors have access to unlimited funds to buy property.
The investor of today in my opinion needs to learn a fundamental skill used by investors for centuries. That skill I am talking about is the ability to sit and negotiate a deal with a seller face to face where CASH isn’t the only component of every deal. Because most of the investors of today make all of their offers through a real estate agent, they haven’t got any idea what the seller really wants and are just guessing what a seller will accept in dollars. They make an all cash offer and if the seller rejects the offer they may offer a few more dollars. Then if the seller rejects the counter-offer the investor is done and they walk away from what could be a potential good deal. If the investor would just sit down with the seller and ask the seller exactly what they want they just might find out what the sellers want and make a deal that will be profitable for both parties.
I know this may sound ridiculous but I know from experience that not every seller always wants all CASH. If the investor never asks the seller what they really want how will they ever know? I believe if the real estate market goes like the financial markets being predicted and investors aren’t able to negotiate deals that can withstand massive inflation with high interest rates, like we had in the early 80’s these investors face another horrible situation like we did in 2008. I believe every investor needs to hone their skills as a negotiator if they want to put together deals that will endure in any financial market. This skill will be very important for those who don’t have ready access to CASH.
I have personally set at hundreds of kitchen tables over the past 35 years and I will tell you, not every seller wants all CASH at the closing of the sale of their property. I learned this as I asked the sellers questions about what their plans were after they sell their property. What they need the money for, where they would like to go, what do they want to do with their lives just to name a few questions I ask.
Because there is a great shortage of true negotiating information available today I decided to write a course called “Negotiating Techniques of the Master Real Estate Investors”. This course will be finished sometime in July so if you want to learn this much forgotten skill look for it on my website www.LarryHarbolt.com. I truly believe that those who learn good negotiating skills will quickly rule the market once they learn how.