The real estate investing business isn’t as easy as TV may have you think. As great as it can be when things are going well, it can be equally as painful when deals are lost. Regardless of your experience level, you will eventually lose a deal that you have worked on for several months. When it happens, it can feel like a punch to the gut. Some investors remain in a daze for several weeks before they get up off the mat and start working again. Others will bounce back quickly and move on to the next deal. While it is important to have thick skin and shake off any negative problems, it is more important to recognize what caused the deal to go south. If you don’t know the cause of the problem, you are doomed to face it again.
There is a lot that can derail a real estate purchase. Even if you are paying cash, you may have issues with the seller, title, insurance, appraisal, lender, contractor and attorney. If you are using lender financing, you can have another host of issues that can pop up at the 11th hour. Sometimes you can do everything right and still have the deal fall apart. Whatever the reason is, you need to recognize it. Most every deal will have some change from how you originally expected it to go. Part of your job is to solve problems as they come. The first step whenever you lose a deal is to get to the bottom of why it happened. This doesn’t mean to point fingers or to place blame. You need to know what the cause is so it never happens again. You may not be able to save the deal you are working on, but you can’t have the same issue arise again in the future.
After you get to the bottom of why you lost the deal, take a look at yourself and see what you could have done to prevent it. Most everything that happens in a purchase will have an effect on something else. Small items like changing the purchase date or not getting the contract back promptly affects everything from the offer being accepted to the closing date being pushed back. Instead of laying blame on others, look at yourself first and see what you did to cause the problem or what you could have done to smooth things over. In most cases, the problem could lie with you or someone on your team.
If you are having trouble finding out what you did wrong, talk the deal out with someone that does. Most investors have a fellow investor that they can run a scenario by or someone that they value their opinion. Listen to what these people have to say and don’t take their criticism personally. If there is a way you can salvage the deal, you may have to swallow your pride or admit that you are wrong. A different voice or perspective could open your eyes to the fact that you may be in the wrong. A real estate mentor, or just another set of ears, can help see things from a different angle and help you realize where the problem lies.
If you realize that you may have been in the wrong, you need to come clean with everyone involved in the deal. It is usually not the act that will help you lose contacts, but the behavior after. If you were at fault or you messed up the deal, you need to reach out as soon as it becomes clear to you. This means doing more than just sending an email or a text. You need to call everyone that you may have originally blamed and personally apologize and see how you can atone for your mistake. This act alone will do more for your business than almost anything else you can do. The people you contact will respect and appreciate your candor. In doing so, you will turn a negative into a positive. Instead of your contacts saying they will never work with you again, they will actually want to work with someone who admitted their errors and went out of their way to apologize. Anyone can make a mistake, but it takes a real professional to admit it.
Every investor, or someone on their team, will drop the ball at some point. Even if you do everything right, someone else involved in the deal can cause the deal to fall apart or the seller could have a change of heart. This is the unfortunate part of the business. It is no fun working on a deal for months only to have nothing to show for it, but it can happen to anyone. When it does, you can either find out what the problem is and address it or pout and complain that it happened. The best investors are the ones that can quickly move on and turn a negative into a positive. Nobody likes doing work for nothing, but the quicker you can accept it, the better investor you will be.
