How can you protect yourself from risking your own capital when a motivated seller needs additional services (cleanouts, repairs, rehabs etc…)?All The Leads
Offering Sellers Vertically-Integrated Solutions Without Putting Your Own Money On The Line Is Easier Than You Think!
The best way to position yourself and your brand is to provide unique value your competition can’t (or won’t!) offer. How can you provide a wide-array of services when you’re just starting out? How do you respond to a client who asks “How much is this going to cost upfront?” And how can you protect yourself from risking your own capital?
On our 235th Mastermind Q&A call, Alesha from Ft. Myers had some questions about building her vendor list with all of these considerations in mind. Is it important for her to find vendors that will allow invoicing at closing? How can she confidently handle seller’s questions on cost? In most cases, vendors will get paid after they’ve done what they promised anyway, but Chad offers his advice.
Susan from the Bay Area, California builds on what Alesha was asking: She is curious if we have any documents to help secure payment at closing for additional vendor services paid for up front, as she put her capital on the line once before and got burned. Chad recommends agents and investors not to put themselves in the position to risk their own capital by providing the services themselves (though he describes how he has made exceptions twice with elderly clients who were very honest and traditional – You can still use your discretion!). Chad offers key advice; liens are a great tool your contractors can use to ensure payment; for clean-out companies and others, you can leverage a lender who will write their own agreement to secure payment or who will take a premium to hold the risks themselves through to closing.
Don’t be afraid to educate and ask these vendors if they are prepared for this work – they will be important team members as you come across situations where this is needed and you will all build strong business relationships with new clients this way.
Bonus Tip: Liquidity isn’t the only option available to a seller who wants to make improvements before selling their property – Get creative with these 5 ways to access equity for improvements when traditional financing isn’t an option: http://alltheleads.com/5-ways-access-equity-improvements-traditional-financing-isnt-option/ )