Most real estate and "found money" professionals invest way too much time doing advance prospecting (otherwise known as researching deals) before reaching out to potential clients. Here's a hard reality about our business:
You will only successfully contact (much less do deals with), a relatively small percentage of people on your prospect list.
Therefore, you'll waste a ton of time and money doing advance research on deals that never end up getting off the ground, if you try to answer unknowns in advance.
The Harsh Truth
In the end, you will likely never even get on the phone with a particular prospect! The deal will never get started.
Luckily, since our lists of prospects can be so large, we only need to connect with a small percentage of our leads to make our business a runaway success.
Real estate investors and found money professionals often insist on grasping the "ins and outs" of a situation before even attempting to reach out to a client. Big mistake.
If you follow suit, you'll end up spending your time doing a bunch of $10/hr tasks, and miss out on the $1000/hr tasks (hint: doing deals) that make our business so lucrative. You didn't get into this business to do $10/hr work, did you?
Ignore this principle at your own peril - if you do, you may tell yourself that the business "doesn't work". In reality, you're just doing it (slightly) wrong!
How To Do It Right
Gathering details of a particular deal can take a lot of your time and money, and should be done only AFTER the "client" (owner or claimant) is found and a possible deal started.
When it comes to distressed real estate transactions or the opportunities they create, use this principle (I learned it from Joe Kaiser as a longtime student of his):
Get the client on the phone, and get a deal in the works. Then get the details. Renegotiate if necessary.
Are you uneasy with that sequence? It's not uncommon.
You're uneasy because you have to almost immediately move past the comfortable research stage (and out of your comfort zone), and actually start doing deals.
If you want to cash big checks, (or any checks at all) you need to get to the dealmaking stage as soon as possible. No way around it.
Admission: I too like to feel 100% comfortable that I know all the answers, before I call someone. It's human nature I think. But if you work that way you're almost certain to fail.
The "Minimal Research Model" - 7 Simple Steps
1. Start with a list of prospects (Pre-tax sale owners? Claimants?)
2. Eliminate obvious losers (properties assessed at $100, overages for $100, etc)
3. Assess what the prospects on the list have in common (Losing their property soon? Unclaimed money somewhere?)
4. Take steps to contact the prospect (you will not be able to find 80-90% of them - sorry!)
5. When you get a hold of the prospect, play a bit "dumb" - because you are! You really don't know all of the details of the situation yet.
6. After stating the purpose of your call, gather as much info as you can; strike up a rapport with the prospect; and tell them what you think you might be able to do. For any unknowns, tell them you need to see what you can do - nobody minds that.
7. At this point it's worth it to contact an attorney if you have doubts. Yes, it will likely cost you $250 per hour for competent advice. You'll have a shot at making 100X that amount on a good deal.
Bottom line: Prospects don't need to feel like you're a total genius. Actually, they feel much more comfortable if you come across as a regular person who happens to know a bit about the subject matter.
Attorneys know all the answers, right? Sort of.
You'll generally frustrate your attorney by asking nothing but hypothetical questions - because without details of a "real situation", there are many variables that could impact the answer.
Here's something tough you probably won't hear anywhere else either. If your only contact with your attorney is asking questions about deals that never end up happening, you'll be discounted as a "wannabe", even if you're paying.
"Players", clients who do regular business, get their calls answered immediately.
Work The Bottleneck
Always concentrate your efforts on the biggest bottleneck in your business.
Assuming you're starting with a valid list of motivated (pre-tax auction?) sellers or claimants, your bottleneck is almost always getting a client on the other end of the phone.
Start there, and worry about the details when you have someone who wants to do business.