Are you ready to become a top producing agent? Today on the show we have Super Agent Bob Zachmeier from Tucson, Arizona. Bob is a former engineer who entered the market in 2000, started his own brokerage in 2004 and has since closed 3,000 transactions since its inception.
Real estate transactions are all about creativity. As long as you have a license to sell, you can help your buyers and sellers close deals a dozen different ways. Using his love for numbers, Bob has been able to offer a truly unique selling proposition to buyers with poor credit scores and a great investment offer for people with capital. Get ready to learn how his process works, how you can start implementing it and how you can skyrocket your business to 300 deals per year.
The Unique Selling Proposition Explained
What do you do when homes aren’t selling in your area due to lack of financing and retirees aren’t earning enough interest at the bank? You solve a problem for these two parties! By keeping his ear on the market, noticing a gap and being creative enough to find a solution, Bob has been able to fix a big issue and make lots of money along the way.
Here’s How It Works
- The Parties: In every one of his transactions there is a seller, a buyer, who can’t get financing, and a lender, typically a retiree.
- The Problem: Bob solves two major issues facing Americans today- securing financing to purchase a home and earning enough money to retire comfortably. For the month of June, 2014, 50% of all people that applied for a home loan got denied.
- The Solution: By using retiree’s money to help unqualified buyers purchase a home, Bob has become the only person in his market that can get these buyers a loan and earn retirees 35x on their investment.
- The Process: The seller prices a home for market value, say $100,000. An unqualified buyer, looking to purchase this property offers to pay $115,000 for the property and is able to put down 15% of fair value (ie. $15,000) but cannot secure financing. In order to protect investors, Bob breaks up the the financing into 2 notes. The first note is usually purchased by retirees at 75% LTV (ie. $75,000), while the second note (the remaining $25,000) can either be carried by the seller or a second outside investor.
- The Winners: Using this unique financing method, Bob ensure that every party in the transaction wins. The seller receives 90% of his money upfront and either decides to carry the note or sell it to an outside investor for an agreed price (lets say 50% of the note value, in which case the seller would receives a total of $102,500). The buyer, who couldn’t qualify for a loan otherwise, now secured a home and makes monthly payments to the noteholder. By charging the buyer a premium on the mortgage, Bob ensures the retiree earns 35x more than she would from a traditional bank. Finally, should the seller decide not to hold the second mortgage, the second investor earns a high return on his investment as well and, because he purchased it at 50 cents on the dollar, earns 100% of his money back when the buyer refinances the mortgage or sells the property.
- The Fine Print: In order for this to work, you have to make sure you qualify your buyers credit and ability to pay. Furthermore, always make sure you can protect the investment downside, which Bob does by creating two mortgage notes.
How To Implement This In A High Priced Market
In Tucson, this method works great because investors have the ability to limit their investment to small amounts. But what if you live in a city where home prices are in the hundred of thousands of dollars and the seller is upside down on his mortgage?
In this situation, to avoid a short sale and save the sellers credit, Bob recommends that you again find a buyer having trouble with financing to lease the property for a short amount of time until he or she can buy it outright. By charging a premium on monthly payments, the seller is able to get out of the property without ruining his credit, and the buyer locks in the property at the current market value to be purchased in the future.
The Results
Using this strategy, Bob was able to generate 3,000 buyer calls related to seller financing in just 12 months. Out of those 3,000, Bob closes an average 30 transactions per month where he gets paid on the lease, the investment and the future sale.
How To 10x Your Business
There are a few fundamental things that have helped Bob 10X his business in the past 10 years. Take these tips and start implementing them in your business today:
- Understand The Fundamentals: Real Estate at its core is determined by supply and demand. Understand what condition your market is in and spot the opportunities in your area.
- Track: Numbers are your friend. By knowing the available supply, demand, number of price reductions and number of days on market you will begin to see trends in your market before anyone else and prepare for upcoming change. When the crisis hit Tucson, Bob was the first agent to notice the storm coming.
- Educate Yourself: Once you understand the state of the market, it is time to act. The agents that fail to educate themselves on how to thrive in their markets will go out of business. Attend relevant conferences and educate yourself on how to help buyers and sellers in your market.
- Dominate: After you have learned how to offer the best solution, put your plan into action and dominate your market. Most agents still don’t understand what Bob does, and that gives him a competitive edge.
Golden Nuggets
- There is always a way to achieve success
- Get Creative
- Millennials are a crucial part of the market: they must be normalized in order to keep the balance in the market
- The economy is interconnected: real estate is affected by everything that happens in the market, from interest rates to student debt and wages. Make sure you understand this if you are going to succeed.
- Stay Focused: One of the main personal habits Bob attributes to his success is his ability to focus on his business and remove himself from technology every morning for 2 hours
Books For Agents
Sold On Change by Bob Zachmeier
Get In Touch With Bob
Email him at bob@win3realty.com
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