Category: Finance, Real Estate.
If you are not aware of just who Sun Tzu was, then you may want to order The Art of War.
More than 2, there was a, 500 years ago period in China known as the Age of Warring States. It is an absolute must read for those in business. This was an age of great conflict and uncertainty as seven warring states fought for survival& control of China. Those individuals with knowledge on strategy& leadership were extremely valuable and highly coveted. For these states to win they sought out any means of gaining advantage over their opponents. During this period arose a general from the state of Ch' i known as Sun Tzu.
To hand down the wisdom he had gained from his years of battles Sun Tzu wrote a book, The Art of War, that became the classic work on strategy in China. His ability to win victories for his warlord gained him fame and power. His book, which details a complete philosophy on how to decisively defeat one's opponent, has given guidance to military theorists and generals throughout the ages. Former U. Military greats and business leaders alike have hailed The Art of War. Sun Tzu has been studied for hundreds of years.
Chairman of the Joint Chiefs of Staff Colin Powell said, I' ve read the Chinese classic The Art of War written by Sun Tzu. He continues to give inspiration to soldiers and politicians. We require our soldiers to read it. " Today, Sun Tzu's appeal has extended beyond the military realm into the world of business. So every American soldier in the army knows of his works. IBM, XEROX, 3M, and many other corporate giants use the teachings of Sun Tzu in their training of executives because business by definition deals with competition. The Grand Duke said" one who is confused in purpose cannot respond to his enemy" .
So in looking at how Sun Tzu can be applied to short sales, let's look at a few of his teachings and how they can be applied, and be applied successfully. This is the beginning of our journey in applying the teachings of Sun Tzu to our real estate business. Without purpose there can be no success. Without purpose there can not be any victory. Most importantly, being confused in purpose leaves you weak and unable to respond properly to the challenges of the real estate business. In this case the foreclosing lender. For instance, if your goal is to successfully complete a short sale transaction, you have to define your purpose while simultaneously being able to respond to that of your enemy's.
When we enter into a short sale transaction we define our purpose very clearly. We also do not want to be involved in any transaction where we are not receiving at least 30% off of current market value and we expect a minimum of$ 20, 0000 profit per transaction. Our objective is to obtain the highest possible discount on the payoff we are seeking and to sell the property by dual transaction immediately at closing to a buyer we have farmed. This gives a very, clearly defined purpose and allows us to easily respond to our enemies, whether lender or real estate agent. OUR purpose. Whatever response the lender gives us in reaction to our short sale proposal, we are not deterred in endeavoring to achieve OUR goal.
Here are some other really valuable" Tzuisms" that we can apply to short sales. "Knowledge that does not go beyond what the generals know is not good. " This means that being successful is more than simply being on the same page. As a project leader on a deal, or as an agent representing the project, one must make certain that all are informed, educated and prepared to orchestrate the transaction successfully. A short sale project is worthless if it's not effectively communicated to everyone on our team( Seller, hard money lender, Buyer, agent, attorney, Title Company, office staff) . How many real estate agents know how to manage a short sale correctly? Are you following the game plan as designed by the Buyer, or are you out there winging it, hoping it all works out? Can you truly coordinate a short sale?
Calling a bank and asking if they accept short sales is transactional suicide. In regards to a short sale, don' t ever, ever speak to a bank regarding a short sale until you are prepared to do so. Sending every offer to the bank for approval is short sale suicide. "If your troops do not equal his, temporarily avoid his initial onrush. " Do not initially engage a competitor unless you are prepared. This means the only contact you are to have with a lender is to find out who the contact person is and what their contact information is. You are not prepared at this point to negotiate. That's it. You are not educated, do not have all of the necessary information compiled, no package has been prepared and if you are just sending offers to the bank without preparing a full package to justify your requested discount then you will not likely succeed and be overrun by your opponent, the lender. "If officers are unaccustomed to rigorous training they will be worried and hesitant in battle" In his teachings, Sun Tzu often reiterates the importance of preparation.
Of great significance is that Sun Tzu believed that training should be distinguished from education. Proper training, proper education and battle tested experience are crucial. While the latter employs a classroom setting, the former provides hands- on learning. You need to have BOTH aspects. In relation to short sales, you can see how to be a short sale expert. You need to have professional class room oriented educational instruction as well as successful hands- on experiential training. In addition, the value of real estate cross- training is integral to your short sale success.
Absent both of these vital components you hardly are an expert. You need to have knowledge of how things work in a short sale and how things impact a short sale. What's in yours? "Therefore, when I have won a victory I do not repeat my tactics but respond to circumstances in an infinite variety of ways. " Each deal is different. Issues like latent material defects, double closings, inspection problems, Hard Money lending, subject to transactions, loss mitigation techniques, obtaining deeds, certain tax ramifications, foreclosure law, and much more are parts of a short sale expert's toolbox. Sun Tzu recommends that you examine what you did right or wrong and changing your strategies accordingly. When we work our short sale deals we do the same. Peyton Manning is a MVP quarterback in the NFL, part of his pre- game preparation is watching every defensive play, from every single game, that his opponent has played that season.
We review what our opponent is doing, and has done and what position they are currently in. I could go on and on but suffice it to say, you need to know what changes you need to make in your presentation and approach and continually fine tune your game. "The supreme importance in war is to attack the enemy's strategy. " The bank wants to make sure they get as much money back from the non- performing asset as they can. We look at what REO's the bank has in inventory, we check their annual report and see what level of non- performing assets the bank has on their books, we sometimes buy a single share of stock so we can obtain various documents and the ability to attend shareholder meetings and conference calls, we see what the level of foreclosure activity they have in our immediate market. In mitigating their loss, their object and purpose is to minimize your profit. You have to be in a position of absolute dominance. It is of the utmost importance that you attack their strategy as forcefully as possible. You do not want to show up to a gun battle with a water pistol.
Our template alone is 100 pages. Our short sale package is over 150 pages once complete. We want our artillery to be armor piercing. It is of absolute importance to strike hard and attack the enemy's strategy. We want to go for the jugular and not release until we win. If you are not prepared to use every weapon in your arsenal.
By the way, you do know they have their own defined personal battle strategy? If you are not educated and trained as to how to wage battle in a short sale setting, then you will succumb to the lender's strategy. Don' t you? If not, you are underestimating your opponent and as Sun Tzu teaches, "He will win who, waits to take, prepared himself the enemy unprepared. " The bank will own you if you do not know how to properly and expertly execute a short sale. "To fight and conquer in all your battles is not supreme excellence. You do know they are practicing these exact precepts against you don' t you? Supreme excellence consists in breaking the enemy's resistance without fighting. " Your goal, like ours has been, is to reach the point in your short sale business that you no longer need to fight. Get to a point of credibility that once the lender acknowledges your presence, you can go straight to negotiation.
Become a proven opponent. No need to neither battle and prove your might nor demean your opponent. Our capacity to wage battle and the manner in which we are prepared to do so is known and precedes us. A mutual respect has been achieved through previous battle. Now, we can break, with many lenders their resistance to our numbers simply by being excellent in what we do. They know we are educated, trained and skilled opponents.
They know what kind of package to expect, they know what lengths we are willing to go. We are respected warriors. We train and educate others to be good soldiers and we' ll teach you as well.
