Saturday, June 13, 2009

How Important it is to form a Money Making Team

Yesterday I spoke about the help a broker gave me with one of my deals. It shows just how important it is to have a good team in place when you make money.

Think about the guy who used to own the 29 lot property (before the bank took it back): he tried to sell them for $220K when they were worth a maximum of $150K. He had an agent on his team (from out of town?). He even held a family day with jumping castles to try and sell the lots. But he didn't succeed. Why? He was missing important people in his team.

If he had a good team with a local agent or broker, he would have known the properties were only worth $150K before he began. He could have used more accurate numbers in figuring out his feasibility on whether the project was worth doing before he began. And he could have avoided the process of foreclosure and repossession. OK, I'll give it to him that prices dropped within the time frame that he tried to sell him. But if he started with more accurate projections he could have sold some of the properties before the price drop and still come away with a profit of some sort.

It's important to have good honest team members who want to make you money as well as their own wealth. An agent who gives inflated valuations of properties isn't a good member of your team. If you base your numbers on their expectations you could lose a lot of money. So you've got to check that your team members are telling the truth with actual data, for example recent sales and Days on the Market statistics. Of course, you don't say to anyone that you think they're lying, but most agents will be happy to give you a CMA (comparative market analysis) on a suburb you're interested in. After all, you are their business!

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