How The Right Contracts Can Save You Thousands Of Dollars And Protect You From Lawsuits
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Read Transcript for “How The Right Contracts Can Save You Thousands Of Dollars And Protect You From Lawsuits”
If you’re worried you might get sued or don’t feel experienced enough to explain contracts to your buyers and sellers, that’s not that uncommon – but you don’t have to be. If you use the contracts in my program, you’ll overcome your fear and succeed.
“Joe, I’m more nervous about filling out contracts than just about anything else. I keep thinking I’m going to do something wrong and end up in jail or in a lawsuit. I’ve been using your techniques to find buyers and sellers, and those have been simple. Maybe I just need to do it before I become comfortable with it. Can you give me some advice on filling out forms and dong contracts?” – Janet Simpson, Naperville, Illinois
Joe: Well, first of all, Janet, any fear can be overcome by knowledge and experience. As soon as you start learning this stuff, it’ll become a lot easier for you.
Joe: I have one student who has bought tens of millions of dollars’ worth of properties. When she filled out her very first form, I remember getting an email from her. She said it took her three hours to fill out her first purchase agreement to buy a property. She said she agonized over it and read through it over and over again, trying to figure out whether to fill it out.
Joe: She said, ‘Joe, will you take a look at it for me?’ She faxed it over to me (she’s a mentor student) and I took a look at it and told her, ‘You did it exactly the way I taught you to. You did a good job.’ She presented it, made money on the deal and she started doing them over and over again.
Joe: She told me that now it takes her five minutes to fill out that same form. So it becomes easier and her fear has completely vanished because of the amount of deals she’s done and her ability to do this.
Joe: Keep in mind that I’m not an attorney – I don’t even play one on TV. I just have a lot of experience as a real estate investor.
Joe: We’ve been playing with the contracts that I have. I have contracts for everything that I teach, different contracts for different types of purchase agreements, depending on the type of structure that you use, whether it’s “Subject To” or “Multi-Mortgage” or land contract or contract for deed, assignable cash offers or lease options – for all of those different types of deals, we have different purchase agreements for them.
Joe: We have different disclosures for each one of those types of deals depending on the property and whether you’re working with a buyer or with the seller. If you’re working with the buyer, you’re going to write the offer differently; you’re going to use a different structure.
Joe: As you learn these, you don’t have to be overwhelmed by it all at one time – all you need to do is learn one technique, one thing, one process, one contract, which I teach by the way from day one, so that you don’t get overwhelmed.
Joe: I teach this at the buying event. I go through the contracts with you, I read through them and I tell you, ‘Fill in this here. This is why this is here. This is what you say to your buyer. This is what you say to your seller when you explain the contract to them. Here’s where they sign.’ It’s very straightforward. This is not rocket science, and once you understand it, it won’t be difficult for you for very long.
Joe: I call my program ‘The Safety Net Method’ for a reason. I believe the contracts are the things that set your expectations with the buyers and sellers and investors that you work with. You want to set expectations properly. You want them to know what can go wrong, what will go right, what to expect from you personally and you want to follow through with the things that you promise.
Joe: You also want them to know what their risk is in the transaction. That’s what the disclosure is all about. Make sure they understand what the potential problems are, so that when and if those problems arise you can go back and say, ‘This problem has arisen. I have to deal with this. I need your help with this. I apologize for it happening.’ It keeps them from filing a lawsuit most of the time.
Joe: I haven’t been in a lawsuit in a long, long time simply because I set expectations properly (and maybe I should knock on wood when I say that because when you’re in business, you can get into a lawsuit any time with anybody). But I think that what I’ve accomplished with my business and the things my real estate investing and my teaching program is that I set expectations properly with the people that I work with so that they won’t be able to come back to me and say later, ‘Joe, you told me this when in fact, it is this; you lied to me’.
Joe: If you have the right paperwork, you can go back to them and say, ‘Remember what I said in that disclosure that you signed right here and actually put your initials right next to that paragraph? It talks about this issue. I’m sorry you’ve forgotten that you signed it, but you signed it right here,’ and it stops the problems right away. If you have the right contracts, it’s going to make that happen.
Joe: Knowing how to fill them out will take away the fear. Knowing that you have the contracts that have been used over and over again from many places all over the country in many ways will also give you the confidence that it can be done.
Joe: We’ve also had these contracts looked at by many, many people. I’ve had lots of people, even in my program, say, ‘Joe I’m a little uncomfortable with this. One of my friends told me that this might not be legal to do it this way.’ And I’ll say, ‘Stop right there. What I want you to do is go to an attorney, a real estate attorney instead of just a friend who might be an investor or who might think he’s an investor. Why don’t you go over to a real estate attorney and have them look at the contract, tell them exactly how you’re doing it and ask them if it’s legal and if it’s done properly. And, if there’s a problem with them, I’ll get on the phone with your attorney and explain to them.’
Joe: Some attorneys don’t understand what we’re doing. They’ve never heard of the things that we’re doing, and as soon as I explain it to them, they say, ‘Oh, that makes sense. I understand exactly what you’re doing now. I just didn’t understand the verbiage or terminology that you’re using’.
Joe: As soon as we explain it to attorneys, we’ve always had them say it’s not a problem, even when we’ve gotten into issues. We’ve gotten into issues a couple of times with these things. We’ve always been able to go to the attorney, explain what we’re doing, and they’ll say, ‘Yes, you’re doing it the right way. There’s no question that what you’re doing is legal. It’s put together right.’
Joe: Every once in a while they’ll say, ‘You could change the wording here or there.’ A lot of times, we do change the wording. We try to learn as we go and modify the contracts as we go, and we try to pay attention to what’s happening in the world of real estate investing.
Joe: So with Subject To, we have six different contracts and disclosures you need to use. The “For Rent Method” requires three different contracts. Assignable cash offers require a purchase agreement, disclosure and an assignment form. Land contracts can be done with one form, unless you want to protect yourself.
Joe: I use four different forms with that that are written specifically for that kind of land contract deal. I don’t do land contracts just to buy properties – I usually use them to sell properties in specific circumstances, and I want to know that I can get those properties back without going through a disclosure if that buyer defaults, so I have a contract set up for that purpose with a quick claim deed back to me.
Joe: I know I’m kind of getting esoteric here on some of these terms, but I’ll teach you all of these things specifically for the specific types of deals that we’re doing.
Joe: You can buy forms online for a lot of these things. You can buy purchase agreements online. You can buy deeds online. You can buy some of these land contracts for just a few bucks. You don’t have to buy my program in order to do it. But if you want the experience that I’ve had, and you want the safety of the things that I’ve done, you have to get those contracts through me.
Joe: I’ll show you how to use each of those contracts, how to fill them out, and how to make them work so that you feel comfortable doing that and explaining them to your buyers sellers and investors before you ever have to get in front of them to do that and your comfort level will be much higher.
Joe: Again, that comes back to fear being diminished by education and experience. Those are the things that I’ll help you get through so that you can be a successful real estate investor. I hope that helps. Thanks, now.