The “right” Real Esate Investing system

February 11, 2009


The “right” Real Estate Investing System
by James Miller

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One of the confusing parts of getting started in Real Estate investing is that there are so many different ways to do it and so many guru’s out there touting why their way is the best.

I am going to let you in on something it took me a while to discover.

It all works.

Yep. Just about everything you see out there every one of the late night infomercials, every guru you have ever hear talk at a seminar and fought the urge to run to the back of the room to buy their CD’s or Boot camp. All of their stuff works.

But it doesn’t work for you.

Here is the difference:

It doesn’t work because you are doing something wrong.

I run under the assumption that there is a way to make just about every money making opportunity I  have ever seen work, but the limiting factor is me.

As an example, I had a hard time getting used to the idea of putting up “I buy houses” signs and ads all over the place. It just seemed too cheesy to me.  One of my partners was fully on board with this phrase.  She took the time and money  to have vinyl letters made with this phrase and her phone number on it and placed them on her car.

I could barely ride around with her in that car I was so embarrassed by it.  I was wondering what people must think.

She had spent $60 on those letters and gets an average of three calls a week from someone wanting to sell their house.  There are also people who come up to her at gas stations asking about it.  She has even been pulled over by a police officer who wanted to sell his house.

Because I wasn’t comfortable with the idea of that cheesy phrase,  “I Buy Houses” didn’t work for me.

Guess what most of my house buying advertising says now?

Too often we get in the way of our own progress by wanting to change a proven system, or not following through with what we are supposed to do because we don’t feel comfortable with it.  Often we want to save some money by changing things.

If we try something and then later give up. It is very easy to blame the system or the person who taught us, but the true nature of why we aren’t successful is that we have done something wrong.

We are the ones to blame, yet we never do see ourselves as the culprit.

If you look at Real Estate, there are thousands of people who are successfully short selling, successfully flipping, successfully assigning contracts, lease optioning and buying using land contracts.  People have been using creative techniques to make money in this business for decades.  So there is a way to do it.

There is a path to follow to get the goal you want.

But you will never get there is your focus is on finding the “right” program.

They all work. You just need to make sure you take the one you have and do it the right way.


The Real Estate Investor mindset.

February 10, 2009


The Real Estate Investor Mindset
by James Miller

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Eliminate the entitlement mentality.

If you are the type who thinks that you deserve certain things just for existing, you should stick to a day job.

We don’t deserve anything.

Please understand that everything we have, has come to us  either as a gift or in exchange for some service.   We need to be grateful for what we have.

It is also good to keep in mind that, from here on out, everything you will receive in your life is owned or controlled by some one else at this very moment.

Understand that everything is your fault.

With very few exceptions, I am certain that everything bad that has ever happened to me can be linked back to something I did that I shouldn’t have, or something I didn’t do that I should have.

Even if you are in a car accident that is caused by someone else, I hear that insurance companies consider you 10% at fault just for being there.

You take control of your life when you realize that you are responsible for the outcome. I honestly feel sorry for people who continually feel taken advantage of, or that they have been victimized.  How little control they must feel they have over their lives.

In high school my car had broken down and the stereo and musical car horn (yeah, I was that cool) had been stolen out of it.

I was very upset.

I vowed to find out who did it. I reported it to the police. I watched everybody and anybody with the suspicion of a tv police detective, I even eventually accused innocent people of the crime.

In reality, I was at fault for not locking the car after it broke down. Even though I lived in a small town, it was an obvious and completely irresponsible thing to do.

I could also say that I was responsible for choosing such a faulty car, or not maintaining it. You see, there are lots of significant points that lead up to any given event, and if you can accept looking at it this way, “blame” and “fault” become a very slippery words.

Mindset of Service

There is a saying that goes “you can get anything you want by helping others to get what they want.”

This is vitally true for Real Estate Investors. Our job is to help people to buy and sell their homes. We use the knowledge we have to make this happen for people whom, most of the time, cannot get it done in any other way.

We are at their service.

If we keep in mind our service to others, great things can happen.  For one, you stand out.

I remember a guy who had called me about an apartment.  I didn’t have what he was looking for, but made some calls to other landlords on his behalf and gave him the names and numbers of a few more landlords that I knew.

He was so grateful he stopped by the house I was working on and told me “Thanks so much, you are the nicest guy I know.”  While I didn’t get him as a tenant, I could tell his compliment was genuine, and for me, was reward enough.

If you do this with enough people, word gets around that you are the person who will go out of your way to help someone, even if you have nothing to sell them directly.

Have a thick skin.

You will especially need this when starting out. Creative Real Estate Investing seems to have a bipolar distribution of proponents that love it and those that think people using these techniques are financial scoundrels,  scamming people out of their home equity.

It is only fair to assume that there will be those close to you who feel the same way.  As Jesus said “Only in his hometown, among his relatives, and in his own house is a prophet without honor.”

You will need to have particularly thick skin with the people closest to you. It is probably best to wait to tell them anything until you have what Ron Legrand calls the “shut up check”, from the bank or title company.

Ready- Fire-Aim.

In this business you can’t wait for all of the lights to be green before pressing on the gas, because the lights will never all be green at the same time.

The best you can do is to start out with low risk ideas, things like Bird-dogging, Assigning contracts, or working leads for another investor.  As you gain confidence and experience you can go onto bigger and better opportunities.

You need to be like an airplane in flight, start off in the right direction, build up speed to get off the ground, and once in flight, continually reevaluate where you are at and what you are doing to best align with your target destination.

Self Motivation

In this business, you are accountable only to yourself. Know your limitations and find people to partner up with to compliment what you lack.

I learned this lesson when I partnered up on a deal with my friend who is a banker, besides getting us a great deal on the interest rate for our loan, he keeps simple yet immaculate records of everything that is going on in that LLC.

I had no idea how bad I was at this until I did this deal with him.  I just knew I didn’t like it.

As a Real Estate Investor, you are also the only person who is going to get the things done that you need done. There is no boss to be accountable to in this business. Only yourself.

Patience and Persistence

Getting something going with real estate can take a long time. In order to find the killer deals you have to kiss a lot of not-so-pretty frogs. Some of these frogs will swear to you that they will turn into a Prince despite the warts.

Every seller I have ever talked to has some reason that his or her house is a great deal. Some actually get me believing it for a while, but very few actually are.

It can be a hassle screening through property after property, but eventually you find the one that is worth it.

Continual learning.

There are a lot of things to learn and some can only be understood by doing them.

One example I can think of is going to the closing for your first bank loan.  Nothing written can precisely, and fully, prepare you for exactly what you will think, see, and feel during the closing.  The party of players sitting around the large conference room type table, the nervousness in the air. the large amount of paperwork you resolve to sign, without fully knowing the meaning of.  The realization that everyone there is getting a piece of you via your bank note.  Nothing can educate you to that experience that  actually sitting in that chair can.

Accept that you will make mistakes.

This is really part of the learning process.  You can’t get around it. Accept mistakes when they happen, and take with it the associated learning experience.

You will have likely paid dearly for it.


Why would any one want to be in Real Estate?

February 8, 2009


Why would anyone want to be in Real Estate?
by James Miller

This question is particularly pertinent right now.

Here are my top reasons for investing in Real Estate… especially now.

1) Real Estate is on sale.

Houses all over the country are selling at a discount from the sellers themselves, from the lenders, or even the US government.

2) I love the Write offs

Real estate allows me to depreciate about 3.3% of the value of the property the first year.  It is a declines after that amortized over 27.5 years. But this is a phantom loss that I can hold against my earned income. Sure I have to realize that deprecation when (or if ) I sell, but the dollar I can write off today is worth much more than the dollar I have to pay back in the future. this is the whole time value of money thing.

Since my real estate is set up as a business, there are plenty of write offs we get to take in our daily real estate routine.  Things like computers, printers and digital cameras are necessary for the work we do on our rental and rehab properties.  So are the tools I pick up at Home Depot, and many other things.

This is essentially a discount from what I would have to pay if I used these things for personal use.

I currently have so many write offs (and I am so underpaid at my current job) that I have not had to pay in income taxes in the past several years.

3)  I can get into a property cheap.

No other time in my investing career has it been so easy to buy a property from a seller with so little out of pocket.  I have literally had sellers pay me to take their house.  I have others where my net out of pocket was only a few hundred dollars and several more where the cash outlay were limited to just a few thousand dollars.

These are small sums that allow you to take control of an asset easily worth 100 times the amount you have into it.

4) Property appreciates in value.

No, I swear it really does. We have had a bumpy ride over the last few years, but when the fear is over and common sense comes back to the market, we will again see the slow steady rise in real estate values that we have been accustomed to over the past 100 years.

I am not saying that there won’t ever be bumps in the road again. I am just saying that what we have seen is an anomaly due to overzealous investing from abnormally easy loans.  Everybody got spanked.  We’re sorry and we promise not to let it happen again…. even though it eventually will.

5) Property provides cash flow.

I am making reference to rental property as rehab property can cost you money until you sell it.  I am in a particular pinch right now as I have three vacant homes we are in the process of selling that have created a net negative cash flow.

I took my eye off the cash flow ball and focused a bit too hard on the speculative rehab profit.  The market tanked and  I am in line with a lot of other investor and developers…. trying to sell ice to the Eskimos.

How can you learn from this lesson?  Always keep your eye on cash flow. As Billionaire Bill Bartmann says, the most important number in your business is the amount in the checking account. When that  goes to zero, everything stops.

If you always have a positive cash flow, your checking will never go empty.


Real Estate Investing – The Greater Good

February 6, 2009


Real Estate Investing – The Greater Good
by James Miller

So much of the focus on Real Estate Investing seems to be on making money. That is the first and truest motivation for what we do.  I feel that there is nothing wrong with this. Being a capitalist, I think anything that gets the Money moving in our economy actually does us good.

But before I turn this into  Gordon Gekko’s Greed is good speech, I want to talk about the other side of what we do, when we buy or sell a place using creative real estate techniques.  I want to talk about how it helps people and the overall good it does.

Think of the benefits to our local economy and community when we do the following investing action:

When we buy a fixer upper, repair it, and resell it with seller financing:

1) We are saving this home from further ruin that time can create. At some point homes become so deteriorated that after enough time only the only choice is the wrecking ball. By saving these homes we are indeed recycling them and keeping a large amount of material out of the landfill.

2) We raise the property values in the local neighborhood. This may or may not happen to any significant degree, but it makes it easier to sell your house if it is sitting next to a freshly  restored Victorian, as opposed to being next to something that looks like a haunted house.

3) We increase local tax revenue. While we never like to see it coming, we benefit the community by creating more assessed value in a home that benefits the tax roles.  This is a dollar savings that  minutely lowers everybody elses taxes.

4) We minutely lower the cost of housing by providing another viable living space.

5) We give hope, usually to a family that is transitioning from renting to the American dream of home ownership.  We are providing renters a way to start building equity in their home even though they may not be able to qualify with a bank right now.

6) We give hope, to the seller we buy from who could not move their home otherwise. This is especially true in this tight market.  I have talked to Realtors who have sold nothing over the past six months.

With our ability to sell via lease options and other creative means, we are constantly and consistently able to sell homes.

7) We are good for the economy. I believe that if there were a massive push from our government to educate it’s population on the ways of creative Real Estate Investing we could pull out of this economic slump without the need for huge bailouts.

The banks would still have to take a hit, but a nation of savvy and creative Real Estate Investors and home buyers could eliminate the inefficiencies in the market.

If you think about all of the people out there right now who would gladly rent or sell their property with creative financing, just to get out of it, but they don’t know how, so they are letting it go into foreclosure.

Compare that against the amount of people that are ready, willing, and able to come up with a little money down and make the monthly payments in order to get into a home of their own… but they don’t know these options exist.

If you compare these two things then we know that there is room for us to make a difference in our economy without a huge infusion of bailout cash.

…..Then again, maybe I am just an idealistic dreamer.

Since posting this I have read Francine Hardaway’s open letter to two mortgage companies. In her blog, she talks about how much better things would be for her and her lenders if  they would accept a reduced interest rate as opposed to her only other option…Foreclosure.


How to avoid a Real Estate lawsuit

February 5, 2009


How to avoid a Real Estate lawsuit
by James Miller

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I have been investing in real estate for 13 years and have not yet been taken to court.  I have had to sue and evict tenants that didn’t pay, but I have never been to court as a defendant over a Real Estate deal.

I have gotten in a  “discussion” on a Real Estate Bulletin board where there seems to be some strong feelings as whether or not to use a purchase and sale agreement when taking over  a property “subject to”.

I have an attorney who  adheres to the KISS principal and that any time you can get by without using a piece of paper, you do so.  He feels this way as any document you create or sign can be construed two ways, for you, or against you. As I understand it, the court looks more critically upon the person who provided or drafted a document.

It occurred to me that the reason that people feel so strongly about their need for legal documents is that they want to feel protected. They are afraid that if they don’t have the right piece of paper someone will get them.

It is my contention that if you focus on helping people, treating people fair and honestly and if you don’t try to take advantage of them then you could get by with very little documentation.  If they are in agreement with what you are doing, there is no reason for them to sue.

Here are the things I try to do to keep that from ending up in court:

1) I don’t make promises I can’t keep.
I certainly don’t sign any agreement where I am agreeing to do something that I don’t think I can do.  I tell people where I sit with regard to the deal and make sure that

2) I make sure my intent is clear.
If I ever end up in court and there is an issue over a series of events, I want everyone to know what I was trying to do.  If possession is nine tenths of the law then intent has to be the other tenth.  It is awfully hard to misinterpret events if the intent was clear.  I will often times use a non-committal letter of intent to fill in the blanks on any understanding that I have with someone on  a  Real Estate deal.

3) I don’t piss people off.
I don’t get in arguments on a $100,000 Real Estate deal over a few hundred dollars.

I seek first to understand what they want to tell me, and then let them know my position.

I try to sandwich bad news with two positive things.

I let them know that we are in it together and I am doing what I can and that I am always going to be fair honest and open with them.

I feel that the main reason that people end up in court is that they get upset because they feel that hey have been taken advantage of, or wronged in some way where the other party will not make it right.

4) If I wrong someone, I make it right.
Often times I will go above and beyond to make it right.  I believe that there is a certain inertia or stickiness to the way a person feels about you.  If they like you it takes a lot for them to not like you, if they don’t like you it takes a greater effort to make them like you again.  By doing more than what is expected to make something right, you can overcome the inertia of dislike.

5) I keep my properties in LLC’s and Hire out much of the work I need done.
In order to be sued, you either need to do something, or have something.  By keeping the properties in separate LLC’s or land trusts I limit the amount of exposure that any one property has. By having others do the work, I limit my own personal exposure to lawsuits, by not creating damages or negligence through my actions.

While nothing can keep you completely safe from getting sued, I think these things have helped to keep me on the plaintiff side of the courtroom.


Taking on the language barrier as a landlord

February 3, 2009


Taking on the language barrier as a landlord.
by James Miller

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I have had two semesters of Spanish in high school. Since that has been over twenty years ago, I now know just enough Spanish to unintentionally insult someone or get arrested in Tijuana.

I am guessing that this topic will be a foregone conclusion in places like California, but here in the Midwest I am finding that intolerance and discrimination is indeed prevalent in my local rental area, and there are lots of qualified Hispanic tenants who are being turned down because their primary language is Spanish, and the mom and pop landlords don’t know how to deal with this.

I find that many of these landlords characterize all Spanish speaking people as “Mexican”, and seem to believe that letting in Hispanic people will cause their apartments to become run down and create all kinds of trouble.

I realized that because of this, catering to English as a Second language (ESL) tenants was basically an untapped market.

When I started taking on Spanish speaking tenants, I also found them to be some of my best tenants. Rent was paid on time, apartments were kept very clean, and I even see that the majority of them who take their shoes off at the door.

This wasn’t always the case, but in my experience I had a better than average experience with my Non-English speaking tenant base.

The only time a problem arose was when I needed to communicate with these tenants.

Here is what you will need to do as a landlord or property manager to bridge the language barrier:

1) The first thing that I needed was a translator.

There is usually someone in their life who can communicate in English fairly well. Often times they are in contact with professional translators who can get the job done. many times job placement agencies have people who are fluent in both languages. Then there is also the local high school Spanish teacher.

Many times they will jump on this opportunity, and can become a faithful resource if you compensate them modestly.

2) Get the leases changed over to Spanish.

I am not sure of the legal ramifications of a ESL tenant signing a lease written in English, but getting the lease changed over is a one time cost for something that can be used over and over again.

3) Use written communication.

I use freetranslation.com, which can translate into several different languages. It doesn’t always translate everything 100% correctly, but gets the general idea across.

After having tenants laugh at something I had translated using this service, I figured out that using a two step English to Spanish, then Spanish back to English translation lets me verify if there is anything that can be potentially confusing or embarrassing.

4) Don’t be afraid to try.

Not knowing a language can be intimidating, but I found that we can communicate quite a bit with some broken words and pointing. Even though they all have my phone number, most of the time my Hispanic tenants will wait for me to stop by the apartment building and pull me aside if they have something that needs to be fixed.

The language barrier also helps to reduce nuisance calls, as ESL tenants will take care of the issue themselves if they can.

Some of my English speaking tenants will call me for just about anything. I have received calls asking me to replace burnt out light bulbs in apartments (even though that is their responsibility), or how the neighbor doesn’t always put his garage door down. yes, true story.

5) Make an effort to learn some key words in Spanish.

Don’t give me the “They should speak English if they want to live here” routine. That isn’t even the point. The point is to fill the apartment wit the best qualified tenant that you can.

By at least partially learning another language, you are opening yourself up to a ever growing tenant base.


Cash on Cash Return vs. Internal Rate of Return

February 2, 2009



Cash on Cash Return vs. Internal Rate of Return

by James Miller

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Cash on Cash
Cash in Cash return, or Return on Investment (ROI)  is the easiest Rate of return to calculate. It is also the one I use the most often as it tells me what the money is generating with regard to actual cash I can put in my pocket today.

To calculate it you take the amount you are getting from an investment, typically on an annual basis,  and divide it by the amount you have invested. Multiply this number By 100 and you have a percentage representing Cash on Cash Return.

For example if I have $10,000 in a property that is netting $100 per month, I am getting $1200 per year on my $10,000.

I divide the $1200 by $10,000 to get .12   I multiply this number by 100 to get my percentage of 12%

As you can see, cash on cash is a pretty simple and straightforward calculation. But what if we want to take into account the amount we are paying down on the loan each month, or the appreciation of the property?

Internal Rate of Return
Internal rate of return (Sometimes called Annual percentage yield) is the total true return on an investment taking into account depreciation, appreciation, and equity gained from paying down the debt.

It is much harder to calculate, as items such as depreciation depend on your taxable income. You also have to make some assumptions with regard to appreciation until a property is actually sold and that number is known.

This calculation is typically done over a holding period of 3 to 7 years. The period is usually fairly short since IRR typically decreases as time goes on.

If we take the example above assuming the following:

1) Home is worth $100,000.
2) I can depreciate 3% of its value the first year,
3) I am in a 35% tax bracket.
4) That property values have appreciates at 6% that year
5) I am paying down $100 per month toward the principal on my mortgage payment.

We get the following:

$1200   Cash on Cash return from above
$1050    Depreciation ($3000 Depreciation X 35% tax bracket)
$6000   Appreciation ($100,000 X 6%)
$1200   Principal Pay Down ($100 X 12 Months)
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$9,450   Total Internal Return

As a percentage:

$9450 first year IR divided by $10,000 initial investment = 94.5% IRR the first year.
Keep in mind that this is not spendable cash. Appreciation was our biggest number and it won’t be realized until we sell the home.

I have found that if I am doing well with regard to cash on cash return, my IRR Is going to be a better number. This assumes that there are no deferred maintenance issues and that I am not going to sell the property at a loss.


How to search for a property deal on Craigslist

February 2, 2009


How to search for a property deal on Craigslist

By
James Miller

Craigslist is great for searching for just about anything, but the problem Real Estate Investors face is that Craigslist is divided into Cities.  If I want to search for homes for sale I have to check four different cities in my area.

The tools:

I stumbled on a web site that allows you to search multiple cities at one time on Craigslist. This site is Craigshelper.com.

Besides searching for items on Craigslist, you are able to see what is availible on Ebay as well.  As of this writing it looks like there are plans for them to add functionality to the site so that you are able to search Kijiji and Backpage.

Craigshelper has a location for you to type in the zip code that you want to search around and a cool little slider you can use to specify the radius of the search.

As powerful as Craigshelper is there is another Craigslist tool called Ad Notifier for Craigslist that will alert you  the moment someone posts something on Craigslist that fits the criteria you have entered.  There is a video on the site that shows the software in use.

Here is a link to a screenshot of someone who has used it to search for anything with the word “free” in it.

You can even configure Ad Notifier for Craigslist to text your cel phone when a match is posted.

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Search terms are vital.

Instead of using generic terms like “homes for sale” or “ranch home” that focus on the properties,  I use search terms that locate the motivated sellers.

The follow search terms may be useful for finding people that need to sell their property:

“Motivated seller”

“will finance”, or “Owner will finance”

“seller will carry second” , or “Seller second available”

“Take over Payments”

“Owner Desperate”, You may get more than just property with this type of search.

“Homeowner must sell”

“house must go”

“All offers welcome”, or “considering all offers”

“will sell on terms”, or “terms available”

“will sell subject to”  although this is rare to find.

“OBO”, or “Or Best offer

“below appraised value”

“will sell for what I owe”, or “will sell for what is owed”

“Assumable”

“flexible seller” , or “Flexible terms”

“creative financing ok”

“please help”

“Lease Option”

“rent to own”

This is not an all inclusive list of terms to search for motivated sellers but will certainly get you started.


The big picture on how to get property moving

February 1, 2009



The big picture on how to get property moving

by James Miller

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My thoughts on the Real Estate, and economic,  slow down is that people in today’s society are truly only worried about the monthly payments on their obligations.

The amount of debt doesn’t really bother most people as long as they can get what they want and keep up with those payments.

It is my contention that the only real way to trigger the sale of property thus kick start at least the Real Estate economy is be keeping interest rates low.

A low interest rate on a mortgage means a lower monthly payment, and the ability for people to afford a larger home.

We got into trouble with easy mortgages earlier when people were allowed to jump on teaser rates that increased after a short time, or negative amortization loans that deferred interest by adding it onto the principal balance.

When the other shoe dropped and these payments went up, borrowers faced the hard truth that they were unable to afford the home that they had bought, even though they were “qualified” for it.

I am not suggest that we bring back those sort of loan programs, but instead that inroads are made to keep mortgage rates low.

I would much rather see the government spending money and effort to keep borrowing rates low than spending money on a bailouts.

It is an economic fact that home buyers also spend money filling thier homes with durable goods. In this way a home purchase has positive rippling effects through the economy by creating demand for more tangible goods.

I have also heard (but fail to cite reference to)  that a manufacturing dollar cycles through the economy seven times, as the manufacturer of durable goods needs to pay those who make his raw materials and that company must do the same.  This creates jobs in many industries.

Compare that to a “service” dollar that makes only one go around in our economy, right into the pocket of person providing the service.

Think of an accountant or barber.  There are no other materials that go into their product outside of their effort.

It is my hope that the powers that be realize the biggest bang for our buck will be through the continued reduction of interest rates.

Please feel free to share any thoughts you may have with regard to this idea.


Real Estate Negotiating – Harnessing the power of questions.

January 30, 2009



Harnessing the power of questions


by James Miller

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Did you ever notice how the cops on the police dramas get so upset when the person they are interrogating asks them a question?

Who hasn’t heard a TV cop yell “I’ll ask the questions around here!”?

Ever wonder why it was so important that he ask the questions?

Asking a question gives you an advantage in three ways:

1) It causes the other person to come up with an answer.
From very early on we are taught to answer questions.  Throughout our years of schooling, there were always people of authority, mostly teachers, and parents, who required us to answer a question. If we gave the right answer we received praise, if we answered incorrectly, we heard a “no”. This incessant questioning, while forcing us to learn, also ingrained a deep-seated need to be right.

It is this “need to be right” that drives us to answer questions today.

As soon as we hear a question, there is a reticular activation mechanism in our mind that starts searching for an answer. This focuses the mind to find an answer and detracts you from things such as creating a question of your own.  It stops us from thinking outwardly and causes us to search inwardly for an answer.

If you want to see how motivated we are to answer questions, try this game:

You and a friend take turns asking each other questions as fast as possible. The questions don’t have to relate, or even make sense, but you can only ask a question. As soon as someone says anything other than a question, they lose.

Try it, you will see that this game shows how difficult it is to not answer a question that is asked of us.

2) Questions direct and control the conversation.
Questions require us to explain, which directs the flow of information. Once a topic has been changed it is awkward to change it without using some sort of segue.

In order to control and redirect the conversation you should get good at using a segue to transition to another topic.

Some of the segues I use most often are:

“I know this is off topic but,…..”
“By the way…”
“Before I forget….”
“I hate to interrupt but….”
“I’ll get to that in a second, but the first thing I need to know is…”

These phrases lighten the blow by acknowledging the impending change in topic.

The interesting part is that you can use them in lieu of answering a question to ask your own. This has the double impact of deflecting their question and redirecting the topic of conversation.

3) Questions buy you time.
When the other party is scrambling to put their information together in order to answer your question, you can be using the time to do your own due diligence.

One of my favorite Donald Trump stories is how he did this during negotiations on a building purchase.

Donald realized that he didn’t have all of the information he needed to continue with negotiations. Instead of revealing this point and asking for more time, he challenged the other party, asking if the knew the true history of the building they were trying to sell. The other party quickly ended the conversation and asked to get back to him at some other time.

Donald had no knowledge of any problems with the history of the building, and didn’t specifically state that he did, he just asked a question that gave him the time he needed to get his ducks in a row.