Nicole and her company process over 150 short sales per month. They have taken the short sale process and streamlined it, closing short sales in 2-3 months vs 12+ months. Hear how she’s able to close them faster than most other sources. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
Best Ever Tweet:
“Scaling is not necessarily a good thing if you’re not doing it the right way” – Nicole Espinosa
Nicole Espinosa Real Estate Background:
- Author of “Short Sales Uncensored” and owner of The Short Sale Queen
- Her company processes over 150 short sales per month
- They are able to process short sales in any market
- Based in Dallas, TX
- Say hi to her at www.thessqueen.com
- Best Ever Book: Scaling Up
The Best Ever Conference is approaching quickly and you could earn your ticket for free.
Simply visit https://www.bec20.com/affiliates/ and sign up to be an affiliate to start earning 15% of every ticket you sell.
Our fourth annual conference will be taking place February 20-22 in Keystone, CO. We’ll be covering the higher level topics that our audience has requested to hear.
TRANSCRIPTION
Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless. This is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Nicole Espinosa. How are you doing, Nicole?
Nicole Espinosa: I’m good. Thanks for having me. How are you?
Joe Fairless: Oh, I am glad to hear that. It’s my pleasure and I’m doing well. And a little bit about Nicole – she is the author of Short Sales Uncensored and the owner of the Short Sale Queen. Her website is thessqueen.com. Her company processes short sales in any market, and in fact, her company processes over 150 short sales per month. She is headquartered in Dallas, Texas. With that being said, Nicole, you want to give the Best Ever listeners a little bit more about your background and your current focus?
Nicole Espinosa: Yeah, absolutely. I started in the real estate industry with foreclosures with REOs (real estate owned transactions) and I really learned about how the banks worked and operated. I hated working for the bank directly as my client, but learned so much about really how to get around things, how they worked, and had relationships. This is back in 2008-2009 when the market was heavily saturated with foreclosures.
At the time we were evicting people… I was in charge of pretty much all of the worst things we had at the time. It was definitely a learning curve, but after a couple of years I got licensed, and the first deal that I did as an agent was a short sale. And there was so many misconceptions of what to do, and those agents – and even my broker at that time – was telling me “Don’t waste your time.”
When it comes to short sale specifically, because it is such a different world than normal transactions, most people don’t understand how to facilitate the transaction or really understand how it works. So I spent pretty much my entire career just educating so that people would feel equipped to at least know how to guide their client or guide a potential seller in that transaction. So I did my first listing, that was a short sale, and I’ve been doing it ever since. Just a lot better now that I spent some time.
Joe Fairless: Well yeah, you do a lot of them so that would make sense – 150 per month. And in your bio you mentioned that your company processes over 150 short sales per month. What does that mean, you process 150 short sales a month?
Nicole Espinosa: It means we have a constant flow of properties closing and properties coming in, but in our inventory we are working actively with the bank on these listings to get approval. So right now for example, we have 151 listings. And when we launched nationwide – we are in about nine to ten different markets right now, it will be ten this month… So even though we have the ability to process in every market, and obviously we are not in every single market, definitely when we went nationwide, I don’t think we expected to grow this quickly. Just a year and a half ago, we were doing 30 to 40 a month. So to go from that many sellers, to scale that much has just been definitely an adventure.
Joe Fairless: Oh, I bet.
Nicole Espinosa: Because every state is different, and every bank has different requirements. For me it’s just been on how to navigate the different states and different markets that we are in. But that’s essentially what that means, that we are processing over 150 – it’s that we have that many listings in our pipeline, that we are working with investors and other realtors.
Joe Fairless: How much do you make on average per deal?
Nicole Espinosa: Our minimum is $5,000 on each deal. And I think when I was doing the numbers for 2019 in the last couple of weeks, the average commission with fees and everything is about $7,500.
Joe Fairless: Wow, okay. So, $5,000 times 150, that’s $750,000 a month. And at $7,500, that’s $13,500,000 in a year. How much of that is profit?
Nicole Espinosa: We don’t close 150 a month. We are processing that many [unintelligible [00:05:21].03] how we have in inventory, but we are two to three months out on the short sales. The average short sale closes in about a year, for most agents. For us, our time frame is two to three months, because we are highly focused on this. We are not like traditional agents, where we are working with the buyer, and working with the seller – no, this is all we are doing. I have a staff of eight people. I have negotiators, I have an office manager, I have VAs who are calling the banks just to say “Hey, did you get our email?”
Joe Fairless: [Laughs]
Nicole Espinosa: Seriously, that’s our operation. We try to do as much as we can to be proactive instead of reactive, so that way we can stay ahead of it, and we try to anticipate what the bank is gonna need before they ask. So that’s why our process is so much faster. Average closings, we have about 30 a month.
Joe Fairless: Wow.
Nicole Espinosa: So that’s the average closing that we are doing. Last month was our biggest month, we had 32. And now that we are consistently getting more inventory, now our new goal is 45 a month. So as much inventory as we have, we are trying to increase our closings.
Now, unlike other contracts – like if you are wholesaling or just in a traditional contract with a seller, you usually can anticipate the closing date, because you put a closing date of 30 days, or 45 days. With short sales, there is no way of knowing.
One short sale we could start at the same with another, and then one could close in two months, the other could closing is four… Because there are so many variables, and every lender is different, and every lender has a different process. So that’s why we do such huge volume at a time, because like I said, it could be one month we close 50, because we have more at the same time… So that’s what how we have to do with such a high volume, because we don’t know when they are going to close.
Joe Fairless: It’s going to be really interesting talking to you about the different states, and the banks, and then how you scale… We are going to get into that. With the closings now – you said you do about 30, and that’s $7,500 per closing on average; 225k times 12, that’s a 2.7 million dollar business. How long have you been doing this, remind me?
Nicole Espinosa: I’ve been doing this for nine years. It’s going to be ten next month.
Joe Fairless: At what point was it a million dollar business? How many years into it?
Nicole Espinosa: I’m going to be very honest, because I am very straightforward – last year.
Joe Fairless: Last year? Wow… What was the tipping point?
Nicole Espinosa: Here’s the deal, I’ve learned so much these last couple of years of how to really focus on becoming profitable… Because I think everybody’s vision — as an entrepreneur, I think people are so focused on growing. We do really well and we are “Let’s scale”, but scaling is not necessarily a good thing. Sometimes growing just means that you are spending more money if you are not doing it the right way. So for me, I am a visionary. I see the bigger picture. I want to take over the world. I’m like, “Let’s do this in every market” or whatever, because I know our value and I know that we are good at it. But I have failed so much when it comes to spending too much money, investing everything back in the business, spending money on the wrong hires… So we are having rehire, and all that.
The tipping point was I started my business all over in October of 2018, and basically fired everyone and took everything back, because I realized that I had this cap to my business because of the employees that I had. They could only grow to a certain level, and they were great at the time, and I had a great culture, but they just didn’t have the capability to grow with me. So I had to take a step back.
Joe Fairless: What made you realize that?
Nicole Espinosa: I wanted to quit, and I was so frustrated because I was in every part of my business, and I couldn’t understand why I couldn’t grow. I couldn’t understand why I was so stressed out, working 80 hours a week, when I had so many employees.
Joe Fairless: How many did you have?
Nicole Espinosa: At that time I had four.
Joe Fairless: Okay.
Nicole Espinosa: And I was like, okay if we are doing 30 to 40 a month that we are processing – and processing, not closing; we are closing only like ten or eleven a month… And I was like, why am I so stressed out if I have people? And know it because I wasn’t hiring intentionally and I was promoting people based off of loyalty and based off of just the culture that we had. And I read Scaling Up, and I started really investing in personal growth. I am like okay, “What are my weaknesses, what are my strengths?” and started reading books that were totally opposite of my personality. And when I read Scaling Up, it said something like “One thing. It only takes that one thing.”
Joe Fairless: Yeah, it does.
Nicole Espinosa: It’s like this light bulb of like, “Okay, wow. That totally resonated with me.” And maybe people have told me this before, but it was just in a different way that it didn’t connect with me. So I read Scaling Up and it said this powerful statement, “If you look at your organization and you look at your employees, would you rehire them?” And I started picking apart and I was like “Oh my God, I wouldn’t.” I love these people, but oh my gosh, I am having to micromanage, and I am not even empowering them because I am so worried that they are going to screw up, or whatever… I had these bodies in these roles, but they weren’t taking ownership of them, and it was basically me doing everything.
Joe Fairless: What a powerful question.
Nicole Espinosa: Yeah. I tell people all the time, “Look it is so hard because we as individuals, we tend to gravitate towards people that are like us.” And if we hire that way, we will never grow, because we need people that are the opposite of us. We need people that are going to be better in certain areas where our weaknesses are. And the only time we can do that is to very self-aware of what we are good at and what we suck at. And most people just focus on what they are really good at. It was very, very humbling. Being in the business for a while and…
Joe Fairless: You fired all four?
Nicole Espinosa: Oh I fired everyone, including my VAs, too.
Joe Fairless: What was that like?
Nicole Espinosa: Oh man, high blood pressure… I was so stressed out. [laughs]
Joe Fairless: What’s a suggestion you’d give to someone who needs to go through similar process?
Nicole Espinosa: To just do it, because it will be more painful to continue to go the path that you are going if you have the wrong people. And you know what – what I noticed, when you say you fire someone, you assume that’s ugly, right?
Joe Fairless: It’s always a good thing, because they are not maximizing their potential as a human being or as a professional, because they are not in the role that’s best suited for them. So it’s a good thing.
Nicole Espinosa: Exactly. And they were so relieved and happy too, because they were only staying because they felt loyal to me. So they were miserable too, they just didn’t want to admit it, and they weren’t going to quit. So when I did let them go, it was just like this relief of like, “Oh my gosh, okay… I can do what makes me happy”, and had I identified the right role for them, maybe they would have stayed in the organization and thrived based on their skillset, not based on what I needed at the time.
So my advice would be just to do it. To take an inventory of the people in your organization and figure out are they truly in the right role? They may have the desire to do it, but do they have the capacity? And I don’t think enough people talk about that. It is not until you are in it that you fully understand how important it is that someone is capable of being able to grow with you.
And I do believe that there are certain people that will just be with you for a season, but I also believe that there are people that can stay with your organization and buy into your vision as long as you continue to provide opportunities and growth. There is no reason why they can’t grow with you.
Joe Fairless: So that’s half the battle, identifying that and then firing them, but the other thing you nailed, clearly, by taking that from 1 million to 2.7, is finding those right people, and making sure you qualify them properly… So how did you do that?
Nicole Espinosa: Well, I started with the foundation. Okay, I know my skill set, I know that I can build relationships… I think the important thing was that I knew every aspect of the job. In any given moment, if every single person in my organization quit, I could dive right in and do any part of the job. And I was like, “Okay, if I am gonna be able to go out there and build relationships and grow the business and bring in the business, then I need someone that’s gonna to hold down the fort.” I needed somebody that was going to be like me, but better, and be able to manage, because that was the other thing that I was terrible at, was managing. I am a great leader, but I am a horrible manager, because I have no patience. That’s why I can’t do it. Like, I don’t care just do it; just get it done. I am a great boss and I am very flexible in things like that, but the job has to get done. It’s very black and white for me. We can have the best relationship if you do your job. Besides that, if you don’t, none of us eat. For the bigger purpose, it doesn’t work for anyone. So I realized I need somebody that is a good manager.
So it was actually Facebook – on your Facebook Page you can create a job. So I put it out there as far as like an Office Manager, and I knew that I was looking for a unicorn, because not many people understand short sales, have never done them… So, anyways, fast forward, Stephanie who’s my office manager now, she was doing them for an investment company. And she applied.
It was one of those things where I kind of didn’t believe her… I was asking her certain questions, because I am like “Okay, if you’re BS-ing me, I am going to know.” And she was just amazing. What got me was that in my book — she was like “Yeah, I read your book.” She’s like, “I probably would have added this, this and this”.
1: [laughs] That’s good!
2: I feel in love with her. I was like, “Oh, my God.” So that to me — I mean, it was just such a great fit, because where she was at she wasn’t happy, and there was no room for growth… They kind of just took advantage of her. So we had the same vision as far as where we wanted to grow, same work ethic… And she has helped me so much streamline, where again, I don’t think systems — I do now, because I have thrown myself into it… But I was the type of person that — I am a very visual person, so I had my notebook, I would get leads, and I would write everything down to retain information. And then it got to the point where I was like, “Okay, I can’t do this anymore. I am getting a [unintelligible [00:15:20].00].” Facebook, and Instagram, and this and that… We needed one central place to be able to do it so there’s no balls that are being dropped. So we basically created the system that we have now. We use Infusionsoft, which is an awesome CRM database or whatever… But the biggest thing with that is that we were able to create a website.
If you go to helpmewithmyshortsale.com, you can literally enter all the lead details and then it goes right into Infusionsoft. So it creates a profile and it tags you as the ambassador [unintelligible [00:15:50] and it triggers a text to the seller saying, “Hey, Joe referred you over to us. When is the best time to connect?” And that way there’s instant contact, and we are not having to enter into it. It takes a lot of the steps out and streamlines it.
So that’s how we are able to scale – I basically looked at my organization as we started growing, and saying “Okay, what are the things that we are doing two to three times a day that we can put a system in place so that way it can go a lot smoother and we are able to scale it?” We spent almost an entire year just working out the kinks, because working with 30 homeowners a month compared to 150 is a completely different ball game. They’re so many humans…
Joe Fairless: Yeah, it forces you to scale, and you have to.
Nicole Espinosa: Absolutely.
Joe Fairless: Or it forces you to develop a system in place, in order to scale.
Nicole Espinosa: Yeah, and I would rather take less business than not do what but we say we are going to do. So it was very important to me that because my business is 100% referral, we are not marketing for these sellers, we are not cold-calling, we are not doing any of that. So if we are doing such a high volume, my reputation needs to stay intact, and saying “Hey look, if you refer this over to us, you’re trusting that we are going to take care of it.” And we are going to take care of this person and that most importantly will give you an opportunity to be able to buy these properties and have this whole other pipeline, so your marketing dollars aren’t going to waste.
Joe Fairless: Closing on around 30 a month now; your goal is in the short-term to be up to about 40 to 45, I believe you told me… The perception that I have – which is clearly not correct, so please educate me and perhaps other who are listening – is that short sales are not nearly as prevalent as they were when you started; that has to be a fact. But there’s still clearly a lot of them out there. So what it’s like being in the business now, and how are you getting this type of volume?
Nicole Espinosa: So I do believe that I have a lot of the market share because I specialize in this and because we are consistent. We’ve been doing this for so long, and most people they just do one day, and they do another… And they know – when they hear Nicole, they think either “The Short Sale Queen” or “The Short Sale Expert” or whatever. And that’s why when we went national, that’s why the company name is The Short Sale Queen, because that was my nickname in Dallas-Fort Worth for a really long time.
So as far as the difference, at the time when I was doing short sales and I was teaching classes and things like that before I wrote my book, everybody wanted to do short sales. Because once the REO market kind of dried up, short sales becoming more known and more prevalent. And then of course as the market starts stabilizing and getting better, everybody that was trying to dabble into it and realized how much work it was, kind of fell off.
But here’s the deal – there’s always going to be short sales in any type of market, because even in 2014-2015 when we started seeing the prices going up again and we started seeing all that, we were still busy, because people are always going to have a financial hardship. People are always going to put themselves in situations that they can’t get out of. So it was just different, because short sales were so big before because prices dropped drastically, because the market crashed. Now, as you shift to 2019-2020, it’s not so much about the prices going down, even locally, it’s turning into a buyer’s market which means sellers lose leverage – it’s not about that, it’s about clients who lost their jobs and get into a bad financial spot and then stop paying, because they are trying to do something with their bank. So if they are doing loan modifications, they are losing all of their equity. So at any point, if they have to sell, they are forced to do a short sale because they lost all their equity to the bank, because they haven’t been paying. Or they did do a loan mod, and it was a band-aid fix, and now they agreed — because when the banks do loan modifications, they add all of those fees to the back of the loan, and a lot of times they are extending the life of the loan. So they are paying into something where they are not ever going to get out of. So that’s why people don’t understand – if you don’t understand that piece of it, you won’t understand why they’ll always be here.
Now, I believe in the next year that we are going to see so many more short sales coming back, because we are seeing a lot of these loans that were done the last couple of years because people were desperate to become homeowners, get into 100% loans again. We are seeing a lot of like new builds that people were just getting into and not really thinking about it, and they were at their max of the monthly payment, and now it’s been a couple of years and something happened to where they can’t afford it anymore. We are starting to see a lot of those come up now, and I think in the next years, we are going to see a lot more.
Joe Fairless: When you take a look at the short sale process, what is the most challenging part of the process for you and your team?
Nicole Espinosa: The price. And that will always be across the board, not just with our company but just in general. Number one reason why most short sales fail is because of price… Because the banks, even more now that it’s been years and years where they have been doing short sales and they have short sale departments, they try to pretend like they are in real estate. They try to act like they know based off third-party valuation, like “Okay, this is the price.” Well, we know that price is relative, or it’s an opinion, because it really depends on what someone is willing to pay. So that’s why it is so difficult, because if the bank is trying to take as less of a loss that they can – they want to get as much as they can for the property. That’s probably the number one thing – how do we consistently adjust the process so we can stay ahead of being proactive. For example with us – if an investor refers something over to us, we let them know, “Do you have any repair bids, do you have anything that we can help us justify your offer?” Because if the property is in need of repairs and it’s something to where it won’t finance, it’s going to go to investor, because a traditional buyer cannot purchase it… So why not go to the investor that has relationship with the seller?
So we ask them, “Hey look, what do you have so that we can use as much as leverage as possible to negotiate with the banks?” and then get it to the appraiser so that we can show all that information and try to stay ahead of it. And then a lot of times that works, and then sometimes we get like the older appraisers that are stubborn and think they know everything, and don’t care, and we still have to dispute it with the bank… But we try to be as proactive as possible and get as much information upfront so that we can show that to the lender to have that as much leverage as possible.
Joe Fairless: Taking a giant step back, what is your best real estate investing advice ever as it relates to your area of expertise?
Nicole Espinosa: The best advice I can give is to capitalize on every single lead that you come across. I’ve been working with investors obviously for a very long time now, because 75% of my business is from real estate investors; the other 25% are from real estate agents who don’t know how to do short sales. So in working with a lot of the bigger companies and the bigger franchises or even smaller companies, a lot of times in training their acquisition teams and talking to them, they don’t understand that they need to be able to capitalize on everything. And I’m not saying to do everything, right? We can’t spread ourselves thin, we have to be able to be good at something, and highly focus on it… But if you don’t have a solution for everything that you come across, you are wasting money; you are leaving money on the table.
For example, a lot of times investors are just highly focused on properties with high equity. And they spend the money, they get a lead, they build rapport and then the deal doesn’t work, and then they walk away… Instead of trying to find a solution. Because at the end of the day, the sellers still has to sell. It may not work for your numbers, but how can you provide a solution to where you can still monetize it? And that’s the way you need to be; if I can’t do it myself, who can I outsource this to, to either still get paid, partner up with someone, but be able to recoup that? Because direct marketing is expensive.
You need to be able to provide solutions — and it’s not just about money, it’s about helping that person, because clearly, if they are coming to you, there’s a need to be able to sell. Something happened to them, they have to move on, especially if they are in foreclosure and they have some type of hardship. So how can you be that resource for them to be able to help them move on to the next phase of their life?
Joe Fairless: We are going to do a lightning round. Are you ready for the Best Ever Lightning Round?
Nicole Espinosa: Let’s do it.
Joe Fairless: Alright, let’s do it. First, a quick word from my Best Ever partners.
Break: [00:24:39].00] to [00:25:18].28]
Joe Fairless: Alright, Best Ever book you’ve recently read?
Nicole Espinosa: Rocket Fuel.
Joe Fairless: Rocket Fuel?
Nicole Espinosa: That’s right. I just got finished reading that one.
Joe Fairless: Okay. And I wrote down one that you’ve mentioned earlier, Scaling Up – would you recommend that one?
Nicole Espinosa: Oh, a hundred percent. I didn’t just read it, but I’ve read that at least twice. And if anybody is building a business, an actual business – you need to read that book.
Joe Fairless: Hey, that’s me. I am going to read that one, too. I will be buying that. And I think 99.9% of Best Ever listeners are building a business too, so there’s gonna be a lot of purchases with that one. What is the deal you’ve lost the most amount of money on?
Nicole Espinosa: I spent a year and a half helping an ex-husband – it was such a long story, but I lost 15k on it because we spent so much time and money working it and we never ended up closing.
Joe Fairless: It wasn’t a short sale?
Nicole Espinosa: It was a short sale, yeah. And we don’t get paid until it closes. And that was one of those situations where we did everything that we could, and I have such a big heart, I was like, “Okay, we can try this way…” And this is one of the situations where three people had passed away, so the heirs ended up being kids, which — you learn something every transaction. So you need [unintelligible [00:26:23].06] for those heirs, and there just wasn’t any more money to be able to pay for an attorney to do it, and all that. But we got this short sale approved three times. So we did what we were supposed to do, we just couldn’t sell because of the title, because everybody kept passing away.
Joe Fairless: What’s the deal you’ve made the most amount of money on?
Nicole Espinosa: The most money I made on one transaction was $55,000, and we ended up buying it. I found the deal – this was early on, and I ended up purchasing it ourselves and then flipping it… But there wasn’t much work that need to be done, and the loan was in default for so long that the bank literally told us, “If you just gave us this, you can have it.” And it was just a slam dunk. It was awesome. It was a reverse mortgage, and we need more of those.
Joe Fairless: Since you made a disproportionate amount of money on the reverse mortgage, and you said you need more of those, why not put 100% of your focus on getting of those deals, versus doing the short sales?
Nicole Espinosa: Well, in that case – it was a very rare case. Yes, absolutely we could hyper-focus on marketing to reverse mortgages, but… In this situation it was a bad note, and the bank could not foreclose on the homeowner. So the reason why we are able to get them so low – and it wasn’t even us fighting with them, it was us saying, “You’ve gotta do something” because the attorney could not foreclose it — I think it was almost ten years of being in default, where the homeowner had passed away and it was just sitting there.
So it was very rare, but we are focused on maximizing on every deal that we can. And I told you, my minimum is 5k, but we do make a lot more on a lot of the deals. We just have a minimum that we have to still be able to be profitable and work hard on these deals for the client.
Joe Fairless: What is the best ever way you like to give back to the community?
Nicole Espinosa: Honestly, educating. Being a resource for investors and agents. I’ve said this my entire career, I will have people that will call me just to pick my brain, and to help them even if I am not involved. So I do the best that I can to make myself available to professionals, because the way I look at it, I feel like money will always come. And if I can help you to help someone else, then that’s the most important thing, if you want to take it on yourself. If you don’t, then you are always going to have me to help you with it. So the best way I can give back is with my knowledge and to be able to help you, even if I am not directly getting paid from it, or whatever.
Joe Fairless: How can the Best Even listeners learn about what you are doing?
Nicole Espinosa: They can go on my website, thessqueen.com, and we are also on YouTube, The Short Sale Queen. We do videos every week.
Joe Fairless: Nicole, thank you for being on the show talking about how you scaled tremendously over the last 24 months… And the key is just fire everyone. [Laughter] The key is to…
Nicole Espinosa: That’s gonna be the title, right? Or the caption… [laughs]
Joe Fairless: Yeah, just “Struggling in your business? Fire everyone and start from scratch.” But it’s assessing what your strengths are, it’s assessing “Would you rehire the people you currently have in place?” What a powerful, powerful question that is; that really can get an entrepreneur thinking… And then building the right team members to go along the journey with them. And it’s knowing your business. If you didn’t know your business, then you wouldn’t know who to hire, how to hire them and what you need. It’s knowing yourself and your business.
Nicole Espinosa: I think self-awareness as an entrepreneur, as the business owner is probably the most important thing if you want to be successful… Because if you can’t get out of your own way, you can’t grow. Because we always have these blind spots, and I feel like that is then the key for me to keep growing, is understanding “I really suck at this, so I am going to continue to outsource, I am going to continue to try to develop and grow, and put people in place that are better than me, so that instead of being prideful or instead of saying “Okay, I got this..” And I did, for a long time. I was like, “Oh, I got this. No worries.” And it was more of just trying to get it done, instead of taking a step back and saying “I don’t need to reinvent the wheel, I also don’t have to be great at everything.” I can focus on my strength and then outsource the rest.
Joe Fairless: Thanks for being on the show. I hope you have a best every day, and we’ll talk to you soon.
