Most real estate investors think they’re competing against other local investors. But that’s not quite true. In reality, all local real estate investors compete against Big Tech companies in Silicon Valley.
And it’s an unfair competition. These Big Tech companies have an unlimited amount of money. They even take losses on deals as long as it gives them “top-of-mind” status in the minds of sellers.
That’s the bad news.
The good news?
You have access to something Big Tech companies will never have: Your personal values. They can’t compete with your personal values because they’re trying to scale — and personal values aren’t scalable.
In this episode, I’m revealing how you can leverage your personal values to make Silicon Valley behemoths irrelevant (even though they have access to a bottomless pit of money).
Listen to the episode now to discover how to gain a permanent competitive advantage over these companies.
Show highlights include:
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You're listening to the “REI Marketing Nerds” podcast, the leading resource for real estate investors who want to dominate their market online. Dan Barrett is the founder of AdWords Nerds, a high-tech digital agency, focusing exclusively on helping real estate investors like you get more leads and deals online, outsmart your competition, and live a freer, more awesome life. And, now, your host, Dan Barrett.
Dan: All right, hello and welcome to this week's episode of the REI Marketing Nerds podcast. As always, this is Daniel Barrett here from AdWordsNerds.com. As always, if you want someone to help you put together an online marketing strategy for your market and your real estate investing business, then you can go over to AdWordsNerds.com/strategy, and we will hook you up. Once again, that's AdWordsNerds.com/strategy. [01:11.4]
Now, you could probably tell, my voice is a little raspy this week. I had my kiddos to myself over the weekend. My wife was away and I will say I did a good job. I did a very good job being a full-time dad and I enjoyed it very much, but at some point we'll just say that I raised my voice several decibels too loud and kind of blew it out, and so now I'm a little raspy, but that's how it goes sometimes.
This week I want to talk about personal values and I want to talk about your personal values and how that impacts the kind of marketing that you do for your real estate investing business. I bring this up not because I'm going to give you some kind of hoity-toity highfalutin speech about ethics and marketing and mindset and this kind of stuff that's, we'll say, on the softer side. [02:14.3]
I'm going to route this discussion purely in the practice of making effective marketing for motivated seller leads, okay? That's what this is about and the reason that it is about that has to do with the fact that our industry, this real estate investing industry, that you and I are both in.
Obviously, I am a service provider. I run a company that does marketing for real estate investors, so investors are my only clients, so obviously what impacts investors impacts me very directly, but obviously you, too. If you are a real estate investor, you are knee-deep in this industry of ours, and our industry is in the middle of a very real shift, a very real transition that you have to know about and understand in order to craft effective marketing. [03:05.3]
I've talked about this before. I've talked about this on multiple other podcasts. I've talked about this on this podcast, but if you haven't heard me talk about this, what I'm talking about is the shift of real estate investing as a market where all you needed to do to market effectively was tell the seller what you did.
You think about the classic forms of real estate investing marketing, which still work today, right, still great. But the yellow letter, the bandit sign, the postcard, what do all of those things have in common? Essentially all they do is tell the seller that you buy houses. A bandit sign, literally, most of the time, just says we buy houses on it. [03:50.2]
That is the definition of what Eugene Schwartz would have called a Level 1 market, which is just a market where the client or the customer, or the seller, in our case, is largely unaware that investors exist, and so all you need to do to market yourself in that kind of market, that kind of industry, is simply tell them that you exist. You say, You have a problem. I have a solution. You've never heard of this solution before, but here it is. All right, that's a Level 1 market.
For decades, decades, really, since the beginning of this kind of current iteration of real estate investing, the way that we all think about it with wholesaling and fix and flip and all this stuff, this has been the way that it has been. Every piece of marketing just says, We buy houses, okay? That's all you needed to do. But at some point in the last, let's say, five to eight years, it's hard to pinpoint it exactly, our industry started shifting and it started shifting towards a Level 2 market. [04:58.4]
The Level 2 market, as defined by Eugene Schwartz, one of the greatest direct response marketers of all time, in the Level 2 market, it is no longer enough to say that you exist and you have a particular solution to the seller's problem because they already know that now.
In a Level 2 market, it becomes a matter of saying, Here is why you should sell to me rather than to another investor, rather than to Zillow, rather than to Trulia, rather than to Offerpad, rather than to Opendoor, rather than to Knock, rather than to sell it on your own.
What we are doing is competing against other people offering similar solutions and it becomes a market in which differentiation, which just means telling people how you’re different, differentiation is the critical component of any piece of effective marketing. That’s where we're at right now. [06:07.8]
Now, I would argue that the vast majority of real estate investors do not understand that this has occurred. There are a lot of people right now with their heads in the sand, pretending that all they've got to do is put up a bandit sign and people are going to start dropping cherry-picked sweetheart deals on their doorstep, and if you have done any marketing in this market over the last couple of years, I think you would agree that is not the case. Maybe it was. It no longer is the case right now. All right, it's very different.
How does this connect to personal values? Let's talk about differentiation. There are lots of different ways you can differentiate your business, your service from your competitors, and therefore pull a greater percentage of sellers with your marketing. Right, there are a lot of ways to do this hundreds and hundreds, if not, thousands of ways to do this. [07:05.2]
Copywriting history is filled with incredible copywriters doing this left right and center, but I think one of the most important ways for you specifically to do this is in the playing field of personal values. By personal values, I just mean the beliefs, the ethical beliefs, the political beliefs, the economic beliefs that underlie your behavior and drive you to do certain things instead of other things. While that sounds kind of high level, here's why I think this is important.
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When you look out at your primary competitors over the next five years, who are they likely to be? Now, certainly you are competing against other local investors, for sure, but local investors as a group are primarily competing against Silicon Valley venture-investment-backed tech companies. Zillow is a tech company. Trulia is a tech company. Knock is a tech company. Offerpad is a tech company. They operate with very different economics than you do because they don't care about losing money in the short term. [08:54.1]
They have lots of investment capital stashed to the side and the game that they are playing is they want to become the Google of real estate, and they're willing to lose money, willing to lose money on a deal in the short term, if that means that that seller comes to associate their brand with selling a home online, and so they're just trying to knock everybody else out of that game. They don't care about the short term. They've got money in the back.
Now, if you are a local real estate investor, I mean, I don't think you can play that game. My clients, in general, certainly aren't willing to play that game where they just lose money on every deal in order to eat market share. If you can play that game, great, but I'm going to assume from this point forward that you don't have bottomless piles of cash stashed off in your bank account. If that's the case for you and you need to actually make money, how do you compete against a competitor for whom the economics of every individual deal are profoundly different? [10:01.5]
There's a couple of different ways. The primary one is getting the seller to know, like, and trust you. Now, this is a classic marketing formulation, know, like, trust. People do business with people that they know, that they like, and that they trust, right? We’re not talking about competing purely on economics. We're not talking about saying, I have to have the best deal when I walk into every seller's home. Otherwise, I'm going to lose that deal, because I don't think most investors can play that game, at least, not for very long.
What we need to do instead is play the game of making the seller know, like, and trust you, because when the seller knows, likes, and trusts you, they will very often, maybe not every time, but very often, prefer to work with you and sell to you, even if you are offering them less upfront. [11:04.5]
Now, the question, of course, becomes, how do I get someone to know, like, and trust me? and there are many different ways. Again, history of copywriting, there are so many different ways to attack this problem. But I think one of the most profound ways is by expressing in your marketing, in how you do business and how you talk to people in your marketing assets, like your website and your postcards or whatever, expressing your personal values.
Your personal values because, if people think, if people feel intuitively that you are operating on a similar moral playing field, a similar ethical playing field as they are, they are more comfortable engaging in a complicated and expensive financial transaction with you. This is not some lovey-dovey thing where I'm telling you, Hey, it's good karma. I'm telling you that people are much more likely to do business with people that they think have similar values to them. [12:08.4]
That is a completely rational, perfectly rational way of looking at it, because, of course, if you and I have similar values, I know what to expect from you. I might expect you to hold your word. I might expect you to follow through with your promises. I might expect you to have my best interests at heart. Similarly, I might get a better offer from someone else, but if I don't think or I don't know that they share my values, I'm going to perceive that transaction as having significantly more risk. So, sharing a set of values, sharing a set of ethical beliefs and ethical assumptions decreases the perceived risk of the transaction. [12:59.4]
Now, this is a thing that offer patent Zillow, Trulia, Opendoor, Knock, and all these other companies simply can't do, or I shouldn't say they can't do it effectively. And why can't they do it effectively? Because they are trying to operate at scale, and ultimately this is not a method that can be done at scale. It is a method that must be done face to face.
When you send out an ad or a text or a voicemail, or someone from your team goes to talk to the seller or you answer a phone call from a lead, each and every one of those moments is an opportunity to express your values. If you can consistently express the values that are important to you, the sellers who share those values will be far more likely to work with you than to work with anyone else. [14:03.2]
The number one factor in this kind of approach to marketing, and I do think it is one of the most critical approaches to marketing that investors need to know about, the single most important thing is simply consistency. It's not doing it once and then forgetting about it. It's not putting your value, vision or mission statement or whatever in a Google document and then forgetting about it. It's waking up every day and living and expressing those values in every piece of marketing and in every contact with the seller that you do. If you can do that, that accrues over time into a massive competitive advantage over other people. [14:50.0]
There is a reason that people love and revere certain people in our society, whether that's Abraham Lincoln or Tom Hanks, or think of anybody who people just kind of universally love like the Rock or whatever. It's that, yes, those people might be funny or they might be talented, or they might have done great things, but largely it is because we feel like we share a value system with them. We identify with them in some kind of profound way, and that is an incredibly, incredibly powerful connection that you have control over and that your biggest competitors can't and won't bother to recreate.
We can all struggle with trying to beat the economics of these giant companies that are spending millions of dollars, just burning it every single day, because they don't care if they lose money. We can struggle, we can play their game, or we can play the game that we can play. We can play our game, and I'm telling you, if you can play your game by sharing your values with your sellers, you will not only do more deals, you will do them more easily and you will have more fun. [16:09.8]
I hope that makes sense. I hope that was useful.
Look, if you are not in our Facebook group, which is the REI Marketing Nerds Facebook group, I would love to have you. I'm in there every week, going live, posting content, posting guides. We're going to be posting a whole bunch of new tools in there to help you with your online marketing for real estate investing and for motivated seller leads, so please, please, please go over to AdWordsNerds.com/group and request to join—it is absolutely free—or just go on Facebook, type in REI Marketing Nerds, and you will find us.
As always, this is Daniel Barrett here from AdWordsNerds.com, signing off. I appreciate you and I will be talking to you next time. Cheers. [16:53.0]
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