Real estate investors go through a lot of trouble to find motivated seller lists because the success of the business depends on having them. If you don’t have a consistent stream of potential leads (an issue that is quite common for REIs), then you might benefit from checking out our guide on finding motivated sellers. However, the focus of this blog is on processing motivated seller lists, so we will assume that you already have them to begin with.
So you’ve done the work to obtain a real estate investor list. But where do you take it from there?
You need to put your business on the map. There are two ways to look at it – either you reach out to homeowners on those lists, or you make it easy for them to reach out to you. Since most REIs run small businesses with limited resources, and in theory there are so many motivated sellers out there, it’s best to have them call you and not the other way around. Of course, don’t take this for granted, because there is nothing wrong with taking a proactive approach, like cold calling or door knocking, to evaluate the potential for making a deal.
In essence, when motivated sellers contact you, you have an inbound lead, and when you introduce your business to homeowners, that’s an outbound lead. However, not every owner on that list is your lead – only the ones that are willing to give you their contact details are. To become a lead, they first need to become aware of your business.
A marketing campaign will bring your REI business in front of all these homeowners. But before you start drafting that campaign, you need to further specify your target audience.
Let’s quickly reiterate – what’s on those lists? You have tax delinquent properties, foreclosure properties, fire damaged properties, code violation properties, vacant properties, absentee owners, and many others, and they are lumped together in a category based on one feature (for example, their owners haven’t paid property tax).
Wholesalers would be interested in foreclosure and tax delinquent properties, while rehabbers would prefer to look into code violation properties and so forth. This doesn’t mean that you want to send your campaign to all owners on that list simply because the properties (or their owners) share the same attributes. In fact, you can probably exclude a large number of the items on the list due to specific criteria, like the neighborhood or the size of the house.
Some REIs want to cast as wide a net as possible in their marketing campaign, so they filter their lists with moderation. This is probably because they are concerned about leaving deals on the table.
The constraints (or limiting factors, whatever you like to call them) you place on your real estate investor list when you are after motivated sellers doesn’t have to be a bad thing, though.
This is particularly true for those REIs who source the lists through data services like Listsource or Propstream. But advanced filtering can also be beneficial to REIs who manually correlate data that originates from different sources to create a motivated sellers list. Let’s get into the nitty-gritty.
List filtering is part thought exercise and part statistical operation. If your thinking is creative, and your handling of data is efficient – you will mine deals from these lists in no time.
Take any given market. In a big city, there may be hundreds of thousands of properties that are for sale, but you only want to reach out to a thousand property owners.
You’ve probably heard about the “tired landlord list.” When creating this sort of list, generally you’d:
You started with an overwhelming number of properties, but after applying all these filters you probably have a thousand potential motivated sellers left on the list. Every additional filtering category will help to hone in on the items on the list that are worth your time. The more you filter categories, the smaller your batch of motivated sellers will be. In some cases, this is very good because it will not only save you money on marketing, but it will also allow you to focus on hotter leads.
Once you’ve narrowed down your audience, you can plan your marketing campaign.
The traditional way to do marketing in this industry was to launch a direct mail campaign. Sending out letters and postcards straight into the mailbox of homeowners still works to this day. You can do it on your own (there is a learning curve involved) or you can hire someone who has the experience with direct mail marketing for finding motivated sellers to do it for you. If you go DIY, bear in mind that you’ll have to sort out several issues:
You can learn more about the intricacies of direct mail for REIs from our article, where we shared all sorts of tips.
However, given the fact that a typical direct mail marketing for real estate investors has a response rate of 1%, (not to mention the costs and the delays associated with direct mail marketing), many are turning to the digital world.
Online marketing for REIs is all about inbound leads. Usually, the first step in establishing credibility as a REI is to make a good, well-designed website, and you can find great offers to help you maintain an effective online presence. A more proactive approach would be to build a social media presence. Both your website and your accounts on social networks are a great marketing outpost for targeting visitors with ads.
These online leads might not come directly through your motivated sellers lists, but keep in mind that many of the homeowners you reach out to are likely to check out your website or your social media accounts. For example, you send a direct mail to a homeowner on your REI list, they open your website and they fill out a form or subscribe to your email newsletter. You get the point – your online presence is an important factor in closing deals.
The campaign is out, and your phone will ring (hopefully), so set up a call center or use a system that allows you to be effective with processing incoming calls. When people call, your goal is to gather information to qualify the leads (or do some in-house filtering of callers). Ask things like:
… and similar inquiries along those lines. The use of scripts for call filtering is common, and it helps REIs to eliminate those callers who don’t fit their ideal motivated seller. Obviously, the type of questions you ask and the direction the conversation will take depends on the deals you are after.
The way you manage incoming calls is up to your in-house processes. But what if the phone doesn’t ring as much as you had expected? It’s not an encouraging prospect, but motivated sellers from those lists might not come to you – there is a real possibility of this happening.
It’s not the end, though. In that case, simply, you’ll have to go after them.
Pick up the phone and start contacting property owners from your motivated sellers list. It’s probably the easiest way to reach out. However, there are two issues with cold calling: the legal aspects of calling strangers and whether or not you have the skill set necessary to talk business over the phone.
Telemarketing is a legal minefield because many people don’t appreciate receiving unsolicited messages. Not from you, not from anyone else. There are laws that prevent intrusion of privacy and they don’t apply only to calls but also to SMS campaigns, recorded voicemail, and any other unwanted contact over the phone. So, before you use a phone to filter REI lists, read the fine print on these laws to avoid getting burned.
You can always find a workaround, though. For instance, skip tracing allows you to find the phone numbers of homeowners on your list. The downside is – this will cost you, not much for getting a single phone number, but if there are thousands of entries on your list, the money quickly adds up.
And then, of course, there are the unpleasant conversations.
The truth is that a significant portion of the cold calls might result in getting the caller (you) cursed out. Despite that, with so many successful business calls in the past decades, cold calling has become an art.
Sometimes, real estate investors use scripts to stay on track during a cold call with a motivated seller. If the homeowner on the other side of the phone is interested in talking to you, these scripts can help you close a deal.
Another tactic to increase the likelihood of having a productive REI cold call is to go for motivated sellers who expect calls. In essence, these are the phone numbers you got from expired ad lists or some similar source.
And if this doesn’t work, then, you can go and visit the properties.
In the most simple terms, door knocking is approaching motivated sellers at the property. Quite literally – you knock on their door. The first contact point for many closed deals is door knocking, but you need to have very good people skills (remember, you are dealing with strangers) because there is no second chance with this approach.
There are two possible outcomes: you either talk to a potential motivated seller, or the homeowner is not to be found at their house.
If you are greeted by someone at the door, and they are willing to hear you out, you have to be prepared to talk business. Consider different scenarios in advance – you can practice through role play – and be ready to determine your boundaries (for example, the contract terms you are able to offer) or the process you’ll use to assess if this is a deal you want to pursue. Sometimes, offers are placed on the spot, so whenever possible, do your research, at least some basic info, like knowing that this house is in tax delinquency.
Obviously, door knocking doesn’t work well for vacant properties or absentee owners. If nobody answers the door, you can leave your details, a prospectus or your REI business card, so that the homeowner can reach out if they want to. Do take into account that other REIs will come before and after you. While it’s a typical example of unprofessional etiquette, some of your competitors might tear down or take away whatever promotional material you’ve left at the door. One pro tip is to place your prospectus in a fake priority mail envelope – other REIs won’t mess with it, and the homeowner will open it immediately.
You have to establish follow up procedures to make the most of the real estate investing lists your company has. Don’t expect that these motivated sellers will call you back – if you’ve talked to them or met them, schedule a follow up in your CRM system as soon as the interaction is over.
Many deals are lost by skipping this step in the processing of motivated seller lists, so don’t let this be the case with you.
While the process for closing REI deals starts by getting a hold of motivated seller lists, there are many steps before both parties sign on the dotted line. The first step is to filter the list through categories that will make the rest of the process efficient. Real estate investors usually go for direct mail marketing, cold calling, or door knocking (or other methods) to reach out to potential motivated sellers. Online presence (website SEO, social media marketing, email marketing, etc.) will help build credibility and real estate data services will support your efforts. However, keep in mind that a diligent follow up process is crucial to close as many deals from the REI list as possible.
After all this, it’s up to the negotiation skills and business prowess of each individual real estate investor.
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