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Real Estate Investing: Optimize the Follow-up Process

Real Estate Investing: Optimize the Follow-up Process

Do you close all the leads you get? Of course, some of the leads do not result in a closed deal. But have you ever made an analysis to determine why so many of the leads that land in your real estate investing funnel end up slipping through your fingers?

Some house seller leads simply can’t be closed because the property owner hasn’t decided yet whether they are going to proceed with the transaction at that moment. These deals are out of your control – you can’t do much to change people’s minds.

However, if there is a method that will help you improve the close rate on deals – and this is a method that’s completely within your control – you would like to learn it, wouldn’t you? Well, it’s usually either about your closing strategy or your follow-up process.

We discussed closing strategies in another piece, so now we will focus on follow-up processes and their effect on calculating ROI.

Return on Ad Spend in Real Estate Investing

We specialize in delivering motivated house seller leads and we’ve been bringing them to real estate investors for more than a decade. The ROI on the ad budget that gets set aside to acquire those leads differs. This is because the close rate is not the same for all investors.

 

Dan talked about this in the 18th episode of the REI Marketing Nerds podcast:

So one of the biggest things that I’ve noticed … is that the difference in success levels between investors that have a very consistent and systematic follow-up process and investors who mostly handle it as it comes, it’s just night and day… I can give two investors the exact same leads at the exact same time, and one investor will turn that into deals all day, and one investor will just really struggle.

And when our team took a closer look at the follow-up system of those investors who are struggling to close leads, we often found that there isn’t a system to begin with. These investors are trying to wing it – they use only one channel (‘Leads don’t answer their phone’) and they don’t take further action even though other contact details, like the lead’s email address, are available in the lead form. In some cases, real estate investors don’t follow up frequently enough (‘I reached out a couple of times’), they don’t track response rates, etc. Well, if you don’t have a follow-up method, you can’t expect to improve your close rate.   

The Adwords Nerds Follow-Up Principles

Closing leads is not really our thing (we are here to obtain leads, not to close them), but we do use follow-up processes in our daily operations. Although our clients are real estate investors like yourself and not people who sell houses, some follow-up principles are universal – they can be employed to improve sales in any business.

Before we head into the specific principles, let’s take a look at the fast-paced environment in which your follow-up message competes for the attention of motivated house sellers.

People Are Overwhelmed With Offers

The average internet user is inundated with private messages and exposed to thousands of ads each day. Messages are every way you go. They get email about discounts from the local store, Instagram ads about beauty products, friends share videos with them through TikTok, family contacts them on Facebook… It’s a lot of information to process for all of us.

As Dan put it on the podcast “..my mom leaves me voicemails and I don’t call her back [because I forget about the darn message].” This can happen to any of us (unfortunately no one has implemented the WUPHF system proposed by Ryan in the Office).

…And They Also Avoid Uncertainty

So, it’s easy for people to forget you ever tried to reach them on one of these channels. But, on top of that, the sales process depends on projecting certainty – and you control this aspect of the process. In the podcast dedicated to our follow-up method, Dan said:

 

It is much easier for people to simply try to forget about something and go back to what they were doing than it is to deal with uncertainty.

  • If they don’t know what to do next – it’s easier to quit!
  • If they don’t know where to click – it’s easier to quit!
  • If they don’t remember who is behind the offer – it’s easier to quit!

Think about the way you make a decision when you choose a service provider. Do you go to the dentist who just got their license or would you prefer to go to an expert? Of course, everyone wants dentists with experience. Also, if the dentist says something like: “Welcome, please take a seat, open your mouth and we’ll take it from there, I hope I can remember how to fix your tooth” most of us would run through the door.

You have to project certainty and confidence to close a deal. When it comes to sales in general, this is a vast subject, however, we examine follow-up principles for real estate investors, and eliminating uncertainty in follow-ups is simple.

The Three Step Follow-Up Formula

Dan shared our in-house formula for following up in the 114th episode of the REI Marketing Nerds podcast:

Thing number one, remind them how they got there. Thing number two, that you need to communicate what they should expect, what’s going to happen next. Then, finally, thing number three, to remind them of for crystal-clear communication, really effective follow-up and closing more of your leads.

This formula is great because it works for each lead in your CRM system. You can adapt the formula to be individually relevant to every house seller.

For example, when you remind people about their last contact with your real estate investing team, you can specify the channel (website), the method (filled a form), and the time frame (two months ago). Same applies to creating expectations – for some leads, the expectation will be to get property appraisal fast (days), for others, it will be to sign a contract within two weeks.

And don’t forget the third step: to offer a low commitment action that can be completed with as little effort as possible, preferably right away. Something along the lines of ‘Click on this link to redeem the offer now’ or ‘Call us on this phone number now.’ Every time you divert them to open a new window, or you make things more complex than they need to be, you are adding a layer of uncertainty.

Provide Guidance To Motivated Sellers

We all know what a motivated house seller means – it’s practically people in distress. They are fighting deadlines, they’ve just lost a loved one, or the property itself is in a bad condition, and being reminded of these issues is enough to produce negative feelings about the process.

Also, motivated sellers are apprehensive of real estate investors by default, because, as property owners, they are afraid that you want to rip them off to get their house at a discount.

Always keep this in mind – you must have special consideration about motivated sellers to be successful at closing these deals.

In a way, you need to provide guidance, especially when the objective is to bump the response rate to your follow-ups. If you don’t create expectations, and if you don’t present a step-by-step road-map that will take them there – you are likely to lose them. You need to show them the first and easy step they should take towards a solution, something they can complete right away.  If some other real estate investor does a better job at presenting a clear picture about the whole process, the house seller will choose them over you.

Automating the Follow-Up Process

We also talked with Dan Schwartz from Investorfuse about systematizing and automating follow ups. His advice on follow up-is more specific to the real estate investing workflow compared to the general principles we use (the ones we shared above), not least of all because Dan Schwartz has tried to optimize follow-ups through project management platforms like Podio, which is popular with real estate investors, even though Podio itself wasn’t originally developed for managing motivated seller leads.

We asked him to explain the philosophy behind Investorfuse, and he gave us the four principles that follow.

1. Response Time

Investors have to respond to a lead as soon as possible. If you are in the real estate investing industry, you already know this, but it’s worth repeating, because it’s central to getting a good follow-up response rate.

The lead is hot at the moment it lands in your CRM, and it stays hot in the next 5 minutes. As time goes by, the lead gets colder. I mean, you can call a motivated seller back the next day, and not within 5 minutes, but the likelihood to close that deal drops significantly.

Do you go through the day obsessing about responding to new leads within 5 minutes? Of course not. One neat thing you can do is to set up an automated message that will be sent to motivated sellers as soon as they provide their details. It can be an SMS message on their phone, or an email to the address they provided – just let them know that their action was noted in your system and your team is on it.

2. Automation

When we talk about follow-up automation we refer to much more than an automated message sent to new leads, like we discussed above. Follow-up automation is an elaborate system that is designed to make lead nurture intuitive. Dan Schwartz and his team are developing a system with an action-based algorithm, i.e. a client relationship management system (CRM) or a digital lead manager that forces you to schedule the next action in your follow-up process:

When you’re done with a conversation, are you going on an appointment, are you scheduling a reminder to follow-up in the future, are you going to create the offer right then there, are you going to assign someone else to create the offer right then and there? If you don’t actually program in that action step, then it’s just to slither through the cracks, like every other lead. And this is again, this is something that I learned the hard way. So what we did, and sort of my whole product mission with even when we were doing this on Podio is to force people to choose the next action, and it was hard to do that Podio because there’s workarounds where you can avoid that. With the new system, which we are coming out with now, it forces you to choose a next action and take one action at a time so that you really can’t mess up or lose track of leads. It’s crucial.

The automation will be as good as your CRM system. If the CRM allows detailed conversion tracking where the system notes the ad campaign that brought the lead into your funnel and then immediately assigns the next action and the team member who is responsible for completing the task, you can improve your close rate. You can further streamline the process by choosing the type of action (call, meeting, email), scheduling its completion (date and time), noting the outcome etc.

In essence, this is a follow-up algorithm, and this system will make sure you don’t forget to chase leads.

3. Lead Qualification

In order to put all your energy into closing deals, Dan Schwartz suggests outsourcing lead qualification. In simple terms: you want your every phone call answered, but you don’t have to do it personally.

There are many call answering services that can do this for you, though most of them don’t work with motivated seller leads exclusively. In recent years, a few call services that do real estate investing lead qualification popped up and CallPorter is one of them.

4. Frequency

You may need to contact a lead up to 7 times to close a deal. Now, this is not a hard science (some studies show that actually it takes 11 contacts to close), but that’s not the point. The idea is that real estate investors need to be persistent with the leads that have entered their funnel.

Dan Barrett (our Dan), says that you should follow up forever.

Reach out to house seller leads on multiple channels, and contact them frequently. That is, until and unless they tell you to stop.

Takeaway

Regardless of the marketing channels you used to get motivated house seller leads (Google PPC, direct mail, Facebook Ads), your ad budget took a dent so that these leads could land in your CRM. Once the seller leads are in the CRM, it’s an imperative for you to do your best to close as many of them as possible.

Take a look at your in-house processes to improve the close rate on real estate investing leads. Maybe you need to examine your overall closing strategy, or maybe you need to streamline your follow-up process.

When you reach out to motivated seller leads, make sure to

  • remind them how they got in your system;
  • guide their expectations from the interaction; and
  • give them one simple action that they can take right away.

If you want to take processing real estate investing leads to another level, consider introducing an action-based algorithm or a digital lead manager for your follow-up process. Respond as fast as possible, automatically schedule the next follow-up actions, outsource lead qualification, and be persistent.

Never give up on the leads in your funnel. If you put an elaborate follow-up process in place, the return on investment for house seller leads will improve.

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