I don’t know why people are confused these days about the correct order in which to do a real estate wholesale deal. Oh wait. Yes I do. People are lazy and want to do as little work as possible and still make big bank. I get it. I understand the theory. There’s a better way to do things. Instead of being lazy, be productive and start outsourcing some of the things that will convert more sellers into leads. Let’s talk about what that might be.
Before I get on my soap box, let me make you aware that I know that there’s more than one way to skin a cat. I hate that adage, but it’s true. I know that there are people out there closing deals and making money by just throwing noodles against the wall and hoping that some stick. Good for you. I hope you can sustain that method for many years to come.
This article is written specifically for real estate wholesalers. For the purpose of focusing on the SELLER side of things, we’ll stick to the process that you should use to get deals under contract. And they ARE in a particular order.
FIRST: Generate Leads. It all starts with a good marketing campaign. It;s the life blood of any successful real estate wholesaler. The ability to generate leads is where it all starts.
NEXT: Pre-Screen Sellers. Determine motivation. Ask questions. Listen for motivated seller trigger keywords. Qualify these sellers for your program. EVERY SELLER IS NOT A LEAD.
THEN: Property Inspection. Go see the house! Check the condition. Know what you’re dealing with. Do some due diligence. Check the comps.
FOLLOWED BY: Make the seller an offer/negotiate. Once you’ve collected the information that you need, and you’ve seen the house, you can make the seller an intelligent offer. Make the seller an offer that won’t make you look like an asshole later.
THEN (if necessary) : Follow Up. If your seller doesn’t accept your offer(s) the first tim, then don’t consider them dead. Follow up with every seller that you have made an offer to. Create a strong follow up funnel that will convert sellers months down the road without any additional marketing dollars being spent.
FINALLY: Get the contract Signed. When you get to this point, it’s all downhill from here.
Can we talk? Let’s go back to the opening statement of my article. I said we were going to discuss the correct ORDER in which to do a real estate wholesale deal. Then I went on to mention that people are lazy and don’t want to work. So take a guess as to which step in the above mentioned process that people leave out?
If you guessed the Property Inspection, then DING DING DING! You’re correct!
Now before you get your panties in a bunch (because I know you will), hear me out. I ran some numbers on my calculator this morning, and based on the number of closed transactions that I’ve done since 1998 (about 700) and the number of leads that I would’ve had to talk to in order to get to that number, I’ve talked to about 38,000 sellers. I’ve been through the real estate crash of 2008. I’ve watched it recover and change back to a seller’s market (like it is currently).
I LISTEN to what these sellers are saying to me. Listening is why we have 2 ears and 1 mouth. So we can do less talking and more listening. And there was a short period of time when the competition was light. It was easy to get a deal under contract by slinging a noodle on the wall.
THINGS HAVE CHANGED IN THE LAST YEAR!
If your sellers are saying to you “I got 10 other postcards”, or “I have someone else coming to look at it”, or “I have a higher offer than this”, then you might want to take me a little more seriously.
When the sellers start saying this to you, realize that the market is competitive. There are other real estate wholesalers out there trying to get the same deal under contract that you are. They may even offer MORE MONEY that you are willing to offer, because they don’t know what they’re doing.
This is when you have to really start looking at your business from a serious angle. Realize that if you want to close more deals, then you’re going to have to do something different that these other guys are doing. You need to present yourself as a serious investor, who has a process. You need to go see the house (maybe not you but SOMEONE DOES), and make the seller an intelligent offer.
When you talk to a seller for 10 minutes on the phone and then sling an offer out there, how can that be taken seriously? We take it lightly as investors because we deal with houses and offers all day long. But when we’re talking to a seller, this is serious business. Real property is typically the biggest asset someone can own. You should present yourself as someone who has taken the time to look at the house, know what you’re dealing with and come up with an offer that makes sense. This will be more justified for both you AND the seller.
I’ve heard NUMBEROUS sellers says to me “Yeah, someone made me an offer, but they didn’t even come out and look at it”. OOH I LOVE WHEN THEY SAY THAT! I immediately take advantage of someone else’s stupidity and immediately set an appointment to come look. Then I use neuro-linguistic programming to let them know that I am a SERIOUS buyer, and validate their thought that the other guy must not be.
Also, we have proven this next fact to be TRUE: If you go meet the seller in person and make the offer in person, you will convert more leads into contracts! Just one more reason to get off your seat and go to the house!
So what makes me an authority on all of this information? Well, I have kept serious data on my business since 2010, and I’m very aware when changes need to be made by the responses I’m getting from sellers and buyers. I was the lazy one that was just making offers to sellers over the phone without ever going to see the house. Was I closing deals? Yes. But my numbers started to decline once the market started to pick up. I noticed it immediately. Once month went by and I blew it off. Another month of lowered conversion rates, and I took action.
KNOW YOUR NUMBERS, GUYS! Know how your business should be performing based on historical data. That data can be monthly, quarterly, or yearly. However you wish to analyze performance. When you see a change in the response rates, conversion rates, and close rates, then it’s time for you to make a change.
Join the M.O.B. today Our Property M.O.B. Membership has monthly Borgata meetings that break down business management and automation into great detail. You might be interested in one of our Meetings in the Archives, which is titled “Analyizing your Business Through Metrics”/ This will show you how to track every metric of your real estate wholesaling business and analyze whether or not it’s performing well. Join the MOB today and listen to this 1 hour call,and enjoy tons of other benefits of being a MOBSTER. Check out the Membership PackageJoin the M.O.B. today