Here are mine stats. Keep in mind that these are for pre-foreclosures only. Returned letters come back as “No such number” or “moved and left no address” or whatever.
[] Total letters sent: 913
[] Returned letters: 72 (or 7.9% of total sent)
[] Corrected Addresses: 19 (or 26.4% of returned mail)
[] Total Delivered: 860
[] Number of call-backs: 14 (or 1.6% of total delivered)
[] Appointments: 9 (or 64.3% of total call-backs). The rest just never returned my phone calls.
What about you? I am mostly interested in the number of call-backs or “hit ratio” (mine too low? too high :o), but any other feedback is highly appreciated!
Usually a 1% response rate is considered the average for direct mail. If you’re doing better than 1% you’re doing a pretty good job.
I’ve always done postcards, but I’m now changing to sending fliers in envelopes first, then switching to postcards after that. I send mostly to pre-foreclosures, probates, and run down properties.
Dmitri, it would be interesting to know how many deals you closed. Number of appointments doesn’t mean a lot…
Sniper - you are right: closed deals mean much more than appointments. I am working on several deals right now, but none are closed. However, from marketing perspective, the best measure is the “hit ratio” or number of phone calls I received as a result of my letters. The reason is that I am trying to measure marketing effectiveness rather than “deal-making” effectiveness. In other words, my letter’s purpose is for the homeowner to call me. Whether it will result in a deal or not is a matter of the particular situation and, of course, my ability to close.
I am new to real estate investing and plan to invest more in marketing. However, before I do that, I want to improve my “hit ratio”. What’s yours?
Anyone else?
It sounds like you are on the right track. A 1% response rate is extremely high for markeitng refinance loans. I have done many campaigns and typically a .25% to .5% is expected with refinances. The next part of the formulas is what is your profit margin going to be. It makes a world of a difference.
If you send out 10,000 marketing pieces at .50 per piece and you recieve a 1% call return that equals 100 calls. Out of those, if you set 20% appointments that would be 20 appointments. And if you close 25% of your appointments, then your closings would be 5 transactions.
So lets recapture. 10,000 pieces = $5000.00
5 closings = per deal ??? Looks good on paper.
To increase your percentages you must have everything in place.
Example for refinance loans. Strong marketing piece, good data, qualified loan officers to take the calls, competitive programs to offer, strong support staff, and quick turnaround times. I hope this general concept helps.
i get 48.9% response and close 19.6567% per 1000 mail outs
beat that
Oh ok. For what? Free trash removal?
good one 8)
At the risk of sounding smug (not trying to), no one can tell you if response ratios are good or bad…want to know why?
Because we aren’t mailing the same message, to the same market at the same time. What my message does in Somewhere, USA has no bearing on what your message does in whatever market you are prospecting.
Marketing is a constant evolution and not a destination and the end all response ratio is ultimately decided by you.
I suggest that now you have a marketing message that is working, the never-ending journey you are on now is called “beat the control”.
There are literally hundreds of things you could test against each other, measure and quantify, etc. to improve your response ratio; here are but a few:
a. Timing (When you send the message could have a negative or positive impact on response rate; test sending the message sooner and later to see what converts better; i.e. if you are marketing to those with ARMs that are due to adjust, send the message 1 month/3 month/6 month before the adjustment to determine the proper timing of your message).
b. Frequency (How often you send a message could have a negative or positive impact on response rate; test sending the message just once vs. sending the same message more then once in a sequenced delivery vs sending sequential but differing messages to see what converts better).
c. Test what you say and how you say it (Vary headline, offer, call to action, etc. to maximize response).
d. Test where you send it (Some messages work better in different geographies).
I could go on for awhile, but I hope you get the point.
Good luck, but you have only just begun…
I think it’s more important to target who you think will be motivated to do a deal with you in the first place. Then by sending to only those your response rate will be higher. But, like I said in a previous post, I use the initial mailer only as a point of reference for a followup call or visit to those I feel are most motivated. And also to find their new address if they have moved as you pointed out.
"Hi, I’m Joe Blow, I sent you a postcard/letter last week, did you get it? That gets them talking and involved. It shows I have an interest and sent them something rather than just making a call out of the blue. It’s some common ground.
Mainly I only market to people trying to sell. 95% of prefcs don’t want to sell. So it’s an uphill battle I don’t bother with because every other investor does. I try to minimize the intense competition and market to those not being contacted by every investor around town.
I find people with large equity are usually less motivated unless they are ignorant of market value. I only send them a mailer every now and then and don’t bother calling. I’ll let them call me, so I have the upper hand like you referred to. But I will go after my target audience.
I want to talk to the people I figure I have a good chance of doing business with. They are usually happy to get my call/visit They think all investors want to buy cheap. I tell them I’m different. They realize I am doing them a favor buying their problem. Try it, you might like it.
You won’t make the big score on each particular deal, but it will pay off in the long run. And you won’t get discouraged and quit like so many other budding investors who can’t make the big score and give up.
Most people drop out because they don’t get enough deals to keep them happy. They are looking for the home run every time. 100K per month is a dream. 10K is more realistic.
EH
Hey Equity,
Just curious. What part of the country do you live in and how do you just target the ones that want to sell? Maybe I’m missing something but not sure how you determine which ones want to sell.
Thanks,
G
Hey G,
I’m in ATL. 5000+ fcs per month. And 95% of those selling use the MLS. That’s where I go. All the listings are online “with” addresses. With the address I can find out what they paid, when, about what they owe now, and of course what it’s worth.
Only 5% or less of listed proprties sell here. It’s the buyers mother load. It’s where I get 95% of my deals. (They have already tried on their own and now have tried it with a Realtor, where are they going to go next if they really want to sell?) Some use 4 or five realtors. WE NEED BUYERS HERE!
Sorry it took so long to get back. I’ve been busy. So many houses for sale, so few buyers. I’m in demand big time.
EH
Here in Texas the time from foreclosure notification to sell on the courthouse steps is 21 days. Makes it kind of tough to list with MLS once the process has started.
I just put in the fact of the 5000 fcs.month as an aside. And that’s just metro ATL. We usually are one of the highest in the country on a regular basis. I don’t bother with prefcs at all. In my county maybe just a dozen out of 500 hundred a month might have equity on paper. They can usually avoid selling using one of 7 methods. Or they have tons of investors to sell to. More times than not they owe way more than I thought so it’s just not feasible for me to spend the time researching and marketing them. When I did, I would post cards, letters, and the phone. Some door knocking also. Mainly I would get calls from people who owed too much, and/or the place was a wreck that wouldn’t support a fix up budget.
There is opportunity to reinstate and then rent/lease opt.
But cash flow wize you are putting yourself in the hole right off the bat.
I’ve also run the course with ss. I learned early on that if you post something saying maybe it doesn’t work quite as well as the general consensus has read about, you become a target, so I let everyone assume what they want for the most part and learn for themselves.
Many of those fcs get taken back as reos and end up on the mls. I don’t bother with them either because they usually get sold to owner occupants or newbies for way above wholesale. REOs probably comprise the majority of sales. Esp. when they finally drop them to 115K or less. Below 100K they usually need major work.
We only have about 26 days here of notice( four thursdays. before the first tues of the month). All the counties hold the auction on that first Tues. And they’ll even have several bids going on at the same time in the same auction. Otherwise I guess they’d be run into the wee hrs. there’s so many.
I was initially shocked to find very few fsbo ads here. They are other investors mainly. So,I target the mls for owners that I think really need to sell usually based on the amt of equity or lack thereof more specifically. And time of ownership. Less time being better.
That might sound backwards but I prefer seeking sellers that don’t have a big emotional or financial tie to the property; maybe they already refied and pulled most of the cash out. Or, if they bought a yr ago. Why are they selling so soon? Somethings up. They must really have to sell.
I buy sub2 and rent or lease/option. That’s the primary game here because it takes a long time to sell and because many properties don’t have much equity due to the poor price appreciation well below the national avg. Avg days on mkt have to be around 270 maybe more. Another popular method is buying at 80% or less with cash if you can and refiing most or all of the cash out and having a tenant in place.
I honestly believe I am providing a viable option for those that really need to sell and can’t wait 9-12 months or longer to sell ending up with little or no money anyway, after commissions, buyers closing costs, and repairs.
I want get about 30 and I’m done with buying. I’ll have someone managing them and it should be enough for me to live on. I’m looking for a retirement without working at Walmart.
EH
Sounds like a plan. I have 6 units now worth around $500K and plan on having a total of $1M by the end of 2007. Just trying to find better deals so I appreciated you openess. Thanks for clarifying.
G
EquityHunter - I’d like to know where in Atlanta you are. I’m here as well!
As for marketing, I (and others who use what I do) get a 10, 12, as high as 20% response rate on my marketing. Why settle for a 1% response rate? What about the other 99%? 
I like what a lot of you have said, and agree that a targeted direct mail campaign is the best way to generate leads. Of course, you still have to close them, but with such a high response rate, that gives you more leads to check out and cherry pick the ones that’ll do best for your biz.
And EZloanz is right, it depends on how, who, when, and where you’re marketing. But a great marketing campaign can take place anywhere in the country, as long as you’re targeting both the sellers and the message.
Big Cheese