Hello Fadi… By the way, Happy Holiday Season to you.
I believe that determining who your audience is – the type of people who will be interested is your services – is key for preserving time, energy and expense. Thus, you want to attract as many real prospects as possible without wasting time, energy and money on the rest of the masses.
There are essentially seven types of prospects who will be interested in buying and/or selling a home. These customers can be labeled by the type of house to which they are connected:
FSBO
For Sale by Owner people are interested in saving money while making the most profit from the sale of their houses. Most are actually just interviewing agents for the job of selling their home. If you decide to buy their house, make sure you buy it before they list it in the Multiple Listing Service (MLS).MLS
Expired Listings
Expired listings are people who previously hired a real estate agent to sell their house within a specific duration of time. A typical listing period is 90-180 days, after which time the listing runs out, or Expires. Once the listing has expired, the home is no longer on the Realtors MLS and a majority of the time the sellers are very anxious to sell. Expired Listings are prime prospects.
NOD/TS
People in Notice of Default or Trustee Sale are a desperate situation. They have defaulted on their mortgages by not making payments for a minimum of 3 to 6 months. As a result, they must come up with the balance in full in order to keep their homes. They are typically given 90 days to come up with the money or the house will be foreclosed on and put up for auction. The time frame may be different, depending on your state.
Their interest is to sell their home quickly in order to pay off the mortgage before foreclosure. Keep in mind that most people in pre-foreclosure are in denial. So it will be up to you to get them to realize the reality of the situation.
Absentee Owners
People who rent out their houses have different problems such as bad tenants, tenants who fall behind on their rent, etc. It is very common for an Absentee Owner to consider selling when a tenant decides to move out.
For Rent
If a For Rent prospect’s house is not being rented to tenants, they are losing money each time they make a mortgage payment that would normally be offset by the income received from tenants. There are a number of angles you can explore in meeting this type of owner’s needs: the owner is undoubtedly familiar with the financial hardships they may incur if they are unable to rent their home or to keep it rented for a period of time.
Probate
This is the most difficult type of prospect to deal with due to the legal red tape involved in the probate process, while potentially having the second highest profit potential. These sellers (probate prospects) are usually the children of the house’s owner and they are more interested in getting money quickly than in dragging out the process. Take some time and find a good, reasonably-priced probate attorney to whom you can refer prospects for selling the house, and sometimes even hire on their behalf. The key in dealing with this prospect is to make the process of selling the house as easy as possible. These people will likely not know anything about the probate process and the more you know, the better your chance of buying the house because they begin to trust and rely on you. So, spend some time with the attorney to learn the time process of a probate-related house sale. Become an expert in your prospects’ eyes and you’ll close more deals.
Never lie to your prospect if you do not know the answer to any of their questions. Say the following: “That is an excellent question, and I will call my probate attorney and ask her for you.” When they feel like you are there to help them, they will follow you like ducklings follow their mother duck.
Farm
Farm prospects refer to a geographical/demographic area to which you direct mail. Let’s say you want to market to people with 2-year-old mortgages or houses that were purchased 5 years ago; they would make up your Farm prospects. Knowing what Farmed prospects want can be difficult, depending from where you’re cultivating your list. If you’re not sure, you can always go with the most common interests, such as “sell our house fast!”
Keep in mind that you cannot start off advertising to everyone. You simply do not have the resources, and I’m not just referring to money. Resources include capital, labor, knowledge and experience.
I focus on a ton on MAILING to the four main seller types: FSBO, NODs, For Rent and Expired.
A. FSBO and Expired - It is important to understand who your competitor is and that it is NOT your fellow investor. FSBO and Expired sellers are inundated by real estate agents trying to sell their services. Your true competitor is the real estate agent. With that understanding, you will want to take the same step Realtors take to become successful, which includes mailing and cold calling these prospects.
You must mail to these two prospects (FSBO and Expired) every three days until they sell, list their houses or die.
You’re going to mail three types of information:
• postcards that say,” before you list your house, I want to buy it”
• a set of letters explaining the advantage of selling to you
• a set of “Mary Letters” (see the “Finding Prospects
Who Want to Sell Their Houses” Module for a description of a “Mary Letter”.
Note: Your message is going to be different with each type of mailing, as different people respond to different messages. Using a variety of methods will increase the likelihood that the prospect will call you.
B. NOD – NOD prospects require a mailing every three days for the first 30 days and then every six days until they list, sell or stop foreclosure. It is important to put a system in place to track the stage of the foreclosure, as you do not want to waste resources. Your legal newspaper will list the cancelled NODs.
Mail the following type of advertising to this prospect:
A set of seven professionally-produced letters telling the prospect about you and why they must call you.
A set of four “Mary letters”, and if you’re in a Spanish-dominant market, you will need to mail your letters translated in Spanish as well.
A series of postcards that state “I buy houses and help people in your situation.” Never put the word “foreclosure” on a postcard.
A foreclosure booklet that helps them understand the process. This book is vital for separating yourself from the vultures these house owners are inundated with.
C. For Rent - Mailing to the For Rent prospects will have the least amount of return compared with the previous three prospect types, but they are still worth prospecting. They may be sellers and/or buyers. This type of prospect is either tired of being a landlord or is motivated and always looking for a good deal. You will find them to be a great source of capital.
Send to these prospects every three weeks. Why three weeks? Because they usually have more than one rental, and you want to catch them as the notice to vacate has just been given to them by their tenant.
Mail them two types of information:
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A series of postcards that says, “I Buy Problem Rentals Vacant or Occupied”, and “I will not bother tenants.”
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A letter outlining the advantages of L/O and advising them what you do and how you may be able to work together.
So, now you know what you are going to mail and to whom. Now let’s talk about making it a priority.
Although mailing is very important, it is time consuming. This system will take 2-4 hours a day unless you’re utilizing an automated one, which will cut this time down considerably. If you’re using a manual system for your mail, ideally it should be handled by someone else on a part time basis or by you after your normal hours of operation (8:00 am to 5:00 pm) or between phone calls IF YOU ARE NOT TAKING YOURSELF AWAY FROM YOUR PRODUCTIVITY. In the beginning, since you have nothing else to do, you will take the task, and later you will teach the task.