Where are the motivated sellers??

Question

Hello All,

Looking for some experienced pros to evaluate my progress in this business so far.

I'm a newb to this and haven't gotten my first deal. I've been working at it for three months and have sent out over 3000 pieces of mail. My mailing criteria is absentee owners with at least 50% equity, then I narrow by cities and keep track of my calls. I get about 2% call backs on my mail. (Most are not motivated at all)

I have gotten close to buying my first deal but something always happens to ruin it (like they shop around and find someone else to over pay for the property.)

Overall I have not spoken with one person who is truly motivated. (like death, divorce, debt, etc.) Most the people I talk to just don't want to go through the hassle of listing the property and want me as their quick fix, but want me to pay them retail. Not to mention the current California RE market is smoking hot, making sellers feel pretty confident they don't need me.

Am I doing something wrong? Should I have a deal by now at 3000 mailers deep? I just want to know if this is normal or could I be doing something better. Could I filter my lists differently, use a different mailing criteria? Is it the area I'm mailing to? Any ideas to get me on the right track would be greatly appreciated, my bank account is getting smaller by the minute with marketing expenses and I'm terrified I wont get a deal to make this all worth it.

Thank you all!

Michael Galloway · Answer

Lauren, I'm sure I'm not the first person to tell you it's not going to be that easy. I think we all wish that we could just mail out 3000 pieces of mail and find someone motivated.

My suggestion is that you build a "table"with your marketing efforts. A table has four legs. One leg could be your mailings. Now you need three more. How about Bandit signs? How about door knocking? How about networking? And when I say networking it does not necessarily have to do with real estate. Find another hobby you like, get involved and let people know you are an investor. ( this is the part where you go into your elevator pitchAfternoon maybe 1 not sure yet.

Networking can be meeting with CPA groups, financial planners, attorneys. I have even met with Dentists. Get out there and get your name out.

A table with only one leg will not stand. Even two can not. Three is week. Four is necessary. Keep me posted.

Sean Brennan · Answer

Michael Galloway This is excellent advice.  You never know where opportunity will come from.  I joined a Toastmasters club a few months ago and it turns out that one of my fellow members is a very experienced (40 years) general contractor who has also done flips, wholesaling, and land development.  I look forward to getting to know him and will ask him to lunch soon.  You never know who you are going to meet!

Dean Letfus · Answer

Your title is where are the motivated sellers. The answer to that question is everywhere but your problem seems to be how to find the ones who can sell at the right price right?
As you have said you lost some due to higher prices my suspicion is you aren't acting fast enough when you do find a deal. Make sure that the second you find something you think is a deal get it signed up so you don't lose it.
I use a generic clause in all contracts that states the contract is conditional up on my property managers inspection. I never get it queried and it enables me to go to contract immediately.  Then you can't get pushed out. I have often sold to another buyer on the same property by assigning my contract. Getting in first is a golden rule especially these days!!

Account Closed · Answer

Scott Williams

Scott:  I think tracking the ones you don't get is important and educational in markets where there is a lot of competition.  It's easy write off other buyers as over paying, especially in So Cal.  But there are a lot of variables and obviously not every buyer who is paying more than me is losing money.  The trouble with tracking is that not everyone is as geeky for sales data as you and me.

Account Closed · Answer

Lauren: I'm not entirely in agreement that it's a numbers game when it comes to mail marketing.  Volume is a good thing, of course.  But volume won't make any difference if your marketing piece is forgettable or cliche or ubiquitous or irritating (to the seller) and/or is sent to the wrong targets. If I were working the OC, I'd really think hard on what seller needs might be in a primo/hot market and what I could do to meet those needs.  And I'd try to eliminate anyone who doesn't need me from my list.

One other thing is lead time. I've done a pretty poor job over the years of keeping track of mailings versus leads.  But, at the beginning of 2012 I tracked every mailing and every call/response.  At the end of 2012, it turns out almost every deal came from contact in 2011.  We are 1 1/2 months into 2013 and every offer I've made so far this year came from contact in 2012.  And I don't mean December.  I mean the seller got my letter or first called me six or more months ago.  I don't think is typical, but it is another angle.  It might be my slow, no-urgency method of working with sellers.  Or it could my sellers are just slow.  :)  I've gotten four calls since the beginning of this year where the seller started out with "Well, my tenant is moving.....".  And my letter was still in the file.  Do what you can to make your letter look like something that goes in the property file.  Personally, I do not think yellow letter marketing is that type of letter.  But that's just my opinion.  I only know I wouldn't keep such a letter.

Michael Galloway has a great point about adding other legs to the marketing table.  There's more than mail marketing when it comes to getting deals.  Making sure that everyone you come in contact with knows that you are an interested buyer and will look at anything is another sturdy leg.  And that's virtually free.

Account Closed · Answer

Jon Holdman
Jon, you give great advice. Could you ellaborate on "a whole different list?"
Also, I'm not solely a wholesalor, I intend to fix and flip as well. Not sure if that makes any difference though as far as marketing and lists.

Michael Galloway I am for sure going to get more legs on that table. I'm a little limited on cash and time because I work full time, but I do intend on doing more. Thank you for your advice!

Arktavious Sally And thank you so much for the encouragment. Sometimes we just need to hear "Dont give up!"

Account Closed · Answer

Scott Williams
I've mailed to over 3000 leads, once. I plan on hitting them again every 4-6  months. The deals I got close on weren't in escrow but the sellers and I have agreed on a price but always a hang up like "But I need to have a realtor come look at the property one last time just so I know what I'm losing out on..." (That one ended up calling other investors until she got someone to pay $20K more then me.)

I'm marketing OC but have dabbled in IE as well. There is more distress there so the people I speak with are way more motivated then OC. The problem is I work full time so its hard for me to look at the properties in the IE. Have you had any luck in OC? My intent is to wholesale and fix and flip. Lets connect, love to hear what your looking for.

Arktavious Sally · Answer

Lauren  Hardy Whatever you do dont give up!! Wholesaling is simple but not easy.. Remember great marketing drives leads and sales. It's a numbers game.. The more marketing you do the greater chance of finding a motivated seller in a distresssed situation who may want to do business with you. When I started wholesaling I learned real early in the game to market other wholesalers deals they already had under contract. They had the deal and I found the buyer and we split the spread. Remember there is no gurantee that you are going to see a return on each and every marketing campaign that you do but you must market to generate leads.

Scott Williams · Answer

How many leads are you mailing to?  Were the 3000 pieces sent to 3000 leads or 3 letters to 1000 leads or ???  What does your marketing piece look like?  Are you sending letters or postcards?  Handwritten or printed?  Are you doing the mailings yourself?  Are you marketing to Orange County or another area?

I have done a similar campaign (absentee owners w/ equity) in Orange County, 3 letters to 1000 leads.  I had one of the Yellow Letter companies do the mailing and the response rate was much better than 2%.  I'm curious why you aren't getting a higher response rate, which is why I asked about your marketing piece.

Most of the calls you receive will NOT be motivated.  The majority of the callers will want to be taken off your list or want to know what their house is worth, etc.  After you have spoken with several non-motivated callers, it will help you to identify someone who isn't just a tire kicker.  Some will come right out and tell you their house is a beat up piece of crap and they want to get rid of it ASAP for whatever reason.  With others you have to ask open ended questions and just let them talk.  Maybe they tell you about their pending divorce, their job transfer, etc.   The motivated sellers I spoke with all had some other issue going on (death, divorce, etc).  The way I see it, absentee owners with equity COULD sell to me, but without some other motivation, they probably aren't going to sell to me.

How close did you get?  Did you write an offer?  Was it accepted?  Did you track the deal where the other person "over paid"?  I have found that even when I think someone else is overpaying, they often go on to make a profit.  I have learned that I need to get better at quickly coming up with an accurate ARV, repair estimate, etc. in order to be competitive in this market.  If you are confident in the amount you are offering, I wouldn't worry about the ones you miss.   But do track some of them and see if the buyer truly over paid.

Hopefully you are closer to a deal than before you sent out the 3000 mailers.  You definitely have more experience and knowledge than before the mailing.  I hear you on watching the bank account dwindle without anything coming of it yet, but if you continue to press forward, it will happen.

Just my 2 cents, good luck!

Scott Williams

Fran Flanagan · Answer

I'm new to this as well and have nothing to offer in terms of parsing your list, but a couple of things you said stood out to me.  Your post reminds me of my days posting in poker forums where very often the answer can be an introspective look at oneself and his or her mindset.

When someone calls you on the phone in response to your mailing, they're interested / the letter served its function.  Obviously, there's always ways to improve your letter, but perhaps you need to work on your closing skills a little more?  What's your pitch, what are you offering them?  It's likely based on what you said that you aren't giving them the highest possible price if they shop around, so you would need to focus on how working with you would provide a rapid closing (no more monthly payments) and no 6% to a realtor, etc.

Also, you may want to take a look at what these homes are selling for to the guy who "over-paid."  How much more was it than your offer?  If the difference is substantial, perhaps you need to adjust your math to the improving market?  You may have to pay a little more, but if you can assign it for slightly more, your end works out the same.

Where are the motivated sellers??

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