Up to my neck in leads - Where do I find a bunch of cash buyers?

[Bruce McCray]

Hi all,

I'm in somewhat of a unique position. My partners and I work in the lead generation business. We've had a lot of success generating leads in various financial services verticals. One of the areas we're generating leads in, is the "We Buy Houses Fast" space. 

We're generating leads in every US state. Typically these people are in a distressed situation, or their home is distressed, and they're looking to sell quickly - often at a significantly lower price point than what the property is worth. It's probably also worth saying that these properties aren't listed on the MLS or elsewhere.

Currently, we're wholesaling these leads (the leads, not the houses) to our buyers and getting paid on a per lead basis. However, we've decided that it'd be beneficial to start working these leads and securing deals ourselves, either as bird-doggers or wholesalers... as we've already got the marketing funnels built out and profitable as a stand alone business.

That said, I'm looking for ways to make contact with cash buyers who can handle our volume, as well as general advice from seasoned REI professionals as how to best go about turning these leads into deals, as this is completely new territory we're charging into.

Thanks,

Bruce

[Brian Burke]

@Bruce McCray congrats on your robust lead pipeline.  Getting that isn't the easiest thing to do.  But now you have to figure out how to monetize it and I hate to be the bearer of bad news, but what you are seeking to do doesn't get easier from here.

First, you have to whittle down your massive lead pipeline to only the real sellers.  You have to dump the tire-kickers, the "see what you think my house is worth" crowd, the "how did you get my information?" folks, and the "I'll sell for an inflated price" group.  Oh, and don't forget the "I want to sell but my ex-wife is on title and she won't sign" calls.  Now that about five percent of your leads are left, it's time for things to really get hard.

The next challenge with your plan is that you aren't an expert in the market where the property is located. This may sound like a minor obstacle at first glance, but it is a huge obstacle to implementation of a program like this on a national basis.  

Let's say that you finally get a live "real" seller on the line. They suggest a price, but how do you know if it's a good price?  If I get such a call in the markets I cover, I can run comps and also compare the house to others that I've bought and sold nearby. I can establish with a fair degree of certainty what the house is worth and what I can pay.  Attempting this without market knowledge is most likely going to result in you signing a lot of contracts but finding very few buyers--the buyers ARE market experts and they won't buy unless it's a good deal.  I get calls all the time from wholesalers who have no market knowledge trying to pitch their deal and very few of them are good deals.  They didn't have the expertise to establish the value nor understand the costs and margins associated with a successful house flip.

Your best bet is to partner with market experts--ones who you can call and ask "the guy at 123 Main St wants to sell, what would you pay?"  The challenge with this is that on a national level you would have to have hundreds of these buyers, and with a crowd that big and such high dilution of deal flow you would have a lot of subpar partners on that list and not enough opportunity to build a solid relationship with them.  You'll get guys that'll tell you "I'd pay $150K for that house" and then you get the house in contract and now all of the sudden Mr.$150 is in the wind.  Or they come to the table but subsequently fail to close or try to re-trade you when they decide that they'd rather pay $135K.

I wish you a lot of luck, and hopefully this bit of knowledge can help you find creative solutions that crack a nut that no one has yet to crack.