Why I Don’t Look For Real Estate Deals
I’ve seen a number of threads on the BiggerPockets Forums which indicate a certain level of frustration with the fact that the Multiple Listing Service (MLS) is “too competitive”, and in today’s market it can be quite difficult to get offers excepted on MLS-listed property. I would concur – it can be very difficult indeed, which is why I do not buy off of the MLS…
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I’ve been teaching the violin for over 15 years and real estate for 3, and as a teacher I understand that there is a world of difference between handing someone a fish for dinner verses teaching them to catch their own. This is why I tend to have a certain amount of distaste for most How To articles. Life is just not that simple!
I am chuckling at myself because I am currently considering writing an article entitled How I Bought a 10-Plex with 1.5% Down – A Case Study. Should I write it? Leave me a comment…but I’ve digressed.
Success, in my opinion, is a function of perspective, and my goal for today’s article is to explore the psychological condition of the marketplace in hopes of encouraging a marginal shift in thinking that will open doors of opportunity.
This isn’t Rocket Science.
Question: Why is the MLS so competitive?
Answer: Because too many investors use the MLS as their gateway to the market.
Question: Why do most investors rely on the MLS to access the market?
Answer: They either don’t realize that there are other ways of finding deals, or they deem those other ways “too difficult.”
Question: What is the opportunity represented by the above?
Answer: To Zag while everyone else Zigs!
Wouldn’t you agree that when framed in this way the proposition becomes self-evident – we have to do things differently from the conventional. A place to start is to acknowledge the possibility that there can be a solution other than the conventional wisdom. Here are a few more questions:
Question: When you are dirty, what do you do?
Answer: You take a shower.
Question: Did taking a shower require carrying buckets of water from the well in your back yard?
Answer: No, you simply opened a faucet – I hope.
Question: Are you getting the moral of this story?
Answer: Say YES!
Indeed, scouring the MLS for property is to me akin to carrying buckets of water. It can certainly work in a target-rich environment, but even when it does work it requires constant effort.
My preference is to build a pipeline instead. While this certainly requires considerable effort during the construction phase, in the long run a pipeline facilitates a significantly more passive process of lead-generation.
Inbound Marketing Concept
In the past decade the concept of Inbound Marketing has taken off in a big way. Unlike yesteryear marketing which aimed at blanketing huge numbers of potential audiences with a constant barrage of sales pitch, inbound marketing aims to position the company or product to “Be Found” if and when the potential client reaches out, and it does so by providing free but good-quality, solid, actionable content.
Think of it this way. Imagine you are watching your favorite show on TV when you are “rudely” interrupted by a pick-up truck commercial. Do you immediately drop everything and run out to buy a new truck? Chances are that you do not, because your old truck works just fine. Moreover, you would likely be a bit miffed at the rude interruption. So, you either flip the channel or go pee – the exact opposite reaction from the one that the auto manufacturer was hoping for.
Inbound marketing is different in that folks using it understand that when you are truly ready to shop for a new truck, you will actively search for them, and all they need to do is make you aware of their existence. How do they do it?
I give you BigerPockets.com. When you wanted to learn about real estate investing you likely typed “Real Estate Investing” into your search engine of choice and pretty well at the of the first page you saw a link to BP, which you followed. When you landed on the home page, Josh Dorkin, a serial entrepreneur and founder of BiggerPockets.com, scored a point – he positioned BP to be found by you. But the game wasn’t over yet, because now he needed you to come back and to engage. How did Josh Dorkin do that?
CONTENT, CONTENT, CONTENT, CONTENT, CONTENT, CONTENT, CONTENT, and more CONTENT!
Having arrived at BP, you likely stayed until 3 A.M., which ensured that you were a complete and total basket case the next morning at your JOB because all you could think about was how nice it would be to make enough money in real estate so that you would not need that JOB. After you came home from work that night you went back to BiggerPockets.com to read more, and more, and more insightful CONTENT, such as this brilliant article – now Josh Dorkin had you!
Note to self: Call Josh and tell him I want more money – or, any money for that matter… Ha-ha-ha
LESSON: BiggerPockets didn’t find you. You found BP at exactly the right time in your life and under the circumstances when you were ready to internalize the message. You were looking for answers and BP provided the answers you needed just when you were psychologically and mentally ready to receive them. So, you came back and you engaged – and this, ladies and gentlemen, is an inbound marketing success story.
What Does All This Have to Do with Real Estate?
I don’t look for deals on the MLS or anywhere else. This may sound strange, but it is the truth – I do not look for deals. I used to look for deals, but I don’t any more. People take action around real estate in order to solve a problem, therefore building a pipeline is to me a function of making the world aware that I am a problem solver, and that I have the perspective, experience, knowledge base, desire to help, and capacity to see things through to the end.
By definition, solving a problem necessitates being privy to exactly what the problem is that needs solved. This requires being eyeball to eyeball with the seller – I have to have access to the seller to do what I need to do! Is that easy or even possible when working through the MLS do you think? Is it…?
I’ll be the first to admit that the process of building a pipeline is not quick and it’s not easy. Why? Because in order for me to have a pipeline, people have to choose to do business with me – a choice they will not make unless they feel that they know me, like me, trust me, and have faith in my capacity to perform. Building relationships and establishing a reputation TAKES EFFORT and TIME, but can result in a pipeline of extraordinary possibilities!
What do you think? Leave me a comment below and let’s talk!